Ind AS 2nd Amendment Rules, 2025

 The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2025, introducing significant updates across 12 Ind AS standards. These changes, effective from 1 April 2025, aim to align Indian accounting practices more closely with international norms (IFRS), while enhancing transparency and legal clarity in financial reporting.

 

1. Loan Covenants & Liability Classification (Ind AS 1 & 10)

• New disclosures are now mandatory for covenant breaches, grace periods, and refinancing rights.
• Legal teams must review loan agreements and board-level disclosures to ensure compliance with the revised classification of liabilities as current or non-current.
• The amendments clarify that rights to defer settlement must exist at the reporting date and be substantive—not merely expected.

2. Supplier Finance Arrangements (Ind AS 7 & 107)

• Reverse factoring and supply chain finance arrangements now require granular disclosures.
• Entities must report payment terms, amounts settled early, and non-cash changes, impacting how liabilities and cash flows are interpreted.
• Legal contracts involving such arrangements should be reassessed for disclosure obligations.

3. Pillar Two Tax Legislation (Ind AS 12)

• Incorporates OECD’s Pillar Two model rules, introducing:
• Exemptions from deferred tax recognition for global minimum taxes.
• Mandatory disclosures on exposure to Pillar Two taxes.
• Legal and tax advisors must evaluate cross-border structures and jurisdictional risks.

4. Transitional Reliefs & IFRS Alignment (Ind AS 101, 107, 109, 115, 116)

• Updates include:
• Transitional relief for lease classification under Ind AS 116.
• Clarifications on joint arrangements (IFRS 11) and financial instruments (IFRS 9).
• Typographical corrections and reference updates to ensure consistency with IFRS.
• First-time adopters must carefully navigate transitional provisions to avoid compliance pitfalls.

Additional Highlights

• Ind AS 108: Corrected reference from IFRS 108 to IFRS 8.
• Ind AS 28 & 32: Minor updates for consistency with IAS 28 and IAS 32, especially around treasury shares and IFRS 17 references.
• Effective Date: Most provisions apply from 1 April 2025, with staggered transitions for some standards like Ind AS 10 and 12