Important Update for Stakeholders!
The Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amendment Rules, 2026 vide G.S.R. 725(E) dated 12th August, 2026.
The amended Rules shall come into force on the date of their publication in the Official Gazette.
For the detailed notification, please refer to the official notification issued by MCA:
G.S.R. 725(E).—In exercise of the powers conferred by section 133 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government, in consultation with the National Financial Reporting Authority, hereby makes the following rules further to amend the Companies (Indian Accounting Standards) Rules, 2015, namely:-
1. Short title and commencement.— (1) These rules may be called the Companies (Indian Accounting Standards) Amendment Rules, 2026.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Indian Accounting Standards) Rules, 2015, in the “Annexure”, under the heading “B. Indian Accounting Standards (Ind AS)”,
(A) in “Indian Accounting Standard (Ind AS) 101”; —
(i) after paragraph 39AI, the following paragraphs shall be inserted, namely:-
“39AJ [Refer Appendix 1]
39AK Annual Improvements to Ind AS (2024), amended paragraphs B5-B6. An entity shall apply those amendments for annual reporting periods beginning on or after 1 April 2026.”
(ii) in Appendix B, for paragraphs B5 and B6, the following paragraphs shall be substituted, namely:-
“B5 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) [see paragraph 6.4.1(a) of Ind AS 109]. 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 ASs.
B6 If, before the date of transition to Ind ASs, an entity had designated a transaction as a hedge but the hedge does not meet the qualifying criteria for hedge accounting in paragraph 6.4.1(b)-(c) of Ind AS 109, the entity shall apply paragraphs 6.5.6 and 6.5.7 of Ind AS 109 to discontinue hedge accounting. Transactions entered into before the date of transition to Ind ASs shall not be retrospectively designated as hedges.”;
(B) in “Indian Accounting Standard (Ind AS) 107”;
(i) after paragraph 5A, the following paragraphs shall be inserted, namely:- “5B Paragraph 30A 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.
5C Paragraph 30B 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.
5D Paragraph 30C applies only to contracts that satisfy the requirements in paragraph 2.3A of Ind AS 109 and have been entered into with regards to an entity’s electricity purchases. These contracts comprise those:
(a) within the scope of Ind AS 109; and
(b) outside the scope of Ind AS 109 in accordance with paragraph 2.4 of that Standard, including those excluded in accordance with paragraphs B2.7-B2.8 of that Standard.”;
Table: Instrument EA
| Instrument EA | Analysis |
| Instrument EA is a loan with an interest rate that is adjusted every reporting period by a fixed number of basis points if the debtor achieves a contractually specified reduction in carbon emissions during the preceding reporting period. The maximum possible cumulative adjustments would not significantly change the interest rate on the loan. | The contractual cash flows are solely payments of principal and interest on the principal amount outstanding. The entity considers whether the contractual cash flows that could arise both before and after each change in contractual cash flows are solely payments of principal and interest (see paragraph B4.1.10). If the contingent event of achieving the carbon emissions target occurs, the interest rate is adjusted by a fixed number of basis points, resulting in contractual cash flows that are consistent with a basic lending arrangement. It is only because the nature of the contingent event itself does not relate directly to changes in basic lending risks and costs that the entity cannot conclude without further assessment whether the cash flows on the financial asset are solely payments of principal and interest. The entity therefore assesses whether, in all contractually possible scenarios, the contractual cash flows would not be significantly different from the contractual cash flows on a financial instrument with identical contractual terms, but without the contingent feature linked to carbon emissions (see paragraph B4.1.10A). Because any adjustments over the life of the instrument would not result in contractual cash flows that are significantly different, the entity concludes that the loan has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. |
Table: Instrument I
| Instrument I | Analysis |
| Instrument I is a loan with an interest rate that is adjusted every reporting period to track the movements in a market-determined carbon price index during the preceding reporting period. | The contractual cash flows are not solely payments of principal and interest on the principal amount outstanding. The contractual cash flows are indexed to a variable (the carbon price index), which is not a basic lending risk or cost. The contractual cash flows are therefore inconsistent with a basic lending arrangement (see paragraph B4.1.8A). |
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 111(E), dated the 16th February, 2015 and last amended vide notification number G.S.R. 549(E), dated the 13th August, 2025.
