Chapter IX - Accounts of Companies
Section 133
Section 133: Central Government to prescribe accounting standards
The Central Government prescribes accounting standards, and any addenda, as recommended by the Institute of Chartered Accountants of India, in consultation with and after examination of NFRA’s recommendations.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations made by the National Financial Reporting Authority: Provided that until the National Financial Reporting Authority is constituted under section 132 of the Companies Act, 2013 (18 of 2013), the Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations made by National Advisory Committee on Accounting Standards constituted under section 210A of the Companies Act, 1956 (1 of 1956).
Introduction
Section 133 is the source of the accounting standards that companies apply under the Act. ICAI recommends a standard; the Central Government consults NFRA and examines its recommendations before prescribing it.
A proviso, inserted by notification S.O. 1227(E) dated 29 March 2016 with effect from 1 April 2015 according to India Code, allowed standards to be prescribed after consulting the National Advisory Committee on Accounting Standards until NFRA was constituted. NFRA’s official website states that it was constituted on 1 October 2018.
Key takeaways
Who prescribes
The Central Government prescribes the standards; ICAI recommends them.
NFRA consultation
The Central Government consults NFRA and examines its recommendations.
Transitional proviso
The proviso covered the period before NFRA was constituted, using the National Advisory Committee on Accounting Standards set up under section 210A of the Companies Act, 1956.
How standards are prescribed
ICAI, constituted under section 3 of the Chartered Accountants Act, 1949, recommends standards of accounting or addenda. The Central Government prescribes them after consulting NFRA and examining its recommendations. Prescribed standards are notified as rules, and companies should check the current notified set for their class.
The transitional proviso
Until NFRA was constituted under section 132, the proviso allowed the Central Government to prescribe standards recommended by ICAI after consulting the National Advisory Committee on Accounting Standards constituted under section 210A of the Companies Act, 1956. The proviso remains in the text, but NFRA is the body now referred to in the main provision.
Link with financial statements and audit
Financial statements under section 129 must comply with the accounting standards notified under section 133. The auditor’s report and the Board’s report deal with compliance under other sections of the Act. Check those provisions for the specific disclosure.
Practical preparation
Identify which set of notified accounting standards applies to the company. Track amendments notified by the Central Government. Record any departure and its disclosure. Make sure the auditor’s report reflects compliance.
Practical checklist
Do
- Confirm which notified standards apply before preparing the financial statements.
- Track amendments the Central Government notifies under section 133.
Avoid
- Do not treat an ICAI recommendation as binding under the Companies Act until it is prescribed.
- Do not rely on the transitional proviso for current standard-setting.
Illustrative example
Hypothetical: new standard amendment
ICAI recommends an amendment to an accounting standard.
Recommendation
ICAI sends the recommendation.
Examination
NFRA examines it and makes its recommendations to the Central Government.
Notification
The Central Government prescribes the amendment, which companies then apply from the notified date.
Outcome
- Companies apply the amendment once it is prescribed, not on the date of ICAI’s recommendation.
Glossary
- Accounting standards
- Standards of accounting, and addenda, prescribed by the Central Government under section 133.
- NACAS
- National Advisory Committee on Accounting Standards, constituted under section 210A of the Companies Act, 1956, referred to in the proviso.
Frequently asked questions
Does ICAI issue binding standards for companies on its own?
Under section 133, the standards that bind companies are those prescribed by the Central Government on ICAI’s recommendation, after consulting NFRA.
Is the proviso still relevant?
It applied until NFRA was constituted. NFRA states that it was constituted on 1 October 2018.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026