Ind AS 118’s biggest Indian friction is not conceptual — it is format. Division II of Schedule III to the Companies Act, 2013 still prescribes a statement of profit and loss that does not show a defined operating profit line, keeps finance costs inside total expenses, and analyses expenses by nature. Listed entities also report quarterly results under SEBI formats that currently mirror that structure.
Where the formats clash
- Schedule III has no compulsory operating profit line of the kind Ind AS 118 requires.
- Finance costs sit inside total expenses, above profit before tax, rather than below the second Ind AS 118 subtotal.
- Expenses are presented by nature only in the prescribed format, while Ind AS 118 permits function presentation with a nature note.
- SEBI’s financial-results format under the LODR framework has no dedicated home yet for the MPM note that Ind AS 118 contemplates inside audited financial statements.
What NFRA has recommended
In recommending Ind AS 118 for notification (with a proposed effective date of periods beginning on or after 1 April 2027), NFRA also flagged the need for consequential work by other regulators. Publicly discussed recommendations include:
- MCA considering amendments to Schedule III so statutory formats can accommodate the new subtotals and classifications.
- SEBI reviewing circulars and guidance so listed-entity reporting — including quarterly results — can align with Ind AS 118 disclosures such as MPMs.
Until those consequential changes land, companies should design the “true” Ind AS 118 presentation for group and investor reporting, and maintain a clear mapping to the legal / SEBI formats that remain in force.
Tax and MAT comfort
Because Ind AS 118 is a presentation and disclosure standard, profit after tax does not change merely from reordering lines. Book profit computations that start from reported PAT are therefore not inherently disturbed — but companies should still document the bridge from Ind AS 118 lines to Schedule III and tax workpapers.
Working approach while formats catch up
- Maintain a dual mapping: Ind AS 118 categories ↔ Schedule III / SEBI line items.
- Keep MPM inventory and reconciliations ready even if quarterly formats cannot yet host the full note.
- Brief the audit committee on residual differences between investor packs and statutory formats.
- Monitor MCA notification language and any Schedule III / SEBI amendments in the same package.
Design to the standard; keep a mapping to the format. The format will follow.
Regulatory formats change by notification and circular. Verify current Schedule III, SEBI LODR formats and MCA / NFRA updates before filing.