Indian Accounting Standards Amendment Rules 2025: Key Changes Explained
The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2025, introducing updates to select Ind AS applicable to companies preparing financial statements as per Ind AS.
Let’s break down what this amendment means for Indian companies and finance professionals.
What Are the Indian Accounting Standards Amendment Rules 2025?
The amendment, notified via GSR 330(E) dated 02.05.2025, modifies key Indian Accounting Standards (Ind AS) to align with international practices and current business realities.
These amendments are effective from 1st April 2025 and apply to financial statements for FY 2025–26 onwards.
Major Amendments Under the 2025 Rules
The following Indian Accounting Standards have been amended:
1. Ind AS 7 – Statement of Cash Flows
- Enhanced disclosure on non-cash transactions.
- Companies must now present reconciliation of liabilities from financing activities.
2. Ind AS 12 – Income Taxes
- Updates reflect changes in deferred tax treatment.
- Recognition of tax consequences of dividends is now aligned with IFRS updates.
3. Ind AS 21 – The Effects of Changes in Foreign Exchange Rates
- Clarifies treatment for deferred foreign exchange items.
- Reduces ambiguity in case of long-term foreign currency monetary items.
4. Ind AS 115 – Revenue from Contracts with Customers
- Minor terminology changes for better alignment with IFRS 15.
- Focus on contract modification disclosures in revenue recognition.
Why These Changes Matter for Businesses
Companies adopting Ind AS need to:
- Update disclosure formats in financial statements.
- Train finance teams on new reconciliation requirements.
- Review how deferred tax on dividends and foreign currency changes impact net profit.
Step-by-Step Compliance Guide
Here’s how to ensure your business is compliant:
| Step | Action Item | Deadline |
|---|---|---|
| 1 | Review amended Ind AS rules | Before June 2025 |
| 2 | Update accounting software & templates | Q2 FY 2025–26 |
| 3 | Conduct internal training for finance team | June 2025 |
| 4 | Consult auditor for revised disclosures | Ongoing |
Legal Reference
- GSR 330(E): Companies (Indian Accounting Standards) Amendment Rules, 2025
- Authority: Section 133 of the Companies Act, 2013
- Official Site: mca.gov.in
Expert View: What CAs Should Watch Out For
“The reconciliation under Ind AS 7 will now require more granular data tracking. Companies must revisit their financing instruments to ensure proper classification.”
FAQs on Indian Accounting Standards Amendment Rules 2025
Q1. Is this amendment applicable to all companies?
No. Only companies mandated to follow Ind AS, such as listed entities or those with net worth above thresholds defined under the Companies Act, 2013.
Q2. When does the amendment come into effect?
From 1st April 2025, applicable for FY 2025–26 and onward.
Q3. Where can I read the full amendment?
You can view the full notification here.
Summary
MCA notified the Companies (Indian Accounting Standards) Amendment Rules, 2025 via GSR 330(E), updating Ind AS 7, 12, 21, and 115. Changes include enhanced disclosures, revised tax treatments, and updated compliance formats for FY 2025–26 onwards.
Final Note
Understanding the Indian Accounting Standards Amendment Rules 2025 is crucial for ensuring year-end compliance and avoiding audit red flags.