Ind AS explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Earnings per share looks simple until shares change during the year. Ind AS 33 divides the profit attributable to ordinary equity holders by the weighted average number of shares, restates the count for bonus and rights elements, and then recomputes the figure assuming every dilutive instrument converts, taking the instruments in order from the most to the least dilutive. This guide runs the whole sequence on one invented year.
Basic EPS = profit attributable to ordinary equity holders of the parent divided by the weighted average number of ordinary shares (paragraph 10). Bonus issues, splits and the bonus element of a rights issue restate every period presented (paragraphs 26 to 28 and 64). Diluted EPS adds dilutive potential shares, tested one issue at a time from the lowest earnings per incremental share upwards; an instrument that would raise EPS is excluded (paragraphs 41 to 44).
Ind AS as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015). Amendments notified after 1 April 2025 are not reflected in this article and should be checked on mca.gov.in. EPS is a presentation item in the main statement, so it forms part of financial statement preparation for every Ind AS company that must show it.
What the paragraphs require
| Paragraph | Requirement | What it means in practice |
|---|---|---|
| 9-10 | Basic EPS for total profit and for continuing operations, on profit attributable to ordinary equity holders of the parent | Use consolidated profit after non-controlling interests (paragraph A1) |
| 12-14 | Deduct after-tax preference dividends; the standard adds that items charged to securities premium or other reserves that belong in profit or loss are also deducted from profit from continuing operations | Cumulative preference dividends for the period are deducted whether declared or not |
| 19-21 | Weighted average shares from the date consideration is receivable | Time-weight issues for cash by days or months |
| 23 | Shares issuable on a mandatorily convertible instrument count in basic EPS from the date of the contract | Not a dilution question |
| 26-28, 64 | Adjust for events that change shares without a change in resources, as if they occurred at the start of the earliest period | Bonus issue, split, bonus element of a rights issue |
| A2 | Rights issue factor = fair value just before the exercise of rights / theoretical ex-rights fair value | Applied to shares outstanding before the issue |
| 31-36 | Diluted EPS: adjust earnings for after-tax interest and dividends saved; add shares on conversion | Deemed converted from the start of the period or the date of issue if later |
| 41-44 | Dilutive only if conversion lowers EPS from continuing operations; consider each issue separately, most dilutive first | Options generally go first as they do not affect earnings |
| 45-47A | Options: assumed proceeds buy shares at average market price; the rest are shares for no consideration; only if in the money | Include the fair value of services still to be received |
| 48, 64-65 | Employee options with fixed terms are options from grant date; performance-based options are contingently issuable; no restatement of prior diluted EPS for changed assumptions | Bonus restates both bases for past periods |
Companies that apply AS instead use the model described in our AS 20 guide. The standard is outlined in Ind AS 33 Earnings Per Share.
The method
- Fix the numerator: profit attributable to ordinary equity holders after preference dividends (paragraph 12).
- List the share events in date order and mark each as for cash at full value or with a bonus element.
- Compute the weighted average, applying bonus and rights factors to the earlier shares (paragraphs 26 and A2).
- Basic EPS = numerator / weighted average.
- Compute for each potential share its earnings effect and its share effect, and the earnings per incremental share.
- Add them in ascending order of that figure, stopping when EPS would rise (paragraph 44).
- Restate the comparative for bonus and rights factors (paragraph 64).
Worked example
The entity and all figures in this example are invented for illustration.
Sabarmati Chemicals Limited has a 31 March year end. At 1 April of Year 2 it has 10,00,000 shares. The year's events: on 1 July it issues 2,00,000 shares for cash at full value; on 1 October it makes a rights issue of 1 for 6 (2,00,000 shares) at Rs 90 when the cum-rights price on the last day before exercise is Rs 120; on 1 January it makes a bonus issue of 1 share for every 10 held (1,40,000 shares). All prices and rates are assumed, for arithmetic only.
Rights factor (paragraph A2). Theoretical ex-rights price = (6 shares x Rs 120 + 1 share x Rs 90) / 7 = Rs 115.7143. Factor = 120 / 115.7143 = 1.0370 (28/27 exactly). It applies to shares outstanding before 1 October. The bonus factor of 1.1 applies to every share outstanding before 1 January, as if the bonus had occurred at the start (paragraph 28).
Weighted average shares (paragraphs 19, 20 and 26). Each period is three months.
| Period | Shares before adjustment | Rights factor | Bonus factor | Adjusted shares | Time weight | Weighted shares |
|---|---|---|---|---|---|---|
| 1 Apr to 30 Jun | 10,00,000 | 1.0370 | 1.1 | 11,40,741 | 3/12 | 2,85,185 |
| 1 Jul to 30 Sep | 12,00,000 | 1.0370 | 1.1 | 13,68,889 | 3/12 | 3,42,222 |
| 1 Oct to 31 Dec | 14,00,000 | none | 1.1 | 15,40,000 | 3/12 | 3,85,000 |
| 1 Jan to 31 Mar | 15,40,000 | none | none | 15,40,000 | 3/12 | 3,85,000 |
| Weighted average | 13,97,407 |
The rights factor is applied unrounded; the displayed factor is rounded to four decimals.
Basic EPS (paragraph 10). Profit attributable to ordinary equity holders is Rs 4,20,00,000, after deducting the after-tax preference dividend of Rs 14,00,000 (paragraph 12). Basic EPS = 4,20,00,000 / 13,97,407 = Rs 30.06.
Restated comparative (paragraph 64). For Year 1 the profit was Rs 3,60,00,000 on 10,00,000 shares, reported at Rs 36.00. The Year 2 rights element and bonus change the number: 10,00,000 x 1.0370 x 1.1 = 11,40,741 shares. Restated Year 1 basic EPS = 3,60,00,000 / 11,40,741 = Rs 31.56.
Dilutive instruments (paragraphs 33, 36 and 45 to 47A).
- Employee options: 1,00,000 options, exercise price Rs 80, outstanding all year; average market price for the year Rs 110 (assumed); no further services to be received, so nothing is added to the exercise price under paragraph 47A. Shares for no consideration = 1,00,000 x (110 - 80) / 110 = 27,273. No effect on earnings.
- Convertible debentures: Rs 2,00,00,000 at 10 per cent, outstanding all year, convertible into 2,00,000 shares (after adjusting for the rights and bonus issues). Interest Rs 20,00,000, after tax at an assumed 25 per cent Rs 15,00,000. Earnings per incremental share = 15,00,000 / 2,00,000 = Rs 7.50.
- Convertible preference shares: Rs 1,75,00,000 at 8 per cent, convertible into 50,000 shares. Dividend Rs 14,00,000 (not tax-deductible, assumed). Earnings per incremental share = 14,00,000 / 50,000 = Rs 28.00.
Ranking and test (paragraph 44).
| Step | Earnings (Rs) | Shares | EPS (Rs) | Dilutive? |
|---|---|---|---|---|
| Basic | 4,20,00,000 | 13,97,407 | 30.06 | |
| + options | 4,20,00,000 | 14,24,680 | 29.48 | Yes, incremental EPS nil |
| + debentures | 4,35,00,000 | 16,24,680 | 26.77 | Yes, Rs 7.50 is below 29.48 |
| + preference shares | 4,49,00,000 | 16,74,680 | 26.81 | No, EPS rises, so excluded |
Diluted EPS = Rs 26.77. The preference shares are antidilutive, because their Rs 28.00 per incremental share is above the Rs 26.77 already reached, and are listed as such in the disclosure (paragraph 70(c)).
Check. Options: 13,97,407 + 27,273 = 14,24,680. Debentures: 14,24,680 + 2,00,000 = 16,24,680 and 4,20,00,000 + 15,00,000 = 4,35,00,000. EPS falls at each dilutive step (30.06, 29.48, 26.77) and rises when the preference shares are added (26.81), the test for exclusion.
Presentation and disclosure
Paragraph 66 requires basic and diluted EPS in the statement of profit and loss, for continuing operations and for total profit, with equal prominence and for each period; if both figures are equal, one line will do (paragraph 67). A discontinued operation's per-share figure is shown in the statement or the notes (paragraph 68); see discontinued operations and EPS. Paragraph 70 requires the numerators and denominators and their reconciliations, the antidilutive instruments, and post-year-end share transactions.
Common mistakes
- Using the closing number of shares instead of a weighted average.
- Forgetting to restate comparatives for a bonus or the bonus element of a rights issue (paragraph 64).
- Treating the whole rights issue as full-price shares.
- Including an antidilutive instrument because it looks dilutive on its own (paragraph 43).
- Adding back gross, not after-tax, interest (paragraph 33).
- Ignoring unrecognised future services in the exercise price of employee options (paragraph 47A).
Need help with EPS and the statement of profit and loss?
If your share capital moved during the year, or you have convertibles and employee options outstanding, an EPS workbook that ranks the instruments and restates the comparative saves a late-night correction. Our team prepares and reviews these workings within financial statement preparation.
Key takeaways
- The denominator is time-weighted; the numerator is after preference dividends.
- Bonus and the bonus element of a rights issue restate all periods presented.
- Dilution is tested one instrument at a time, lowest earnings per incremental share first.
- Antidilutive instruments are excluded but disclosed.
- Prior-period diluted EPS is not restated for changed assumptions or conversions.
Read next
- Share-based payment under Ind AS 102: ESOP expense, vesting conditions and modifications
- ITFG clarifications on Ind AS 32 and 33: preference shares, convertible bonds and EPS
- Discontinued operations under Ind AS 105 and earnings per share
- AS 20 Earnings per Share for non-Ind AS companies
Disclaimer: Based on the Indian Accounting Standards as on 1 April 2025 (ICAI Compendium of Ind AS 2025-26, the standards notified under the Companies (Indian Accounting Standards) Rules, 2015) and, where named, the ITFG clarification bulletins of ICAI, as consulted on 4 October 2026. The worked example uses invented figures. Amendments notified after 1 April 2025 should be checked on mca.gov.in. This article is general information, not legal advice; check the official text before acting.