Most Singapore businesses entering India discover—only after the fact—that their SFRS(I) knowledge covers surprisingly little ground here. India operates a dual-standard system covering Indian GAAP, Ind AS, GST compliance, and oversight from the Institute of Chartered Accountants of India (ICAI), the Ministry of Corporate Affairs (MCA), and the National Financial Reporting Authority (NFRA). Underestimating this complexity leads to compliance gaps, restatements, and penalties that could have been avoided.
This guide walks through India's core accounting principles, compares them to Singapore's SFRS framework, and maps out which standards apply to your entity based on net worth and listing status—from statutory audit requirements to transfer pricing documentation and dual-reporting obligations.
TLDR:
India operates a two-tier accounting system designed to balance global convergence with local regulatory needs. Smaller and unlisted companies follow legacy Indian GAAP (Accounting Standards AS 1–32), while larger companies and all listed entities adopt Ind AS (Indian Accounting Standards), which are converged with—but not identical to—IFRS.
For Singapore businesses setting up Indian subsidiaries, this distinction is critical. Your entity's net worth and ownership structure determine which framework applies, and the decision is irreversible once made.
Four primary institutions shape India's accounting landscape:
If you're establishing a listed Indian subsidiary or a large unlisted entity, expect oversight from all four bodies—not just ICAI.
Indian GAAP refers to the 27 operative Accounting Standards (AS 1–32) issued by ICAI and notified by MCA under the Companies (Accounting Standards) Rules, 2021. These apply to companies below the Ind AS thresholds.
Five standards are not operative:
StandardStatusReasonAS 6, AS 8WithdrawnMerged into AS 10 and AS 26AS 30, 31, 32Never notifiedSuperseded by Ind AS 109, 32, and 107
Indian GAAP is rules-based, rooted in domestic business practices, and emphasizes historical cost accounting. It's simpler than Ind AS but lacks the fair value measurements and disclosure granularity that IFRS-converged frameworks demand.
Ind AS was introduced to align India's accounting with global norms, making Indian subsidiary financials easier to consolidate at the Singapore parent level. While largely aligned with IFRS, Ind AS includes 10+ India-specific carve-outs that create practical differences for Singapore parent companies consolidating Indian subsidiary results.
Key Ind AS carve-outs from IFRS:
Mandatory applicability thresholds:
PhaseCriteriaEffective DatePhase IListed companies OR unlisted with net worth ≥ ₹500 croreApril 1, 2016Phase IIUnlisted companies with net worth ≥ ₹250 croreApril 1, 2017
These thresholds don't tell the full story. If your Indian subsidiary is a holding company, subsidiary, JV, or associate of an entity already covered under Ind AS, it must also adopt Ind AS—regardless of its own net worth. Once adopted, reversion to Indian GAAP is prohibited under Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015.
Getting this classification wrong at incorporation can force costly restatements later. VJM Global helps Singapore businesses identify the correct framework for their specific entity structure before they register — not after.
India's accounting standards—both Indian GAAP and Ind AS—are built on principles that directly affect how your Indian subsidiary records transactions and meets compliance obligations. Several of these interact with India's tax system in ways that catch Singapore businesses off guard.
Income and expenses are recorded when earned or incurred, not when cash changes hands. Section 128(1) of the Companies Act 2013 mandates that all Indian companies maintain books on an accrual basis using double-entry accounting.
Why this matters in India:
Financial statements assume the business will continue operating indefinitely, which affects asset and liability valuation. AS 1 codifies this as a fundamental assumption under Indian GAAP; departure requires explicit disclosure.
For Singapore businesses evaluating exit strategies or restructuring Indian operations, this matters practically: any indicators of discontinuance must be disclosed and can trigger different asset measurement bases entirely.
Expenses must be recognized in the same period as the revenues they helped generate. Accurate matching also feeds directly into India's advance tax payment schedule, where estimation errors carry interest penalties:
Due DateCumulative % of Estimated Annual TaxJune 1515%September 1545%December 1575%March 15100%
Mismatched expense recognition can lead to advance tax estimation errors and interest penalties.
Accountants recognize probable losses immediately but only record gains when realized. This prevents overstatement of financial position.
Key difference between frameworks:
All material information affecting stakeholders' understanding must be disclosed. This is particularly critical for:
Singapore's SFRS(I) is identical to IFRS as of January 1, 2018. India's Ind AS is converged with IFRS but includes carve-outs and local requirements that create practical reporting differences.
Both frameworks follow the same conceptual foundation—accrual accounting, fair presentation, going concern, and materiality. Revenue recognition (SFRS(I) 15 / Ind AS 115), lease accounting (SFRS(I) 16 / Ind AS 116), and financial instruments (SFRS(I) 9 / Ind AS 109) are aligned at the standard level.
But: India's carve-outs mean identical transactions can produce different numbers.
Both prohibit LIFO (Last-In, First-Out) and require FIFO or weighted average cost. Both measure inventory at lower of cost and net realizable value (NRV), with mandatory reversal of write-downs when NRV subsequently increases.
India-specific nuance: Ind AS 2 requires detailed disclosure of inventory write-down reversals, and ICAI has issued sector-specific guidance (for example, construction and pharmaceuticals) that Singapore accountants may not encounter under SFRS(I).
Both follow the five-step model under IFRS 15. However:
Beyond the areas of convergence, three compliance requirements apply exclusively in India—none have direct equivalents in Singapore's reporting framework.
Under Sections 194 and 195 of the Income Tax Act 1961, payers must deduct tax at source on specified payments, including all payments to non-residents if chargeable to tax in India. This creates:
Every invoice must track TDS deduction status—a requirement with no parallel in Singapore's GST system. For Singapore businesses with Indian subsidiaries, TDS compliance tracking needs to be built into both accounts payable and receivable processes from day one.
GSTR-2B is a monthly auto-generated statement (available on the 14th of every month) showing ITC available based on supplier filings. Claiming ITC for invoices not reflected in GSTR-2B is impermissible—creating a financial reporting obligation unique to India.
In practice, this means your books must reconcile against GSTR-3B returns monthly, with ineligible transactions identified and interest computed on any excess claims. VJM Global's GST reconciliation service handles this process for clients, reducing the risk of compliance gaps.
Section 128(1) of the Companies Act 2013 requires every company to maintain books of account in India, on accrual basis, using double-entry accounting. Books must be maintained in Indian Rupees—no exceptions.
Singapore parent companies accustomed to maintaining consolidated records in SGD must ensure their Indian subsidiary maintains separate, compliant INR-denominated books.
Applicability depends on entity type, net worth, and ownership structure — and getting this wrong at incorporation creates compliance gaps that are costly to fix later. Singapore businesses typically establish one of three entity types in India, each with a different accounting obligation:
Entity TypeGoverning LawAccounting FrameworkKey Filing ObligationsWholly Owned SubsidiaryCompanies Act 2013, MCAInd AS or Indian GAAP (net worth-based)Statutory audit by ICAI-registered CA; AOC-4 (financials) and MGT-7 (annual return) with MCALiaison OfficeRBI/FEMANo Indian GAAP/Ind AS mandate (not a company)Annual Activity Certificate (AAC) from CA to RBI and AD Bank by September 30; cannot earn income in IndiaBranch OfficeRBI/FEMAMust maintain books and file accountsAAC from CA + audited Balance Sheet to RBI by September 30; file annual accounts with RBI and MCA
If you're establishing a wholly owned subsidiary incorporated in India, the following thresholds apply:
Critical: Once Ind AS is adopted (whether mandatory or voluntary), you cannot revert to Indian GAAP—even if net worth subsequently falls below the threshold.
VJM Global works with foreign businesses entering India to identify the correct accounting framework at incorporation and manage transitions when subsidiaries cross Ind AS thresholds — before a compliance gap appears on an auditor's report.
Section 128(1) mandates that Indian companies maintain specific records:
Singapore businesses accustomed to flexible SME accounting practices often underestimate how rigid India's statutory book requirements are. Non-compliance can result in penalties and direct liability for company directors.
The most frequently missed obligations include:
Under Section 139(1) of the Companies Act 2013, every company must appoint an auditor—regardless of revenue, assets, or employee count. Singapore businesses are often surprised by this — there is no equivalent small-company exemption in India.
Singapore's audit exemption (for comparison):
Under Section 205C, a Singapore private company qualifies for audit exemption if it meets 2 of 3 criteria for two consecutive years:
CriterionThresholdTotal annual revenue≤ S$10 millionTotal assets≤ S$10 millionNumber of employees≤ 50
India has no equivalent exemption. Every Indian company—including small subsidiaries with minimal revenue—must have statutory audit by an ICAI-registered Chartered Accountant.
VJM Global coordinates statutory audits for foreign-owned Indian companies, ensuring CA registration requirements are met and audit schedules align with both Indian statutory deadlines and Singapore parent reporting timelines.
Transactions between a Singapore parent and its Indian subsidiary are international related-party transactions governed by Sections 92–92F of the Income Tax Act 1961.
Documentation requirements (Rule 10D):
Penalties under Section 271AA:
ViolationPenaltyFailure to maintain/furnish TP documentation2% of transaction valueFailure to furnish Master File (consolidated revenue > ₹500 crore)₹5,00,000 (fixed)Failure to furnish Form 3CEB (TP Audit Report)₹1,00,000 (fixed)
Ind AS 24 also requires disclosure of all related-party transactions in financial statements, including amounts, outstanding balances, and terms.
VJM Global supports Singapore parent companies with contemporaneous TP documentation, benchmarking studies, and Ind AS 24 disclosures — helping clients demonstrate that intercompany pricing reflects what unrelated parties would agree to and avoid the 2% transaction penalty.
Singapore parent companies typically need two sets of financials:
Ind AS 21 prescribes how to translate foreign currency transactions and operations. For Indian subsidiaries:
Exchange rate context: As of May 2026, the SGD/INR mid-market rate is approximately ₹74.27 per SGD, with a 6-month average around ₹71.25. The rate ranged from ₹67.75 (November 2025) to ₹74.60 (May 2026). That spread is meaningful volatility — plan for consolidation translation adjustments accordingly.
Use accounting software that supports:
Establish clear month-end close timelines:
Indian statutory deadlines:
FormPurposeDeadlineAOC-4Financial statementsWithin 30 days from AGMMGT-7Annual returnWithin 60 days from AGMAGMAnnual General MeetingWithin 6 months from year-end (by September 30 for March 31 year-end)
Singapore parent consolidation deadlines vary by company but typically align with quarterly reporting cycles.
Managing both sets of books across two jurisdictions is where many Singapore finance teams run into delays. VJM Global handles Indian subsidiary books (Ind AS/Indian GAAP in INR) while your Singapore team focuses on SFRS(I) group consolidation, keeping both sets of accounts audit-ready and deadline-compliant.
India uses two sets of standards: Indian GAAP (27 operative Accounting Standards AS 1–32) for smaller and unlisted companies, and Ind AS (IFRS-converged Indian Accounting Standards) for listed companies and unlisted entities with net worth ≥ ₹250 crore. Both are governed by ICAI and MCA, with NFRA providing independent oversight for listed entities.
US GAAP is rules-based and developed by FASB for the US market; Indian GAAP is principles-based and shaped by India's regulatory environment. Key divergences include inventory methods (LIFO allowed under US GAAP, prohibited in India), lease accounting models, and financial instrument impairment approaches. Ind AS 109 uses a three-stage ECL model, while US GAAP applies lifetime expected losses immediately.
The five most commonly cited principles are accrual (record when earned/incurred), going concern (business continues indefinitely), matching (expenses recognized with related revenues), conservatism (recognize losses immediately, gains when realized), and full disclosure (all material information disclosed). India's ICAI-issued standards incorporate all five as foundational concepts.
The seven basic principles are economic entity, monetary unit, time period, historical cost, full disclosure, going concern, and matching. Indian standards recognize all seven; Ind AS introduces fair value exceptions to historical cost for specific asset classes such as financial instruments and investment properties.
The 12 GAAP principles are regularity, consistency, sincerity, permanence of methods, non-compensation, prudence, continuity, periodicity, materiality, utmost good faith, recognition, and disclosure. India's Ind AS incorporates all of these while layering in IFRS alignment — which matters directly to Singapore businesses managing dual-reporting obligations for Indian subsidiaries.
Ready to get your Indian subsidiary's accounting right from the start? VJM Global's ICAI-registered Chartered Accountants and cross-border specialists support Singapore businesses at every stage — from Ind AS applicability assessments to statutory audit coordination and management reporting. With 30+ years of experience helping foreign companies navigate India's accounting landscape, we bring practical expertise to every engagement. Reach us at info@vjmglobal.com or +91-9213397070 to discuss your India expansion needs.
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