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IFRS 20, effective January 2029, establishes a robust framework for rate-regulated activities, replacing the temporary Ind AS 114. It mandates recognizing “total allowed compensation” when services are delivered, using discounted cash flows and regulatory interest rates. For India’s power sector, this shift reduces earnings volatility by aligning financial reporting with economic performance rather than tariff billing cycles. Unlike the preservation-focused Ind AS 114, IFRS 20 introduces rigorous measurement and disclosure standards. While evolving from existing ICAI guidance, it significantly enhances transparency, giving investors clearer insights into future recoveries and the quality of regulatory balances.
INTRODUCTION
In May 2026, the IASB issued IFRS 20 Regulatory Assets and Regulatory Liabilities, a comprehensive accounting standard for specified rate-regulated activities. Effective from 1 January 2029, IFRS 20 replaces IFRS 14 and introduces a robust framework for recognising, measuring, presenting and disclosing regulatory assets and regulatory liabilities.
For India, IFRS 20 is particularly relevant because Indian entities currently operate under a mixed landscape. Under Indian GAAP, the ICAI Guidance Note on Accountin
