IFRS vs Ind AS: Key Differences Every Indian Business Must Know

IFRS vs Ind AS: Key Differences Every Indian Business Must Know Home/Blog/Accounting Standards/IFRS vs Ind AS Accounting Standards IFRS vs Ind AS: Key Differences Every Indian Business Must Know Why Ind AS differs from pure IFRS, which carve-outs matter most, and how they affect companies with international operations. Author  The Classic Partner Published  01 September 2026 Category  Accounting Standards In short India converged with IFRS rather than adopting it outright — the Ministry of Corporate Affairs kept roughly 90% of the treatment identical but built in around a dozen carve-outs, concentrated in financial instruments, borrowing costs, foreign exchange, and first-time adoption. These carve-outs mean Ind AS financial statements are not IFRS-compliant, and for companies with foreign investors, cross-border listings, or multinational reporting lines, the gap is exactly where numbers diverge from what an IFRS reader expects. IFRS vs Ind AS is not a comparison between two unrelated frameworks — it is a comparison between the original and its carefully modified Indian adaptation. India did not adopt IFRS; it converged with it. The Ministry of Corporate Affairs reviewed each IFRS standard issued by the International Accounting Standards Board (IASB) and, where Indian company law, tax legislation, or economic conditions warranted a departure, introduced a carve-out — a specific modification that makes Ind AS different from the corresponding IFRS standard. The result is a framework where approximately 90% of the accounting treatment is identical between IFRS and Ind AS, but the remaining 10% — concentrated in financial instruments, borrowing costs, foreign exchange, and first-time adoption — creates real differences in reported profits, asset values, and equity. For Indian companies with foreign investors, cross-border listings, or multinational group reporting obligations, these carve-outs are not footnotes — they are the exact points where Ind AS financial statements diverge from what a pure IFRS reader expects to see. The Classic Partner provides Ind AS advisory services that include carve-out impact analysis, dual-framework reconciliation, and IFRS conversion support for companies operating across both frameworks. 01 — Convergence vs AdoptionWhat Does “Convergence” Mean and Why Didn’t India Just Adopt IFRS? Adoption means taking IFRS as issued by the IASB and making it the legally binding framework — no modifications, no carve-outs. Over 140 countries have adopted IFRS this way, including the EU (with minor endorsement modifications), Australia, Canada, and most of Asia and Africa. Convergence means building a national standard set aligned with IFRS in substance and structure, but with specific modifications where local conditions require them. India chose convergence for three interconnected reasons: Conflicts with Indian statutes. IFRS 9 prohibits recycling FVOCI equity gains to profit or loss, but Indian companies historically booked realised gains on strategic investments as income, and tax treatment under the Income Tax Act was structured around that practice. Rupee volatility. Under pure IFRS (IAS 23/IAS 21), exchange differences on foreign currency borrowings would hit profit or loss entirely — potentially distorting the reported operating performance of infrastructure companies with large dollar-denominated ECBs. The Ind AS carve-out allowing capitalisation was built specifically for this reality. The Indian GAAP transition gap. Moving from old Indian GAAP to Ind AS required additional first-time adoption exemptions beyond those available under IFRS 1, to accommodate very different measurement bases. The practical consequence: Ind AS financial statements are not IFRS-compliant. An Indian company cannot claim compliance with “IFRS as issued by the IASB” based on Ind AS statements, even though the two are substantially similar — which matters for companies filing with foreign regulators or undergoing due diligence by foreign investors. Professional audit and assurance services verify that the correct framework is identified and that no inadvertent claim of IFRS compliance is made. 02 — The Carve-OutsWhat Are the Most Significant Ind AS Carve-Outs and Why Do They Exist? The carve-outs fall into three thematic categories: financial instruments and investment accounting, foreign exchange and borrowing costs, and transition and first-time adoption. Theme 1 — Financial Instruments and Investment Accounting Ind AS 109 vs IFRS 9 — FVOCI equity recycling. This is the most commercially significant carve-out. Under IFRS 9, when a company designates an equity investment at fair value through other comprehensive income (FVOCI) and later sells it, the accumulated gain or loss transfers to retained earnings within equity — it never enters profit or loss. Under Ind AS 109, that same gain can be reclassified (recycled) to retained earnings on disposal. The end destination is the same, but Ind AS routes the gain through a distributable reserve, which has implications for dividend distribution and the computation of book profit under Section 115JB of the Income Tax Act. Companies with significant equity portfolios need corporate finance advisory that accounts for this difference when planning disposals. Theme 2 — Foreign Exchange and Borrowing Costs Ind AS 23 vs IAS 23 — exchange differences as borrowing costs. Under IAS 23, capitalisable borrowing costs include interest, discount/premium amortisation, and ancillary costs — but not exchange differences on foreign currency borrowings. Under Ind AS 23, exchange differences on foreign currency borrowings are included in borrowing costs to the extent they’re regarded as an adjustment to interest costs. This lets Indian companies capitalise exchange losses on ECBs as part of the cost of qualifying assets — typically power plants, roads, and ports — instead of expensing them. Ind AS 21 paragraph 46A — long-term foreign currency monetary items. Unique to Ind AS, this permits capitalising exchange differences on long-term foreign currency loans relating to depreciable capital assets, with the capitalised amount then depreciated over the asset’s remaining life. Carried forward from old Indian GAAP (AS 11), it exists because infrastructure, real estate, and manufacturing companies borrowed heavily in foreign currency, and rupee volatility would otherwise have severely distorted operating results. Tax advisory teams must account for the deferred tax implications, since deductibility arises through future depreciation rather than an immediate expense. Theme 3 — Transition and First-Time Adoption Ind AS 101 vs IFRS 1 — additional transition exemptions. Ind AS 101 offers several voluntary exemptions beyond IFRS 1: using previous Indian