MCA issues Companies (Indian Accounting Standards) Second Amendment Rules, 2025, effective from August 12, 2026

The Ministry of Corporate Affair (“MCA”) has issued Companies (Indian Accounting Standards) Amendment Rules, 2026 amending the Companies (Indian Accounting Standards) Rules, 2015. The amendment is effective from August 12, 2026.

Key Amendments:

1. An entity shall not reflect in its opening Ind AS Balance Sheet a hedging relationship of a type that does not qualify for hedge accounting in accordance with Ind AS 109 (for example, many hedging relationships where the hedging instrument is a stand-alone written option or a net written option; or where the hedged item is a net position in a cash flow hedge for another risk than foreign currency risk). However, if an entity designated a net position as a hedged item in accordance with previous GAAP, it may designate as a hedged item in accordance with Ind ASs an individual item within that net position, or a net position if that meets the requirements in paragraph 6.6.1 of Ind AS 109, provided that it does so no later than the date of transition to Ind AS.

2. In Ind AS 107:
   • Paragraph 30A is inserted which applies only to contracts to buy nature-dependent electricity that satisfy the requirements in paragraph 2.3A of Ind AS 109 and are outside the scope of that Standard in accordance with paragraphs B2.7–B2.8 of Ind AS 109.
   • Paragraph 30B is inserted which applies only to contracts that satisfy the requirements in paragraph 2.3A of Ind AS 109 and have been designated in a cash flow hedging relationship in accordance with paragraph 6.10.1 of Ind AS 109.
   • Paragraphs like 44LL, 44MM, 44NN, 44OO and others are inserted under the Ind AS 107.

3. Any transfers of the cumulative gain or loss within equity during the reporting period related to the investments derecognized during that reporting period.

4. An entity shall disclose the information required by paragraph 20C of AS 107 by class of financial assets measured at amortized cost or fair value through other comprehensive income and by class of financial liabilities measured at a mortised cost. The entity shall consider how much detail to disclose, the appropriate level of aggregation or disaggregation, and whether users of financial statements need additional explanations to evaluate any quantitative information disclosed.

5. An entity must disclose in a single note in its financial statements information about contracts that meet the criteria set out in paragraph 5B. In particular, the entity shall disclose information that enables users of its financial statements to understand the effects these contracts have on the amount, timing and uncertainty of its future cash flows and on its financial performance.

6. The following terms are defined in paragraph 11 of Ind AS 32, Appendix A of Ind AS 107 or Appendix A of Ind AS 113 and are used in this Standard with the meanings specified in Ind AS 32, Ind AS 107 or Ind AS 113:
   • credit risk;
   • equity instrument;
   • fair value;
   • financial asset;
   • financial instrument; and
   • financial liability.

7. When accounting for an investment in an associate, a joint venture or a subsidiary accounted for at cost, an investor restricts its reporting in the statement of cash flows to the cash flows between itself and the investee, for example, to dividends and advances.

8. Subsequent changes have been made in Ind AS 109 and Ind AS 110.

Source: Ministry of Corporate Affairs