Ind AS 20
Active
Accounting for Government Grants and Disclosure of Government Assistance
Prescribes the accounting for government grants and disclosure of government assistance, converged with IAS 20, with a genuine presentation divergence: the deduction-from-asset method is prohibited.
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Conceptual Framework Linkage
Same income-matching philosophy as IAS 20, narrower presentation choice
Ind AS 20 shares IAS 20's core principle – government grants are recognised in P&L on a SYSTEMATIC basis over the periods in which the entity recognises related costs, matching grants to the expenses/assets they are intended to compensate. Where Ind AS 20 genuinely diverges is PRESENTATION: it REMOVES IAS 20's option to deduct asset-related grants from the asset's carrying amount, mandating DEFERRED INCOME presentation only.
HOW IND AS 20 MAPS TO THE FRAMEWORK
Comparability – mandating a SINGLE presentation approach (deferred income) is considered to enhance comparability WITHIN India, even though it narrows IAS 20's own flexibilityTransparency – presenting the GROSS asset cost (rather than a net-of-grant amount) is considered by Indian standard-setters to provide clearer information about the asset's full cost
This is one of the FEW Ind AS standards with a genuine, explicit presentation-level divergence from its IFRS counterpart, comparable in character to Ind AS 1's format divergence.
Grant recognition – identical timing principle to IAS 20
Grants recognised in P&L systematically over the periods matching the related costs they compensate
IDENTICAL recognition TIMING principle to IAS 20 – the divergence is confined to PRESENTATION of asset-related grants.
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Scope & Applicability
What Ind AS 20 covers
Ind AS 20 applies to accounting for and disclosure of government grants, and disclosure of other forms of government assistance – IDENTICAL scope to IAS 20, EXCLUDING government participation in ownership (covered by Ind AS 109/32) and grants covered by Ind AS 41's fair value model.
Key definitions you must know
Government grants
IDENTICAL definition to IAS 20 – assistance in the form of transfers of resources in return for past/future compliance with conditions.
Deferred income presentation
Presenting an asset-related grant as a SEPARATE liability line item, released to P&L over the asset's useful life – the ONLY presentation permitted under Ind AS 20.
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Recognition Criteria
Identical to IAS 20
Grants are recognised only when there is REASONABLE ASSURANCE the entity will COMPLY with attached conditions and the grant will be RECEIVED – IDENTICAL recognition criteria to IAS 20.
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Grants Related to Income
Identical to IAS 20
Grants related to income are presented EITHER as a separate credit in P&L, OR deducted from the related expense – IDENTICAL choice preserved under Ind AS 20 (this choice is NOT removed – only the asset-related grant deduction option is removed).
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Grants Related to Assets – Presentation (with worked example)
The core divergence point, illustrated
Example 1: Deferred income vs deduction method comparison
An Indian manufacturing company purchases machinery for ₹1,00,00,000 and receives a government capital subsidy of ₹20,00,000 under a state industrial promotion scheme, with the machinery having a 10-year useful life.
Under IAS 20's DEDUCTION method (NOT available under Ind AS 20): the asset would be recognised at ₹80,00,000 net, with ₹8,00,000 annual depreciation.
Under Ind AS 20's MANDATORY DEFERRED INCOME method: the asset is recognised at the FULL ₹1,00,00,000, with ₹10,00,000 annual depreciation, while the ₹20,00,000 grant is recognised as DEFERRED INCOME (a liability), released to P&L as ₹2,00,000 income per year over 10 years.
The NET P&L IMPACT is IDENTICAL either way (₹8,00,000 net annual charge), but the GROSS PRESENTATION of the asset and the grant differs materially – illustrating Ind AS 20's mandatory presentation approach.
Under Ind AS 20's MANDATORY DEFERRED INCOME method: the asset is recognised at the FULL ₹1,00,00,000, with ₹10,00,000 annual depreciation, while the ₹20,00,000 grant is recognised as DEFERRED INCOME (a liability), released to P&L as ₹2,00,000 income per year over 10 years.
The NET P&L IMPACT is IDENTICAL either way (₹8,00,000 net annual charge), but the GROSS PRESENTATION of the asset and the grant differs materially – illustrating Ind AS 20's mandatory presentation approach.
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Non-Monetary Grants
Identical to IAS 20
Non-monetary grants (e.g. land, or other resources transferred at below-market terms) are usually recorded at FAIR VALUE – IDENTICAL to IAS 20, common for Indian state industrial land allotment schemes.
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The Mandatory Deferred Income Presentation – Indian Divergence
A genuinely important, well-documented Ind AS 20 divergence
Unlike IAS 20, which offers preparers a CHOICE between deferred income presentation and netting the grant against the asset's carrying amount, Ind AS 20 removed this choice ENTIRELY for asset-related grants – the DEFERRED INCOME approach is the ONLY permitted presentation. This means Indian companies applying Ind AS 20 will ALWAYS show the GROSS cost of the subsidised asset on the balance sheet, with the grant appearing as a SEPARATE deferred income liability, unlike some IFRS preparers globally who might net the two together.
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Repayment of Government Grants
Identical to IAS 20
A grant becoming repayable is accounted for as a CHANGE IN ESTIMATE (per Ind AS 8) – first against any remaining deferred income balance, with any excess recognised immediately in P&L – IDENTICAL to IAS 20.
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Disclosure Requirements
Identical disclosure requirements to IAS 20
Accounting policy and presentation method adoptedNature and extent of grants recognisedUnfulfilled conditions and contingencies attached to recognised grants
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Critical Judgments & Estimates
Where management judgement matters most
SIGNIFICANT JUDGEMENTS
Whether "reasonable assurance" of compliance and receipt exists for grant recognitionSystematic basis for allocating grant income (typically matching depreciation pattern for asset-related grants)
SIGNIFICANT ESTIMATES
Fair value of non-monetary grants
Companies transitioning from OLD Indian GAAP (which permitted the deduction method) to Ind AS 20 needed to RECLASSIFY existing asset-related grants to the deferred income presentation, a genuinely notable one-time transition adjustment.
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Ind AS 20 vs IAS 20 – Full Comparison
Comprehensive comparison table
FeatureIAS 20Ind AS 20
Recognition criteria and timingStandard modelIDENTICAL – no substantive divergence
Grants related to assets – presentationCHOICE: deferred income OR deduction from asset costDEFERRED INCOME ONLY – deduction method PROHIBITED
Grants related to income – presentationChoice preservedIDENTICAL choice preserved
Ind AS 20 is one of the RARE standards with a genuine, EXPLICIT presentation-level divergence from its IFRS counterpart – narrowing IAS 20's choice to a single mandatory method for asset-related grants, while leaving recognition timing and grants-related-to-income presentation unchanged.
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Statement Mapping
Comprehensive event-to-statement mapping table
Event / transactionStatement(s) affectedNotes
Grant received (asset-related)Balance SheetRecognised as deferred income liability, NOT netted against the asset
Systematic release of deferred incomeP&LMatches the depreciation pattern of the related asset
Grant related to incomeP&LSeparate credit or deduction from related expense, identical to IAS 20
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Related Standards
Cross-reference map
StandardConnection
IAS 20The global counterpart standard, converged in principle but diverging in mandatory presentation
Ind AS 16Governs the gross asset cost against which the deferred grant income is matched
Ind AS 8Governs the change-in-estimate treatment for grant repayment
Quick-reference glossary
Deferred income
The mandatory Ind AS 20 balance sheet presentation for asset-related grants, released to P&L systematically.
Deduction method
The IAS 20 alternative (netting the grant against asset cost) that Ind AS 20 does NOT permit.
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Quick-Reference Glossary
Government grants
IDENTICAL definition to IAS 20 – assistance in the form of transfers of resources in return for past/future compliance with conditions.
Deferred income presentation
Presenting an asset-related grant as a SEPARATE liability line item, released to P&L over the asset's useful life – the ONLY presentation permitted under Ind AS 20.
Deferred income
The mandatory Ind AS 20 balance sheet presentation for asset-related grants, released to P&L systematically.
Deduction method
The IAS 20 alternative (netting the grant against asset cost) that Ind AS 20 does NOT permit.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows