Ind AS 24 related party disclosures — who, what and how much.

What is Ind AS 24?

Ind AS 24, Related Party Disclosures, requires an entity's financial statements to disclose the existence of related-party relationships and the transactions, outstanding balances and commitments with those parties — even when the transactions were priced at arm's length. The objective is simple: a reader of the financial statements should be able to see whether the entity's financial position or performance was influenced by dealings with parties it doesn't deal with at arm's length by default, such as its parent, its directors, or entities controlled by the same promoters.

It applies to every entity required to prepare financial statements under Ind AS (see our Ind AS applicability page for the phase-wise criteria) and it sits alongside — but is legally distinct from — related party requirements under Section 188 of the Companies Act, 2013 and, for listed entities, SEBI's LODR Regulations. A CA reviewing related-party compliance needs to check all three, not just the Ind AS note.

Who is a related party — the framework

Ind AS 24 defines a related party in two broad limbs: entities related to the reporting entity, and individuals (and their close family) who have control, joint control, significant influence, or are Key Management Personnel (KMP). The test looks at substance and ability to influence — not merely a shareholding threshold.

"Close members of the family" includes a person's spouse, children, dependants of the person or their spouse, and can extend to domestic partners depending on the facts. The standard also carves out certain parties that are not automatically related merely by virtue of a normal business relationship — for example, two entities simply because they share a director who has no other influence, or a provider of finance, trade union, public utility or government department in the ordinary course of dealings, are not related parties by that fact alone.

What must be disclosed

Once a party is identified as related, Ind AS 24 sets out what the notes to the financial statements must contain. The core requirements:

Disclosure is required for the reporting period presented, and comparative-period balances and transactions must also be disclosed. Where the entity is controlled by another entity, the ultimate controlling party must be named even where no transaction occurred with it during the year — the relationship itself is the disclosable fact.

Sample disclosure note format

A typical related-party note in the financial statements is structured in three parts: the list of related parties and the nature of relationship, KMP compensation, and a schedule of transactions and outstanding balances by category. An illustrative extract:

Transactions during the year (₹ in lakh):

KMP compensation (₹ in lakh):

This is an illustrative skeleton only — the actual note must reflect the entity's real related parties, every category of transaction (loans, guarantees, purchase/sale of assets, leases, management contracts and so on), and the full set of quantitative disclosures the standard requires. Verify the exact note wording expected by your auditors and any recent ICAI illustrative-format guidance before finalising.

Practical application notes for a practicing CA

• Identify related parties before the year closes, not during audit. Build the related-party list from shareholding records, board composition and known family relationships each quarter — a related party missed at the transaction stage often means the disclosure is incomplete even if the accounting itself is correct.
• "Arm's length" is not a disclosure exemption. Every related-party transaction is disclosable regardless of pricing; a statement that pricing was arm's-length is permitted only when it can genuinely be substantiated with comparable data.
• Don't confuse Ind AS 24 with Section 188 or LODR compliance. Board/audit-committee approval, shareholder approval and materiality thresholds under the Companies Act and SEBI LODR are separate compliance tracks with their own tests — satisfying Ind AS 24 disclosure does not mean the transaction was validly approved under company law.
• Watch for KMP by function, not just by title. A person without a director designation who nonetheless has authority to plan, direct and control the entity's activities (a de facto CEO, for instance) is KMP under the standard's substance-based test.
• Loans, guarantees and letters of comfort to/from related parties need the same rigour as ordinary transactions — outstanding balances, terms, security and any provision for doubtful recovery must be disclosed, and intra-group guarantees are easy to overlook because no cash moves at inception.

As with any standard carrying interpretive and transitional detail, verify the current text and any recent ICAI/MCA clarifications before finalising disclosure for an unusual related-party structure.

Where TatvaBooks helps

TatvaBooks lets you tag related-party masters (holding company, group entities, directors and their close family) directly on the customer/vendor ledger, so every transaction with a related party is traceable through the year instead of being reconstructed at audit time — useful when you're pulling together the Ind AS 24 note and cross-checking it against Section 188 approvals.

See the for Chartered Accountants page, or go straight to pricing.

Frequently asked questions