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Ind AS 1, Presentation of Financial Statements sits at the core of how Indian companies communicate financial position and performance. The Companies (Ind AS) Second Amendment Rules, 2025 refine this foundation by tightening when an entity truly has the right at the reporting date to defer settlement, defining what counts as “settlement” for classification purposes, and adding targeted covenant-risk disclosures when non-current classification depends on meeting covenants within the next 12 months.
The amendments draw a clear line in the sand firmly separating what qualifies as current versus non-current, leaving no room for subjective interpretation. A temporary Indian carve-out applies in financial year (FY) 2025-26 allowing a post balance-sheet waiver to avoid current classification (with disclosure). From FY 2026-27 this relief goes and India fully converges with IAS 1 on breaches at period-end where only the rights on the reporting date speak, and everything else is noise.
WHY THE AMENDMENTS MATTER
Under the old wording, preparers often asked: Does a covenant tested after year-end affect classification? Can we rely on a lender’s waiver after the reporting date? What if we intend to settle early? Different interpretations led to inconsistency. The amendments address these by anchoring classif
