IFRS vs Ind AS 20: Key Differences Every Indian Accountant Should Know

While IFRS and Ind AS 20 seem similar, key differences can affect how Indian enterprises present their financial statements. It is especially useful for students pursuing an IFRS course or are already studying it, as well as for those who deal with multinationals.

What is IFRS? International Financial Reporting Standards is an international standard of accounting rules formulated by the International Accounting Standards Board (IASB). Ind AS stands for Indian Accounting Standards, which are similar to IFRS standards but with changes applicable to the Indian environment. 

IFRS vs Ind AS 20: Main Differences Every Indian Accountant Must Be Aware Of

1. Overall Convergence Between IAS 20 and Ind AS 20

Ind AS 20 is based on IAS 20 and follows the same broad accounting principle for government grants. The government grant will be recognised only when there is reasonable assurance that the entity will comply with the grant terms and receive the grant.

For an accountant enrolled in an IFRS course, this matters because the recognition process does not change much under either system. Grants are recognised in profit or loss systematically over periods in which the entity recognises the related costs. This matching principle prevents the entity from recognising the entire grant as income immediately when related expenses arise over several reporting periods.

2. Measurement of Non-Monetary Government Grants

One difference frequently mentioned in older comparisons relates to non-monetary government grants. IAS 20 permits an entity to measure certain non-monetary government grants at either fair value or nominal amount. Historically, Ind AS 20 did not provide the same option and required fair value measurement.

However, this is no longer a current difference! The relevant amendments to Ind AS 20 made the nominal value option available from 1 April 2018. Therefore, current Ind AS 20 is aligned with IAS 20 on this point. An IFRS course covering Ind AS comparisons must use the amended position rather than reproduce the older pre-2018 distinction. 

3. Presentation of Grants Related to Assets

IAS 20 permits two approaches for presenting government grants related to assets! An entity can present a grant as deferred income and recognise it systematically over the useful life of the related asset, or it can deduct the grant from the carrying amount of the asset. IAS 20 permits both approaches.

Historically, Ind AS 20 permitted only the deferred income approach, which differs from IAS 20. However, the Indian standard was subsequently amended, and the option to deduct the grant from the carrying amount of the related asset was made available from 1 April 2018. Therefore, this should not be presented as a current difference when writing an updated IFRS course article. 

4. Presentation of Grants Related to Income

IAS 20 and Ind AS 20 require grants related to income to be recognised systematically in profit or loss over periods necessary to match them with related costs. Such grants may be presented separately or under a general heading like other income or deducted from the required expense, subject to applicable presentation requirements.

India has a specific presentation consideration arising from the structure of Ind AS financial statements. Ind AS uses a Statement of Profit or Loss presentation, and certain provisions concerning a separate income statement in IAS 20 were removed as a consequence of Ind AS 1 not permitting the same two-statement presentation option. This is a useful technical distinction for professionals taking IFRS course and comparing detailed presentation requirements under two frameworks. 

5. Government Loans Provided at Below-Market Interest Rates

Both standards address the benefit received when the government provides a loan at a below-market interest rate. Under Ind AS 20, the loan itself is recognised and measured under Ind AS 109, while the benefit arising from the below-market interest rate is treated as a government grant. The benefit is measured as the difference between the loan’s initial carrying amount under Ind AS 109 and the proceeds received.

IAS 20 contains substantially similar requirements, with the loan accounted for under the applicable financial instrument requirements and the below-market-rate benefit treated as a government grant. This area demonstrates strong convergence between the two standards rather than major accounting differences. For an IFRS course, it’s relevant as it illustrates how IAS 20 interacts with IFRS 9, while Ind AS 20 interacts with Ind AS 109. 

6. Terminology, Presentation and Indian-Specific Modifications

Although the underlying principles have converged, Ind AS 20 includes India-specific modifications. For instance, terminology differs – Ind AS uses terms like ‘Balance Sheet’ and ‘Statement of Profit and Loss,’ whereas IFRS standards use ‘Statement of Financial Position’ and ‘Statement of Comprehensive Income’ in corresponding contexts. Ind AS omits certain IAS 20 provisions that it considers irrelevant in the Indian reporting framework.

These differences reflect Ind AS’s broader approach. The standards are based on IFRS but are not word-for-word copies; ICAI notes that Ind AS contains carve-outs and carve-ins to make requirements appropriate for India’s economic and legal environment. Understanding what is IFRS and how it differs from Ind AS helps accountants understand international principles and corresponding Indian modifications so they can apply the correct framework in practice.

Conclusion

Understanding the differences between IFRS and Ind AS is important for Indian accountants working in financial reporting, compliance, and international business. Ind AS is converged with IFRS; certain differences in recognition, measurement, presentation and disclosures can affect how financial statements are prepared and interpreted. 

Are you interested in gaining knowledge about international accounting standards? Register for the IFRS course at Zell Education and gain practical experience in IFRS standards. 

FAQs

1. Is Ind AS the same as IFRS?

No, Ind AS is largely converged with IFRS; it includes certain differences and carve-outs.

2. Can knowledge about IFRS benefit accountants in India?

Yes, IFRS knowledge will benefit careers in international reporting and with multinationals.

3. Which one should I learn: IFRS or Ind AS?

Both are equally important, but IFRS will be more beneficial for professionals who want global exposure to financial reporting.