Companies Indian Accounting Standards Amendment Rules 2021
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 18th June, 2021
G.S.R. 419(E).—In exercise of the powers conferred by section 133, read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government, in consultation with the National Financial Reporting Authority, hereby makes the following rules further to amend the Companies (Indian Accounting Standards) Rules, 2015, namely:-
1. Short title and commencement.-
(1) These rules may be called the Companies (Indian Accounting Standards) Amendment Rules, 2021.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Indian Accounting Standards) Rules, 2015, in the ―Annexure‖, under the heading ―B. Indian Accounting Standards (Ind AS)‖,-
- (A) in ―Indian Accounting Standard (Ind AS) 101‖, in ―Appendix B‖,-
(i) in paragraph B1, for item (d), the following shall be substituted, namely:-―(d) classification and measurement of financial instruments (paragraphs B8-B8C); ‖;
(ii) for heading before paragraph B8, the following shall be substituted, namely:- ―Classification and measurement of financial instruments‖;
- (B) in ―Indian Accounting Standard (Ind AS) 102‖, –
(i) after paragraph 63D, the following shall be inserted, namely:- ―63E Amendments to References to the Conceptual Framework in Ind AS issued in 2021 amended the footnote to the definition of an equity instrument in Appendix A. An entity shall apply that amendment for annual periods beginning on or after 1 April, 2021. An entity shall apply the amendment to Ind AS 102 retrospectively, in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. However, if an entity determines that retrospective application would be impracticable or would involve undue cost or effort, it shall apply the amendment to Ind AS 102 by reference to paragraphs 23–28, 50–53 and 54F of Ind AS 8.‖;
(ii) in Appendix A, for the footnote relating to ―equity instrument‖, the following shall be substituted, namely:- ―* The Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India, defines a liability as a present obligation of the entity to transfer an economic resource as a result of past events.‖;
(C) in ―Indian Accounting Standard (Ind AS) 103‖, for paragraph 11, the following shall be substituted, namely:- ―11 To qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Framework for the Preparation and Presentation of Financial Statements in accordance with Indian Accounting Standards* issued by the Institute of Chartered Accountants of India at the acquisition date. For example, costs the acquirer expects but is not obliged to incur in the future to effect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree‘s employees are not liabilities at the acquisition date. Therefore, the acquirer does not recognise those costs as part of applying the acquisition method. Instead, the acquirer recognises those costs in its post-combination financial statements in accordance with other Ind AS.‖;
(D) in ―Indian Accounting Standard (Ind AS) 104‖, –
(i) after paragraph 20, the following shall be inserted, namely:-
- ―20A-20Q [Refer Appendix 1] 20R-20S [Refer Appendix 1]‖;
(ii) after paragraph 35, the following shall be inserted, namely:-
- ―35A [Refer Appendix 1] 35B-35N [Refer Appendix 1]‖;
(iii) after paragraph 39A, the following shall be inserted, namely:-
- ―39B-39M [Refer Appendix 1]‖;
(iv) for heading before paragraph 40, the following shall be substituted, namely:-
- ―Effective date and transition‖;
(v) after paragraph 41I, the following shall be inserted, namely:-
- ―42-51 [Refer Appendix 1]‖;
(vi) in Appendix 1,
- (a) paragraph 3 and 4 shall be renumbered as 4 and 5 respectively;
- (b) after paragraph 2, the following shall be inserted, namely:-
―3. IFRS 4 contains provisions that address concerns arising from the different effective dates of IFRS 9 and the forthcoming Insurance Contracts Standard, IFRS 17. IFRS 4 provides two optional approaches: a temporary exemption from applying IFRS 9; and an overlay approach. It provides the following two options for entities that issue insurance contracts within the scope of IFRS 4:
- the option to recognise in other comprehensive income, rather than profit or loss, the volatility that could arise when IFRS 9 is applied before the new insurance contracts Standard is issued; and
- give companies whose activities are predominantly connected with insurance an optional temporary exemption from applying IFRS 9 until 2023.
The above optional temporary exemptions have not been provided under Ind AS 104.
In the context of optional temporary exemptions from applying IFRS 9, paragraphs 3 and 5 have been amended and paragraphs 20A-20Q, 35A-35N, 39B-39M, 46-49 have been added in IFRS
4. Since temporary optional exemptions have not been provided under Ind AS 104, these paragraphs have not been included in Ind AS 104. However, paragraph numbers have been retained in Ind AS 104 to maintain consistency with IFRS 4.
Amendments to Interest Rate Benchmark Reform—Phase 2 added paragraphs 20R-20S in IFRS 4 which prescribes that an insurer applying the temporary exemption from IFRS 9 shall read certain paragraph references of IAS 39 in place of paragraph references of IFRS 9. Since temporary optional exemptions have not been provided under Ind AS 104, these paragraphs have not been included in Ind AS 104. However, paragraph numbers have been retained in Ind AS 104 to maintain consistency with IFRS 4.‖;
(c) for paragraph 5, as so re-numbered, the following shall be substituted, namely:-
―5. Paragraphs 40-41F, and 41H, and 42-51 related to effective date and transition have not been included in Ind AS 104 as these are not relevant in Indian context. However, in order to maintain consistency with paragraph numbers of IFRS 4, these paragraph numbers are retained in Ind AS 104.‖;
(E) in ―Indian Accounting Standard (Ind AS) 105‖, in ―Appendix A‖, in the definition of ―recoverable amount‖, for the words ―fair value less costs to sell‖, the words ―fair value less costs of disposal‖ shall be substituted;
(F) in ―Indian Accounting Standard (Ind AS) 106‖, –
(i) for paragraph 10, the following shall be substituted, namely:-
―10 Expenditures related to the development of mineral resources shall not be recognised as exploration and evaluation assets. The Conceptual Framework for Financial Reporting under Indian Accounting Standards issued by the Institute of Chartered Accountants of India and Ind AS 38, Intangible Assets, provide guidance on the recognition of assets arising from development.‖;
(ii) after paragraph 25, the following shall be inserted, namely:-
―Effective date
26 [Refer Appendix 1]
26A Amendments to References to the Conceptual Framework in Ind AS issued in 2021, amended paragraph 10. An entity shall apply that amendment for annual periods beginning on or after
1 April, 2021. An entity shall apply the amendment to Ind AS 106 retrospectively in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. However, if an entity determines that retrospective application would be impracticable or would involve undue cost or effort, it shall apply the amendment to Ind AS 106 by reference to paragraphs 23–28, 50–53 and 54F of Ind AS 8.‖;
(iii) in Appendix 1,for paragraph 1, the following shall be substituted, namely:-
―1. Paragraph 26 of IFRS 6 related to Effective Date has not been included in Ind AS 106 since it is not relevant in Indian context. The transitional provisions given in IFRS 6 have not been given in Ind AS 106, since all transitional provisions related to Ind ASs, wherever considered appropriate have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards, corresponding to IFRS 1, First-time Adoption of International Financial Reporting Standards.‖;
(G) in ―Indian Accounting Standard (Ind AS) 107‖, –
(i) in paragraph 24G, in item (c), for the words, figures, brackets and letter ―paragraph 6.7.4(b) of Ind AS 109‖, the words, figures and letters ―paragraph 6.7.4 of Ind AS 109‖ shall be substituted.;
(ii) after paragraph 24H, the following shall be inserted, namely:-
―Additional disclosures related to interest rate benchmark reform
24I To enable users of financial statements to understand the effect of interest rate benchmark reform on an entity‘s financial instruments and risk management strategy, an entity shall disclose information about:
(a) the nature and extent of risks to which the entity is exposed arising from financial instruments subject to interest rate benchmark reform, and how the entity manages these risks; and
(b) the entity‘s progress in completing the transition to alternative benchmark rates, and
how the entity is managing the transition.
24J To meet the objectives in paragraph 24I, an entity shall disclose:
(a) how the entity is managing the transition to alternative benchmark rates, its progress at the reporting date and the risks to which it is exposed arising from financial instruments because of the transition;
(b) disaggregated by significant interest rate benchmark subject to interest rate benchmark reform, quantitative information about financial instruments that have yet to transition to an alternative benchmark rate as at the end of the reporting period, showing separately:
(i) non-derivative financial assets;
(ii) non-derivative financial liabilities; and
(iii) derivatives; and
(c) if the risks identified in paragraph 24J(a) have resulted in changes to an entity‘s risk
management strategy (see paragraph 22A), a description of these changes.‖;
(iii) in paragraph 35A, in item (a), for the word, figures and letters ―paragraph 35J ‖, the word, figures, letters and brackets ―paragraph 35J(a) ‖ shall be substituted;
(iv) in paragraph 35G, in sub-item (ii) of item (a), for the word ―have‖, the word ‗has‖ shall be substituted; ……………. Click here for read more.