Amendments in Schedule III (Division-I Non IND-AS)

MCA has revised the Schedule III (Division-I Non IND-AS) to the Companies Act, 2013 vide notification dated 24th March 2021 by introducing additional presentation and disclosure requirements and changing some existing requirements in the financial statements to improve governance.

The major changes are such as disclosure of Title Deeds of Immovable Property that are not in the name of Company, Ageing Schedule of CWIP, Intangible Assets under development, Trade Payables and Trade Receivables, Disclosure of Ratios, Undisclosed Income, CSR, reconciliation of statements filed with banks for the purpose of working capital etc. and various other requirements such as disclosures about promoter shareholding and subsidiaries, mandatory rounding off and re-classification of certain line items etc.

The amendments are as follows:

1. IN THE GENERAL INSTRUCTION           

Compulsory rounding off

Now rounding off is compulsory and a company cannot continue to show full figure.

Total Income* < Rs. 100 Crore	Round off to the nearest hundreds, thousands, lakhs or millions or decimal thereof.
Total Income > Rs. 100 Crore	Round off to the nearest lakhs, millions or crores, or decimal thereof

*The word “Total Income” has been substituted in place of “Turnover”.

2. IN THE BALANCE SHEET

 

The word “Intangible Assets” inserted after the word “Property, Plant and Equipment”

and the word “Tangible Assets” has been substituted by the word “Property, Plant and Equipment” as shown below:

EARLIER in the face of balance sheet	NOW in the face of balance sheet
II. ASSETS (1)     Non Current Assets (a)     Property, Plant and equipment (i)  Tangible assets (ii)  Intangible assets	II. ASSETS (1)     Non Current Assets (b)     Property, Plant and equipment and Intangible assets (i)  Property, Plant and equipment (ii)  Intangible assets

2. IN THE NOTES UNDER THE HEADING “GENERAL INSTRUCTION FOR PREPARATION FOR BALANCE SHEET”, IN PARAGRAPH 6

1. Under the heading “A. Share Capital” after item (l), “Shareholding of Promoters” has been inserted to disclose as below:

		Share held by promoter at the beginning of the year		Share held by promoter at the end of the year		% Change during the year
S.No.	Promoter Name	No. of shares	% of total shares*	No. of shares	% of total shares*
Total

*Details shall be given separately for each class of shares.

 

1. “Current Maturities of Long term borrowings” shall be disclosed under the heading “Short-term borrowings” as a result it has been omitted from the heading “Other current liabilities”.

2. After the heading “FA. Trade Payables” and entries relating thereto, the following disclosure of ageing schedule for ‘trade payables due for payment’ shall be given as below :

Trade Payable due for payment

Particulars	Outstanding for following period from due date of payment*
	Unbilled	Not due	Less than 1 year	1-2 years	2-3 years	More than 3 years	Total
(i) MSME (ii) Others (iii) Disputed due- MSME (iv) Disputed dues- Others	Provisions	Bill not due as on Mar 31

* where no due date of payment is specified in that case disclosure shall be from the date of the transaction.

3. Under the heading “I. Tangible Assets” for the word “Tangible Assets”, the words “Property, Plant and Equipment” has been substituted.
4. Under the heading “I. Tangible Assets” and “J. Intangible Assets” the following highlighted disclosure inserted:

“A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment) and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed separately.”

5. “Security Deposits” shall be disclosed under the heading “Other non-current assets” as a result it has been omitted from the heading “Long-term loans and advances”.
6. Under the heading “ Other non-current assets” after the item (iii), the following shall be inserted, namely:

(iv)  For trade receivables outstanding, following ageing schedule shall be given:

Trade Receivables ageing schedule

Particulars	Outstanding for following periods from due date of payment*
	Unbilled	Not due	Less than 6 months	6 months – 1 year	1-2 years	2-3 years	More than 3 years	Total
(i) Undisputed Trade receivables – considered good (ii) Undisputed Trade receivables – considered doubtful (iii) Disputed Trade Receivables considered good (iv) Disputed Trade Receivables considered doubtful

* where no due date of payment is specified in that case disclosure shall be from the date of  the transaction.

7. Under the heading “P. Trade Receivables” for item (i) “Aggregate amount of Trade Receivables outstanding for a period exceeding six months from the date they are due for payment should be separately stated” the “ (i) For trade receivables outstanding” has been substituted. The format of “Trade Receivables ageing schedule” is same as given in above note.

8. The Schedule III requires that where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken and such borrowings are outstanding at the balance sheet date, the company shall disclose the details of where they have been used.

9. Disclosure requirement for ‘Specified Bank Note’ has been omitted.

10. ADDITIONAL REGULATORY INFORMATION

1. The company shall provide the details of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the company in format given and where such immovable property is jointly held with others, details are required to be given to the extent of the company’s share.

Relevant line item in the Balance Sheet	Description of item of property	Gross carrying value	Title deeds held in the name of	Whether title deed holder is a promoter, director or relative of promoter/ director or employee of promoter/director	Property held since which date	Reason for not being held in the name of the company
Property, plant and equipment	Land Building					** also indicate if in dispute
Investment property	Land Building
PPE retired from active use and held for disposal	Land Building
Other

2. Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017.

3. The company to provide details of the amount in respect of loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment granted to promoters, directors, KMPs and related parties in the below format:

	Current Period		Previous Period
Type of Borrower	Amount outstanding*	% of Total^	Amount outstanding*	% of Total^
Promoters
Directors
KMPs
Related Parties

*represents loan or advance in the nature of loan

^represents percentage to the total Loans and Advances in the nature of loans

4. Capital-Work-in Progress (CWIP)

This disclosure requires that the total amount of CWIP as presented in the financial statements to be split between two broad categories viz., ‘Projects in progress’ and ‘Projects temporarily suspended’ along with its ageing schedule. The disclosure is not required to be presented at an asset/project level however, the total amount presented in this disclosure should tally with the total amount of CWIP as presented in the financial statements.

1. For Capital-Work-in Progress following ageing schedule shall be given

CWIP	Amount in CWIP for a period of				Total
	Less than 1 year	1-2 years	2-3 years	More than 3 years
Project in progress Project temporarily suspended

 

1. In respect of assets/projects forming part of CWIP and which have become overdue compared to their original plans or where cost is exceeded compared to original plans, disclosure is required to be given for expected completion timelines in defined ageing brackets.

For Capital-Work-in Progress, whose completion is overdue or has exceeded its cost compare to its original plan, following CWIP completion schedule shall be given:

CWIP	To be completed in
	Less than 1 year	1-2 years	2-3 years	More than 3 years
Project in progress Project 1 Project 2   Project temporarily suspended Project 1 Project 2

5. Intangible assets under development

This disclosure requires that the total amount of Intangible asset under development as presented in the financial statements to be split between two broad categories viz., ‘Projects in progress’ and ‘Projects temporarily suspended’ along with its ageing schedule.

The ageing schedule are similar of Capital-Work-in progress (as given in previous point) to the extent applicable to Intangible assets under development.

6. Detail of Benami Property held

Where any proceedings have been initiated or pending against the company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and the Rules made thereunder, the company shall disclose the following:

(a)   Details (i.e. Name and Nature) of such property, including year of acquisition;

(b)   Amount of Acquisition Cost incurred at the time of acquisition of property;

(c)   Details of Beneficiaries such as name, registered address, any government identification number (for e.g., PAN, Aadhar Card, SSN, CIN, etc) and relationship with the company;

(d)   If property is in the books, then reference to the item in the Balance Sheet: - the company shall disclose the line item of the balance sheet in which such property is presented, if it is recognized in the books of accounts;

(e)   If property is not in the books, then the fact shall be stated with reasons;

(f)    Where there are proceedings against the company under this law as an abettor of the transaction or as the transferor then the details shall be provided: - like the initiating officer, date of show-cause notice, name and nature of the property which is the subject of the proceeding etc. ;

(g)   Nature of proceedings, status of same and company’s view on the same: - the company shall specify, as part of the nature of proceedings, whether it involves an attachment, adjudication and/or confiscation of property. The company shall also state the fact around the status of the proceedings and its view on the same.

7. Security of current assets against borrowings

Where the company has borrowings ‘during any point of time of the year’ from banks or financial institutions on the basis of security of current assets, it shall disclose the following:

(a) whether quarterly returns or statements of current assets filed by the company with banks or financial institutions are in agreement with the books of accounts.

(b) if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

1. 1. 1. The term "sanction" here should include fresh sanction during the reporting period as well as limits renewed or due for renewal during the reporting period. Moreover, both fund based and non-fund based credit facilities availed by the Company shall be included for the purpose of this disclosure. However, this would exclude any borrowings which are sanctioned on the basis of security of the company's assets other than current assets.
      2. Moreover, although company may be submitting monthly returns/statements to the lenders, reporting under this clause is confined to the quarterly returns/statements only.
      3. If any discrepancy arises when such returns/statements are compared with the books of account, then the Company is required to provide summary of reconciliation and reasons of material discrepancies. Instances of such differences may be relating to difference in value of stock, amount of debtors/creditors, ageing analysis of debtors, etc., between the books of account and the returns/statements submitted to banks/financial institutions.

8. Illustrative format for disclosure is as follows:

Quarter	Name of Bank	Particular of securities provided	Amount as per books of account	Amount as reported in quarterly return/ statement	Amount of difference	Reason of material discrepancies
June 20XX	Bank XYZ	Finished goods	XX	XX	XX

9. Wilful Defaulter*

Where a company is declared wilful defaulter (at any time during the financial year or after the end of reporting period but before the date when financial statements are approved or in an earlier period and the default has continued for the whole or part of the current year) by any bank or financial institution or other lender, following details shall be given:

(a) Date of declaration as wilful defaulter;

(b) Details of defaults (amount and nature of defaults)

*A ‘wilful defaulter’ means a person or an issuer who or which is categorized as a wilful defaulter by any bank or financial institution (as defined under the Act) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.

10. Relationship with Struck off companies

Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956, the company shall disclose the following details:

Name of the struck off company	Nature of transaction with struck off company	Balance outstanding* as at current period	Relationship** with struck off company (if any)	Balance outstanding* as at previous period	Relationship** with struck off company (if any)
	Investment in securities
	Receivables
	Share held by struck off company
	Other outstanding balances (to be specified)

* The company shall disclose the amount outstanding as the gross amount (without netting the provision for doubtful debts or impairment loss allowance). If any transaction with a struck off company has happened during a financial year and settled / reversed / squared off etc., during the same financial year such that the balance outstanding is NIL as at the end of the reporting period, the company is required to disclose those transactions as well in the similar format as prescribed above.

** for the purpose of this disclosure, such relationship between company and struck off company should exist as at respective Balance sheet date.

However, when providing the above disclosure, the details should not be included for those companies whose names were struck off during the financial year but an order had been passed by any adjudicating authority (for e.g., NCLT) restoring the company’s name before approval of the financial statements.

11. Registration of charges or satisfaction with Registrar of Companies

Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed. Such details may include a brief description of the charges or satisfaction, the location of the Registrar, the period (in days or months) by which such charge had to be registered and the reason for delay in registration.

12. Compliance with number of layers of companies

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship / extent of holding of the company in such downstream companies shall be disclosed.

13. Analytical Ratio

The company shall explain the financial statement line items included in numerator and denominator for computing the following ratios:

Ratio	Numerator	Denominator	Current Period	Previous Period	% Variance	Reason of Variance
Current Ratio	Current Assets	Current Liabilities
Debt- Equity Ratio	Total Debts	Shareholder’s Equity
Debt Service Coverage Ratio	EBIDT + Non cash expense	Interest + Principal Repayment
Return on Equity Ratio	PAT – Preference Dividend	Average shareholder’s equity
Inventory turnover ratio	Sales	Average Inventory
Trade receivables turnover ratio	Net credit sales	Average account receivable
Trade Payable turnover ratio	Net credit purchase	Average trade payable
Net capital turnover ratio	Net sales	Average working capital
Net profit ratio	Net profit	Sales
Return on Capital employed	EBIT	Capital employed
Return on investment

The company shall provide a commentary explaining any change (whether positive or negative) in the ratio by more than 25% compared to the ratio of preceding year.

14. Compliance with approved Scheme(s) of Arrangements

Where any Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013, the company shall disclose that the effect of such Scheme of Arrangements have been accounted for in the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with accounting standard’ and deviation in this regards shall be explained.

15. Utilisation of Borrowed fund and share premium

(A) Where a company has advanced or loaned or invested funds to Intermediaries with the understanding that the Intermediary shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries, the company shall disclose the following:

(I) date and amount of fund advanced or loaned or invested in Intermediaries with complete details of each Intermediary.(II) date and amount of fund further advanced or loaned or invested by such Intermediaries to other intermediaries or Ultimate Beneficiaries along with complete details of the ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries.

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act has been complied with for such transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

(B) Where a company has received any fund from any Funding Party with the understanding that the company shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries, the company shall disclose the following:

(I) date and amount of fund received from Funding parties with complete details of each Funding party.

(II) date and amount of fund further advanced or loaned or invested in other intermediaries or Ultimate Beneficiaries along with complete details of the other intermediaries’ or ultimate beneficiaries.

(III) date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries.

(IV) declaration that relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and Companies Act has been complied with for such transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

3. IN PART II- STATEMENT OF PROFIT AND LOSS

1. Under the heading “III. Total Revenue (I+II)” the word “Revenue” has been replaced by the word “Income” as shown below:

EARLIER in the face of Statement of P&L	NOW in the face of Statement of P&L
I. Revenue from operation II. Other Income III. Total Revenue (I+II)	I. Revenue from operation II. Other Income III. Total Income (I+II)

2. Under the heading “General Instructions for Preparation of Statement of Profit and Loss”

1. In paragraph 2, in item (A), after sub-item (b) (i.e. Sale of Service), the following has been inserted:

Grants or donations received (relevant in case of section 8 companies only),

2. In paragraph “5 Additional information” after item (viii)

1. Undisclosed Income

The company shall give details of any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity for disclosure under any scheme. The company shall also state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.

The details that are required to be provided by the company as part of this disclosure are prescribed below:

S. No.	Assessment Year	Section of the Act	Amount disclosed in tax return	Transaction description along with value treated as income	Assessment Status	Whether transaction recorded in books of account?	FY in which transaction is recorded

2. Corporate Social Responsibility (CSR)

Where the company covered under section 135 of the companies act, the following shall be disclosed with regard to CSR activities:-

(a) amount required to be spent by the company during the year,

(b) amount of expenditure incurred,

(c) shortfall at the end of the year,

(d) total of previous years shortfall,

(e) reason for shortfall,

(f) nature of CSR activities,

(g) details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR expenditure as per relevant Accounting Standard,

(h) where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements in the provision during the year should be shown separately.

3. 3. Details of Cyrpto Currency or Virtual Currency

Where the company has traded or invested in Crypto Currency or Virtual Currency during the financial year, the following shall be disclosed: (a) profit or loss on transactions involving Crypto Currency or Virtual Currency; (b) amount of currency held as at the reporting date; (c) deposits or advances from any person for the purpose of trading or investing in Crypto Currency / Virtual Currency.