Five years after pulling the plug at the 11th hour on its first bid to adopt IFRS, the transformative benefits of the global standards have drawn India back for another try
Accountants in India are once again preparing to adopt International Financial Reporting Standards (IFRS) after an announcement by the new government under prime minister Narendra Modi. However, major corporations and their accountants remain wary, having wasted resources five years ago when the previous government abandoned similar plans at the last moment.
Harinderjit Singh, senior partner at the India branch of PwC, says: 'Last time, we got a lot of assignments to prepare companies for IFRS, but then all the dates flipped. Today, clients have become very sceptical and are waiting for some concrete dates.'
When presenting the national budget in July, India's finance minister, Arun Jaitley, proposed the mandatory adoption of IFRS from April 2016 for listed and large private companies. 'There is an urgent need to converge the current Indian accounting standards with IFRS,' he said. Companies
can start reporting with IFRS from 2015/16 if they choose, but IFRS will be required for the 2016/17 fiscal year. However, the policy has not become law yet, and it is not immediately clear when it will be implemented. A similar promise was made by former prime minister Manmohan Singh during
the G20 summit in 2009; he announced that India would adopt IFRS from April 2011, but just two months before the deadline the government deferred implementation indefinitely.
Lack of clarity on the tax implications was given as themain reason for the delay, along with protests from industry and businesses worried they would not be ready in time for the deadline. Amarjit Chopra, former president of the Institute of Chartered Accountants of India (ICAI) and former chairman of its IFRS implementation committee, says: 'The obstacles were raised by industry at the last moment because it feared many tax issues. When we did everything on Earth possible to see that it went through, the government backed out.' Highlighting the fears of corporate boards, he says: 'The moment you go into fair valuation, your income will be taxed. But it is not clear that, if you have fair-value losses, whether the government would allow them [to be considered for taxation].' - Read More at page 33 -
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