"There is an urgent need to converge the current Indian accounting standards with the International Financial Reporting Standards (IFRS)," Finance Minister Arun Jaitley said while presenting the Budget.
"I propose for adoption of the new Indian Accounting Standards (Ind AS) by the Indian companies from the financial year 2015-16 voluntarily and from the financial year 2016-17 on a mandatory basis," Jaitley added.
However, the Finance Minister said that timelines for implementation of Ind AS for the financial services sector, including banks and insurance companies would be separately notified by the respective regulators.
"Based on the international consensus, the regulators will separately notify the date of implementation of AS Ind for the banks, insurance companies etc," Jaitley said.
"Standards for the computation of tax would be notified separately," he added.
While hailing the government's move to execute the new standards, experts said various challenges involved in the implementation would have to be taken into account.
"By moving forward with the implementation, India can play a significant role in accounting standard setting globally," KPMG Accounting Advisory Services-Global Head Jamil Khatri said.
"While preparing the detailed implementation plan, the pitfalls that resulted in unsuccessful implementation of Ind AS in 2011 should be avoided and proactively addressed," Khatri added.
KPMG India Accounting Advisory Services-Head Sai Venkateshwaran said "the government should finalise the roadmap for implementation (of Ind AS) immediately".
"This roadmap should consider implementation in a phased manner, taking into account various challenges involved in the implementation, including sectoral issues, as well as wider issues around capacity building," Venkateshwaran added.
Noting that the government's intent to move towards global best practices has been established, Ernst & Young Global Partner Pankaj Chadha said, "Corporate world would need to gear up for changes which application of Ind AS would entail, particularly new generation sectors like ITES and telecom".
PWC Partner Harinderjit Singh said: "I am yet to read the fine print but hope that the earlier hurdles such as impact on taxation and fair value have been sorted out. Also the road map will take care of enough time being given to SME for preparation".
In the past, the government had set the deadline of April 2011 for adopting the converged Ind AS with IFRS standards.