Companies (Accounting Standards) Rules, 2021

The Ministry of Corporate Affairs through notification dated 23rd June, 2021 has notified the Companies (Accounting Standards) Rules, 2021. It provides Accounting Standards 1 to 5, 7 and 9 to 29 as recommended by the Institute of Chartered Accountants of India (As per Annexure to the said notification).
The Accounting Standards shall come into effect in respect of accounting periods commencing on or after the 1st day of April, 2021.

It also provides revised criteria to qualify as “Small and Medium Sized Company” (SMC).
As per revised definition, Small and Medium Sized Company (SMC) means a company –
  1. Whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India;
  2. Which is not a bank, financial institution or an insurance company;
  3. Whose turnover (excluding other income) does not exceed two hundred and fifty crore rupees in the immediately preceding accounting year;
  4. Which does not have borrowings (including public deposits) in excess of fifty crore rupees at any time during the immediately preceding accounting year; and
  5. Which is not a holding or subsidiary company of a company which is not a small and medium-sized company.
Further, it has also been clarified that any company who was previously not a SMC and subsequently, has become SMC shall not be qualified for exemptions available to SMC in respect of Accounting Standards until it remains SMC for 2 continuous accounting periods. 


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