Accounting Policies of National Securities Depository Ltd. Company

Mar 31, 2025

Material Accounting Policies

2.2 Revenue and Income Recognition

a) The Company has applied Ind AS 115 Revenue
from Contracts with Customers which establishes
a comprehensive framework for determining
whether, how much and when revenue is to
be recognised. Under Ind AS 115, revenue
is recognized at an amount that reflects the
consideration to which an entity expects to be
entitled in exchange for rendering services to
a customer. The standard requires entities to
exercise judgement, taking into consideration all
of the relevant facts and circumstances related to
contracts with their customers.

b) The Company derive revenue primarily from
services to corporates and capital market
intermediary services. The Company recognise
revenue when the significant terms of the
arrangement are enforceable, services have been
delivered and the collectability is reasonably
assured. The Company recognise revenue based
on two main models: services rendered at a point
in time and services rendered over time:

Services rendered at a point in time: Revenues and
costs relating to time and service contracts are
recognised as the related services are rendered.

Services rendered over time: Revenue from
annual fee contracts is recognised proportionately
over the period of the contract. When services
are performed through an indefinite number of
repetitive acts over a specified period of time,
revenue is recognised on a straight-line basis over
the specified period or under some other method
that better represents the stage of completion.

The Company accounts for pricing incentives to
customers by reducing the amount of revenue.

c) I nterest income is accounted on accrual basis.
For financial instruments measured at amortised
cost, interest income is recorded using the
effective interest rate (EIR). EIR is the rate that
exactly discounts the estimated future cash
payments or receipts over the expected life of the
financial instrument or a shorter period, where
appropriate, to the gross carrying amount of
the financial asset or to the amortised cost of a
financial liability.

d) Dividend income is accounted for when the right
to receive it is established.

2.3 Leasing

Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks
and rewards incidental to ownership to the lessee.

As a Lessee -

At the date of commencement of the lease, the
Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and
low value leases. For these short-term and low value
leases, the Company recognizes the lease payments as
an operating expense on a straight-line basis over the
term of the lease.

Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.

The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability

adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are depreciated from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying asset. Right of use assets are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the
fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the
asset does not generate cash flows that are largely
independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash
Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country
of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the
related right of use asset if the Company changes its
assessment if whether it will exercise an extension or a
termination option.

Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been adjusted towards rent expenses in the
Statement of Profit and Loss.

2.4 Employee Benefits

Employee benefits include provident fund,
superannuation fund, gratuity fund, and
compensated absences.

Defined Contribution Plan

The Company''s contribution to provident fund and
superannuation fund are considered as defined
contribution plans and are charged as an expense based
on the amount of contribution required to be made and
when services are rendered by the employees.

i. Superannuation

The Company contributes a sum equivalent to 15%
of annual basic salary of the eligible employees
to an insurance company which administers the

fund. The Company recognises such contributions
as an expense during the period they are incurred.

ii. Provident Fund

Employees are entitled to receive benefits in
respect of provident fund, in which both employees
and the Company make monthly contributions at
a specified percentage of the covered employees''
salary (currently 12% of employees'' basic salary).

Defined Benefit Plans

i. Gratuity

The Company accounts for the net present value
of its obligations for gratuity benefits based
on an independent external actuarial valuation
determined on the basis of the projected unit
credit method carried out at the Balance Sheet
date. Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the asset
ceiling (if applicable) and the return on plan assets
(excluding net interest), is reflected immediately
in retained earnings routed through OCI and is not
reclassified to profit and loss. Past service cost is
recognised in profit or loss in the period of a plan
amendment. Net interest is calculated by applying
the discount rate at the beginning of the period to
the net defined benefit liability or asset.

Defined benefit cost are categorised as follows:

• Service cost (including current service cost,
past service cost, as well as gains and losses
on curtailments and settlements);

• Net interest expense or income; and

• Remeasurement

ii. Other Employee Benefits

Performance Incentive and Compensated Absences

The amount of short-term employee benefits
expected to be paid in exchange for the services
rendered by employees are recognised during the
period when the employees render the services.
These benefits include performance incentive
and compensated absences which are expected
to occur within twelve months after the end of
the period in which the employee renders the
related service.

The Company accounts for the net present value
of its obligations for compensated absences
based on an independent external actuarial
valuation carried out at the Balance Sheet date.

The cost of short-term compensated absences is
accounted as under:

a) in case of accumulated compensated
absences, when employees render the
services that increase their entitlement of
future compensated absences; and

b) i n case of non-accumulating compensated
absences, when the absences occur.

2.5 Tax on Income

Income tax expense represents the sum of the tax
currently payable and deferred tax.

i. Current Tax

The tax currently payable is based on taxable profit
for the period. Taxable profit differs from ‘Profit
Before Tax'' as reported in the Statement of Profit
and Loss because of items of income or expense
that are taxable or deductible in other years and
items that are never taxable or deductible.

Current tax assets and liabilities are measured
at the amount expected to be recovered from or
paid to the taxation authorities, in accordance
with the Income Tax Act, 1961 and the Income
Computation and Disclosure Standards (ICDS)
prescribed therein. The tax rates and tax laws used
to compute the amount are those that are enacted
or substantively enacted, at the reporting date.

Management periodically evaluates positions
taken in the tax returns with respect to situations
in which applicable tax regulations are subject
to interpretation and establishes provisions
where appropriate.

Current tax assets and liabilities are offset only if
there is a legally enforceable right to set off the
recognised amounts and it is intended to realise
the asset and settle the liability on a net basis or
simultaneously.

ii. Deferred Tax

Deferred tax is recognised on the temporary
differences between the carrying amounts of
assets and liabilities in the financial statements
and the corresponding tax bases used in the
computation of taxable profit. Deferred tax
assets are generally recognised for all deductible
temporary differences to the extent that it is
probable that taxable profits will be available

against which deductible temporary differences
can be utilised.

The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in the
period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that
have been enacted or substantively enacted by
the end of the reporting period.

iii. Current and Deferred Tax for the period

Current and deferred tax are recognised in
profit or loss, except when they relate to items
that are recognised in other comprehensive
income or directly in equity, in which case, the
current and deferred tax are also recognised
in other comprehensive income or directly in
equity respectively.

2.6 Property, Plant and Equipment

Property, Plant & Equipment carried at cost less
accumulated depreciation and impairment losses,
if any. The cost comprises its purchase price net of
any trade discounts and rebates, any import duties
and other taxes (other than those subsequently
recoverable from the tax authorities), any directly
attributable expenditure on making the asset ready
for its intended use, other incidental expenses and
interest on borrowings attributable to acquisition of
qualifying fixed assets up to the date the asset is ready
for its intended use.

Capital Work-in-Progress

Projects under which tangible fixed assets that are
not yet ready for their intended use are carried at cost,
comprising direct cost, related incidental expenses,
and interest attributable.

2.7 Intangible Assets

Intangible assets purchased are measured at cost as of
the date of acquisition less accumulated amortization
and accumulated impairment, if any.

Intangible Assets under Development

Projects under which Intangible assets that are
not yet ready for their intended use are carried
at cost, comprising Development expenses and
software expenses.

2.8 Depreciation and Amortisation

Depreciation is charged so as to write off the cost of
assets other than Capital work-in-progress less its
estimated residual value over their estimated useful
lives as prescribed in Schedule II to the Companies
Act, 2013, using the straight-line method except for the
new office building for which useful life of 35 years has
been adopted as determined by technical expert.

Depreciation on addition/(disposal) is provided on a
pro-rata basis.

Intangible assets are amortized on a straight line
basis. Computer software is amortised over useful
life of assets.