Ind AS Applicability: The ₹250cr / ₹500cr Net-Worth Phase Test
Indian Accounting Standards didn't roll out to every company at once. The Companies (Indian Accounting Standards) Rules 2015 phased it in by net worth, over two effective dates — and companies, NBFCs, banks, and insurers each run a materially different version of the test. Getting the entity type wrong before applying a threshold is the most common way this test goes wrong.
Companies: Two Phases, Split by Listing Status
For a company whose equity or debt securities are listed (or in the process of being listed) on any stock exchange in India or abroad, Ind AS applies regardless of net worth — the net-worth figure only decides which phase, not whether it applies at all:
- Phase I — net worth ≥ ₹500 crore — effective FY 2016-17 (1 April 2016)
- Phase II — every other listed company, any net worth — effective FY 2017-18 (1 April 2017)
For unlisted companies, net worth is the actual gate:
- Phase I — net worth ≥ ₹500 crore — FY 2016-17
- Phase II — net worth between ₹250 crore and ₹500 crore — FY 2017-18
- Below ₹250 crore — Ind AS is not mandatory; voluntary adoption is permitted, but choosing it triggers the same lock-in as mandatory adoption
NBFCs Run Their Own Roadmap
NBFCs don't share the company roadmap's dates or thresholds — a separate schedule applies:
- NBFC Phase I — net worth ≥ ₹500 crore, whether listed or unlisted — FY 2018-19 (1 April 2018)
- NBFC Phase II — every listed NBFC not already in Phase I (regardless of net worth), plus unlisted NBFCs with net worth between ₹250 crore and ₹500 crore — FY 2019-20 (1 April 2019)
Banks and Insurers Are Carved Out Entirely
Banking companies and insurers don't follow the Companies Act Rule 4 roadmap at all — each sector regulator sets its own timeline. RBI has deferred Ind AS implementation for scheduled commercial banks indefinitely; there is currently no notified effective date, and banks continue reporting under the existing RBI-prescribed format. Insurers, by contrast, are further along: IRDAI has mandated Ind AS — via the Ind AS 117 insurance-contracts framework — for all insurers uniformly, effective FY 2026-27 (1 April 2026), with parallel IGAAP reporting continuing in the first year as a special-purpose regulatory submission.
Two Rules That Override the Threshold Entirely
Group cascade — a holding, subsidiary, joint venture, or associate company of an entity already covered by Ind AS is itself covered from that entity's own effective date, regardless of its own net worth or listing status. A small unlisted subsidiary of a Phase I parent doesn't get to wait for its own net worth to cross ₹250 crore.
Once applicable, always applicable — Rule 4(3) is the sting in the tail. Once Ind AS is adopted, whether because a threshold was crossed or by voluntary choice, it must be followed in every subsequent financial statement — even if net worth later falls back below the threshold, the company delists, or it stops being a subsidiary, associate, or JV of a covered entity. The computation year matters exactly once, permanently.
Frequently Asked Questions
If a company's net worth drops below ₹250 crore after adopting Ind AS, can it revert to AS?
No. Rule 4(3)'s once-applicable-always-applicable rule means Ind AS adoption is permanent for that company, regardless of what net worth does afterward.
Do banks have to adopt Ind AS?
Not currently. RBI has deferred Ind AS implementation for scheduled commercial banks with no notified effective date — banks continue under the existing RBI-prescribed reporting format until further notice.
Does a small subsidiary of a large listed Ind AS company have to adopt Ind AS too?
Yes, immediately, via the group-cascade rule — regardless of its own net worth or listing status. It adopts Ind AS from the same effective date as the covered parent, holding, associate, or JV.
Are NBFC Ind AS thresholds the same as the company thresholds?
The net-worth figures (₹500 crore and ₹250 crore) are the same numbers, but the effective dates differ — NBFC Phase I is FY 2018-19 and Phase II is FY 2019-20, two years later than the equivalent company phases (FY 2016-17 and FY 2017-18).
CORAA's Ind AS Applicability Calculator runs the correct roadmap for the entity type selected — company, NBFC, bank, or insurer — rather than applying one generic net-worth test across all four, and flags both the group-cascade and once-applicable-always-applicable rules where they override the plain threshold check.