ICAI 2025 | Key Amendments And Guidance Notes

1. Introduction

The year 2025 witnessed significant regulatory and standard-setting activity by the Institute of Chartered Accountants of India (ICAI), reflecting its continued commitment to strengthening the financial reporting, auditing and assurance. During the year, ICAI issued exposure drafts, implementation guides, manuals, and technical guidance, addressing evolving business practices, global developments in Ind AS/IFRS and auditing standards. Further, ICAI has also amended some of the Ind AS. Considering all the developments, we have prepared consolidated overview of the key amendments, exposure drafts, and technical publications issued by ICAI in 2025, highlighting their scope, objectives, and practical implications for professionals and stakeholders.

2. Amendments

2.1 MCA notifies Ind AS amendments 2025 with key updates on supplier finance, liability classification & Pillar Two taxes

The Companies (Indian Accounting Standards) Second Amendment Rules, 2025 introduce targeted amendments to several Ind AS with the objective of improving clarity, consistency, and alignment with recent IFRS developments. The key amendments and important aspects are summarised below:

(a) Ind AS 1 – Classification of Liabilities:

Detailed guidance has been introduced on classifying liabilities as current or non-current, particularly where loan covenants exist. The amendments clarify that classification depends on the entity’s right to defer settlement at the reporting date, not on management intention or events after the reporting period. Additional disclosure requirements have been introduced where compliance with covenants is required after the reporting date.

(b) Ind AS 7 and Ind AS 107 – Supplier Finance Arrangements:

New disclosure requirements have been introduced for supplier finance (or supply chain finance) arrangements. Entities are required to disclose information on terms, carrying amounts, payment ranges, and the impact of such arrangements on cash flows and liquidity risk.

(c) Ind AS 12 – Pillar Two Income Taxes:

Amendments introduce specific guidance on OECD Pillar Two minimum tax rules. Entities are prohibited from recognising deferred tax assets or liabilities related to Pillar Two taxes and are required to provide specific disclosures on current tax and exposure to such legislation.

Overall, the amendments focus on improving transparency, especially in relation to liability classification, supplier finance arrangements, and international tax reforms, and are effective mainly from 1st April 2025, with certain provisions applicable from 1st April 2026.

3. Exposure Drafts issued in the year 2025

3.1 Exposure draft of Ind AS 118: Presentation and Disclosure in Financial Statements

The Institute of Chartered Accountants of India (ICAI) has issued an exposure draft of Ind AS 118,Presentation and Disclosure in Financial Statements which deals with how information is presented and disclosed in financial statements. This draft is aligned with IFRS 18, issued by the International Accounting Standards Board (IASB) in April 2024.

IFRS 18 introduces a new and structured approach to presenting income and expenses by classifying them into five categories: operating, investing, financing, income taxes, and discontinued operations. It also prescribes new mandatory subtotals in the statement of profit or loss and enhances disclosure requirements, particularly in relation to management-defined performance measures.

Ind AS 118 is proposed to be applied in India for financial reporting periods beginning on or after 1st April 2027, consistent with the global effective date of IFRS 18, which applies from 1stJanuary 2027.

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3.2 Exposure draft on Ind AS 109 and Ind AS 107 for electricity contracts dependent on natural sources

ICAI has issued an exposure draft proposing amendments to Ind AS 109 and Ind AS 107 to clarify the accounting and disclosure requirements for contracts linked to nature-dependent electricity, such as solar and wind power. The amendments provide guidance on when such contracts fall within Ind AS 109, Financial Instruments and permit their use in hedge accounting for future electricity consumption.

The draft also enhances disclosure requirements under Ind AS 107, Financial Instruments: Disclosuresrequiring entities to explain the impact of these contracts on cash flows, unused electricity, and related risks. The proposed transition provisions allow limited retrospective application. Overall, the amendments aim to improve clarity, transparency, and risk management for renewable energy–linked electricity contracts.

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3.3 Exposure draft on amendment of Ind AS 21

Indian Accounting Standards (Ind AS) are substantially converged with the IFRS Standards issued by the International Accounting Standards Board (IASB). As IFRS Standards are issued or amended from time to time, the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) reviews these changes to assess the need for corresponding updates to Ind AS and to maintain alignment.

As part of this ongoing convergence process, the ASB has issued an Exposure Draft inviting public comments on the “Amendments to Ind AS 21, Translation to a Hyperinflationary Presentation Currency.

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3.4 Exposure draft of the manual on Concurrent Audit of Banks

The Internal Audit Standards Board of ICAI has issued an exposure draft of the “Manual on Concurrent Audit of Banks” to guide members in conducting consistent, high-quality, and effective concurrent audits. The draft explains the objectives, scope, and approach of concurrent audits and highlights their role in strengthening banks’ internal controls and risk management.

It provides practical guidance on audit planning, execution, documentation, and reporting, in line with RBI regulations and other applicable requirements. The manual also includes sector-specific guidance on key banking areas such as credit, deposits, treasury, advances, foreign exchange, and compliance with KYC and AML norms, while emphasizing auditor independence, professional judgment, and ethical conduct.

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