Ind AS 118, Presentation and Disclosure in Financial Statements, is India’s proposed convergence with IFRS 18. The Institute of Chartered Accountants of India (ICAI) issued the Exposure Draft in January 2025. The National Financial Reporting Authority (NFRA) has since recommended the standard to the Central Government for notification, with mandatory application proposed for annual reporting periods beginning on or after 1 April 2027. As of October 2026, Ministry of Corporate Affairs (MCA) notification is still awaited.
Like IFRS 18, Ind AS 118 does not change how companies measure assets, liabilities, income or expense. It changes how performance is presented and disclosed — especially in the statement of profit and loss.
Why India needs Ind AS 118
Investors have long struggled to compare “operating profit” and other performance labels across companies. Different entities used different definitions, and many adjusted measures sat outside audited financial statements. Ind AS 118 answers that by defining categories and subtotals, bringing certain management measures into a single audited note, and tightening how information is grouped and labelled.
What the standard requires
- Withdraws and replaces Ind AS 1 as the primary presentation standard (with related material moved to Ind AS 8 and Ind AS 107 where appropriate).
- Classifies all income and expense into five categories: operating, investing, financing, income taxes, and discontinued operations.
- Makes two subtotals compulsory in profit or loss: operating profit; and profit before financing and income taxes.
- Requires disclosure of management-defined performance measures (MPMs) in one note, bringing them within the audit perimeter when they meet the standard’s definition.
- Allows expenses to be presented by nature or by function, with a structured nature analysis when function presentation is used.
- Strengthens principles for aggregation and disaggregation, and constrains catch-all captions labelled “other”.
- Aligns the starting point of the indirect cash flow statement with operating profit (subject to the final notified text and consequential amendments to Ind AS 7).
What does not change
Recognition and measurement stay under the existing Ind AS suite (for example Ind AS 115, 109, 116 and 12). Profit before tax and profit after tax remain the familiar bottom-line anchors. Book profit for MAT is not disturbed merely because presentation lines rearrange above those totals.
Practical next steps for boards and CFOs
- Map every material P&L and cash-flow line to the five categories.
- Document the entity’s main business activity assessment (critical for entities that invest in assets or provide finance to customers).
- Inventory non-GAAP measures used in earnings releases, investor decks and website disclosures that may become MPMs.
- Plan ledger and ERP tagging so comparative year data can be restated without a forensic rebuild.
General information based on the ICAI Exposure Draft, NFRA recommendations and publicly discussed timelines. The final MCA-notified Ind AS 118 may differ. Obtain advice for your facts and monitor notification status.