Today, we continue in our series on adoption of the new revenue recognition standard in India.
The country is likely to defer adoption of this new accounting standard (known as Ind AS 115) as more consultation is necessary to help clarify the requirements and to provide examples in order to assist with implementation.
At the National Advisory Committee on Accounting Standards (NACAS) meeting early last month, it was decided to gather viewpoints from all three apex industry chambers – FICCI, CII and Assocham – on whether Ind AS 115 should be deferred. All three favored deferrment.
During last week’s NACAS meeting, it was recommended to the Modi-led government that India defer adoption from the original timeline of April 1, 2016. (IndAS 115: Delay of India’s New Revenue Standard Considered This Week)
This standard was one of the 10 standards notified by the government earlier this year, as India converges with the International Financial Reporting Standards (IFRS) starting next year.
Technology, real estate, automobiles and telecom companies are likely to be impacted the most by this standard. The new standard replaces the fragmented set of rules by which companies book their revenues. (Source)
“We have to be in-line with the international standards,” said Amarjit Chopra, chairman, National Advisory Committee on Accounting Standards (NACAS).
India was slated to be the early adopter of the IFRS revenue recognition standard. However, since the global standard itself is under review, NACAS has recommended deferral of Indian standard as well.
NACAS has not recommended a new date for adoption of the revenue recognition standard. Whether it will be deferred for one or two years and whether the option of early application will be provided are key issues still to be determined.
The Indian government will take a final view on applicability of the new standard. Stay tuned to this space to get the latest developments on the new revenue recognition standard in India!