Companies (Indian Accounting Standards) Second Amendment

Companies (Indian Accounting Standards) Second Amendment Rules, 2025.

Overview:
Issued by the Ministry of Corporate Affairs on August 13, 2025 (G.S.R. 549(E)), this notification amends the Companies (Indian Accounting Standards) Rules, 2015, in consultation with the National Financial Reporting Authority. Titled the Companies (Indian Accounting Standards) Second Amendment Rules, 2025, these rules are effective from the date of publication in the Official Gazette and align Ind AS with recent international financial reporting updates.

Key Amendments by Ind AS:

• Ind AS 101 (First-time Adoption of Indian Accounting Standards):
• Substituted paragraph 7(v) with transitional provisions from IFRS 11 (Joint Arrangements), omitting paragraph D31 of IFRS 1.
• Replaced paragraph 8(c)(2) with a new item D9AA, providing transitional relief for first-time adopter lessors under Ind AS 116 (Leases) to assess lease classifications (land and building elements) based on transition-date facts.
• Omitted paragraph 12(vii).
• Ind AS 107 (Financial Instruments: Disclosures):
• Inserted paragraph 44JJ, linking amendments to supplier finance arrangements with Ind AS 7 changes.
• Substituted Appendix B, paragraph B11F(h) and (i) with updated items (h)–(j), including instruments with settlement options, master netting agreements, and supplier finance arrangements (per paragraph 44G of Ind AS 7).
• Ind AS 108 (Operating Segments):
• Corrected Appendix 1, paragraph 1, replacing “IFRS 108” with “IFRS 8”.
• Ind AS 109 (Financial Instruments):
• Substituted Appendix 1, paragraph 3, noting the omission of IFRS 9 paragraphs 7.1.1–7.1.3 (effective dates) as irrelevant in India, retaining numbers for consistency.
• Ind AS 115 (Revenue from Contracts with Customers):
• Updated Appendix D, Information Note 2 table: Replaced “Ind AS 17” with “Ind AS 116”, “Ind AS 18” with “Ind AS 115”, and “This Appendix A” with “This Appendix D”.
• Ind AS 1 (Presentation of Financial Statements):
• Amended paragraph 60 to reference paragraphs 66–76B.
• Substituted paragraph 69(d) to define the right to defer liability settlement for at least 12 months.
• Inserted headings before paragraphs 70 and 71 for clarity on operating cycles and trading/settlement criteria.
• Added paragraphs 72A–72B on covenants affecting deferral rights (assessed at or after the reporting period).
• Substituted paragraphs 73–74: Clarified non-current classification for obligations with rollover rights or waived breaches (with disclosure per Ind AS 107).
• Amended paragraph 75 and inserted 75A: Classification remains non-current regardless of settlement intent or likelihood, with disclosure requirements.
• Inserted paragraphs 76A–76B: Defined “settlement” (e.g., cash/equity transfer) and equity instrument options.
• Inserted 76ZA: Required disclosures on covenant risks in loan arrangements (nature, amounts, compliance challenges).
• Substituted paragraph 139U: Retrospective application from April 1, 2025, with specific paragraphs (74, 75, 75A, 76) effective from April 1, 2026.
• Inserted paragraph 139W (refer to Appendix 1).
• In Appendix 1: Updated paragraph 9 for breach waivers; substituted paragraph 11 to reflect combined IAS 1 amendments (2020 and 2022), consolidating transitions in 139U.
• Ind AS 7 (Statement of Cash Flows):
• Inserted paragraphs 44F–44H: Required disclosures on supplier finance arrangements (terms, carrying amounts, payment due dates, non-cash changes) to assess liquidity risk.
• Updated heading before paragraph 53 to “Effective date and transition”.
• Inserted paragraphs 62–63: Effective from April 1, 2025, with exemptions from comparative and initial disclosures.
• Ind AS 10 (Events after the Reporting Period):
• Amended paragraph 3: Replaced “provision” with “covenant” (effective April 1, 2025); omitted from April 1, 2026.
• Inserted paragraph 23CA referencing Ind AS 1 amendments.
• In Appendix 1, paragraph 2: Replaced “provision” with “covenant”.
• Ind AS 12 (Income Taxes):
• Inserted paragraph 4A: Applied to Pillar Two income taxes (OECD model rules), exempting deferred tax recognition/disclosure.
• Inserted paragraphs 88A–88D: Required disclosures on Pillar Two tax application, current tax expense, and exposure (qualitative/quantitative or progress statements).
• Inserted paragraph 98M: Paragraphs 4A and 88A apply immediately/retrospectively; 88B–88D from April 1, 2025 (no interim disclosure before March 31, 2026).
• Ind AS 28 (Investments in Associates and Joint Ventures):
• Substituted Appendix 1, paragraph 6: Omitted IAS 28 paragraph 45J (related to IFRS 17/4 exemptions, under formulation), retaining numbers.
• Ind AS 32 (Financial Instruments: Presentation):
• In Appendix A, substituted heading before AG36 to “Treasury Shares (paragraphs 33-34)”.

Additional Notes from Uploaded Pages:

• The summary image confirms the notification’s structure, including short title, commencement, and specific amendments to Ind AS 101, 107, and 1, aligning with the detailed text.
• Clarifications in Ind AS 1 (e.g., paragraphs 69–75) emphasize that long-term loan arrangements need not be classified as current if breaches are waived before financial statement approval, with added disclosure requirements.
• Supplier finance arrangements (Ind AS 7, paragraphs 44F–44H) and Pillar Two tax reforms (Ind AS 12, paragraphs 88A–88D) are newly introduced, with effective dates and transitional reliefs specified.

Conclusion:
The original summary is largely accurate but has been refined for clarity and completeness, incorporating details from the uploaded pages (e.g., specific paragraph substitutions and effective dates). The amendments enhance financial reporting transparency, align with IFRS, and provide transitional guidance, effective as published unless otherwise stated (e.g., April 1, 2025, or 2026). The principal rules (2015) were last amended on May 7, 2025 (G.S.R. 291(E)).

Notification

Also Read: MCA Update on New Company Forms (Effective 14th July 2025)

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