Applicability of Accounting standards -The accounting standards aim at improving the quality of financial reporting by promoting comparability, consistency and transparency, in the interests of users of financial statements.

If you like this article then please like us on Facebook so that you can get our updates in future ……….and subscribe to our mailing list ” freely “

Recommended Articles


It has already been mentioned that the Accounting Standards are developed by the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India and are issued under the authority of its Council. The Institute not being a legislative body can enforce compliance with its standards only by its members. Also, the standards cannot override laws and local regulations. The Accounting Standards are nevertheless made mandatory from the dates specified in respective standards and are generally applicable to all enterprises, subject to certain exception.


The implication of mandatory status of an Accounting Standard depends on whether the statute governing the enterprise concerned requires compliance with the Accounting Standards. The Companies Act had earlier notified 28 accounting standards and mandated the corporate entities to comply with the provisions stated therein. However, in 2016 the MCA has withdrawn AS 6. Hence, effectively there are now only 27 notified Accounting Standards as per the Companies (Accounting Standards) Rules, 2006 (as amended in 2016).

Applicability of Accounting standards

Hello everyone….Here in this article I’m going to discuss a few lines about the applicability of accounting standards…

First of all we should know the classification of non corporate entities as decided by ICAI.

Enterprises to which the accounting standards apply?

Accounting Standards apply in respect of any enterprise (whether organised in corporate, co-operative or other forms) engaged in commercial, industrial or business activities, whether or not profit oriented and even if established for charitable or religious purposes. Accounting Standards however, do not apply to enterprises solely carrying on the activities, which are not of commercial, industrial or business nature, (e.g., an activity of collecting donations and giving them to flood affected people).

Exclusion of an enterprise from the applicability of the Accounting Standards would be permissible only if no part of the activity of such enterprise is commercial, industrial or business in nature. Even if a very small proportion of the activities of an enterprise were considered to be commercial, industrial or business in nature, the Accounting Standards would apply to all its activities including those, which are not commercial, industrial or business in nature

Level-1 entities:

Non corporate entities which fall in any one of the following categories at the end of relevant accounting year are called as level-1 entities:

1.Entities whose equity or debt securities are listed or in the process of listing with any stock exchange whether in India or abroad.

2.Banks, financial institutions or entities carrying in insurance business

3.All commercial, industrial and business reporting entities whose turnover is greater than 50 crores in the immediately preceding accounting period. Here other income is to be ignored in calculation of turnover.

4.All commercial, industrial and business reporting entities whose borrowings including public deposits in excess of 10 crores at any time during the immediately preceding accounting year.

5.Subsidiary or holding entities of any of the above.

Level-2 entities:

Non corporate entities which are not covered in any of the above categories and fall any one of the following categories are level-2 entities.

  • All industrial, commercial and business reporting entities whose turnover exceeds rupees 10 crores but doesn’t exceed rupees 50 crores in the immediately preceding accounting year.
  • All commercial, industrial and business reporting entities whose borrowings including public deposits are above 1 crore but doesn’t exceed 10 crores at any time during the immediately preceding accounting year.
  • Holding and subsidiary entities of any one of the above.

Level-3 entities:

Non corporate entities which are not covered under level-1 and level-2 are considered as level-3 entities.

Applicability of AS:

AS NO. Applicability 
AS-1All entities
AS-2All entities
AS-4All entities
AS-5All entities
AS-6All entities
AS-7All entities
AS-8Not in existence
AS-9All entities
AS-10All entities
AS-11All entities
AS-12All entities
AS-13All entities
AS-14All entities
AS-15All entities
AS-16All entities
AS-18Level-1&2/all companies
AS-19All entities
AS-20Level-1, All companies
AS-21see #
AS-22All entities
AS-23see #
AS-24Level-1&2/ All companies
AS-25Level-1 and any entity which is required to prepare interim financial report
AS-26All entities
AS-27see #
AS-28All entities
AS-29All entities

#….As-21,23 & 27 are mandatory to those entities which require to prepare & present consolidated financial statements.

Recommended Articles

Latest Comments

  1. Is as 15 mandatory for all non corporate assesses ?? As I have read there is some relaxation given to level 2 and 3 enterprises whether this is applicable now or this is an old provision .please suggest me.

  2. Dear sir,

    The given link shows that the level 2 entities are the one which turnover exceeds 1 crore and does not exceed 50 crore. Sir you have mentioned in this article it is 10 crore instead of 1 crore, is this including other income?, please clarify.

  3. please thing…. it is written that banks are covered in Level 1 entities on which all.AS applies….. But in RTP of May 17 a ques is given on pg no.19, in ats answer it is written that AS 13 does not applies, rather it have to.comply with RBI norms….. why it is contradictory…. is im having a conceptual error…..? PLEASE HELP

  4. Dear sir
    As you have mentioned in level II entities – turnover between 10 crore to 50 crore but on ICAI website it is 40 lakhs to 50 crore. Can you please clarify.


Join the Discussion