Implementation of new accounting standards, converged with international norms, would further boost India's ability to attract foreign capital and access global capital markets, says a report by consultancy EY.
However, it has also cautioned that there are challenges which need to be addressed on a priority basis for implementation of new accounting standards.
The Indian Accounting Standards (Ind AS) are converged with the International Financial Reporting Standards (IFRS), which is being followed in more than 100 countries.
In a report focused on 'Roadmap on adoption of Ind AS', the consultancy said its implementation would result in significant benefits to Indian companies as well as the country as a whole.
Adoption of Ind AS would give "the right signal to the world about corporate India's move towards better governance and greater transparency which will further strengthen the country's ability to attract foreign capital and access global capital markets," EY said.
In his Budget speech on July 10, Finance Minister Arun Jaitley had said there was an urgent need to converge the current Indian accounting standards with IFRS.
"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," he had said.
The time lines for implementation of Ind AS for the financial services sector, including banks and insurance companies would be separately notified by the respective regulators.
According to the EY report, regulators should constitute a detailed study and consult various stakeholders before deciding upon a strategy for Ind AS applicability on various entities.
Dolphy Dsouza, partner in a member firm of Ernst & Young Global said that to ensure smooth implementation of Ind AS, the government should ensure that a tax neutral position is maintained.