Schedule III to the Companies Act 2013 prescribes the form and content of a company's balance sheet, statement of profit and loss and notes. It has three divisions: Division I for companies following the Companies (Accounting Standards) Rules, Division II for non-NBFC companies following Ind AS, and Division III for NBFCs following Ind AS. The amendment notified on 24 March 2021 (G.S.R. 207(E)), effective 1 April 2021, added the ageing schedules, ratios and regulatory disclosures that now take most of the audit time.
Facts checked: 9 October 2026. The MCA and India Code pages could not be opened by our research tools, so the structure below rests on ICAI and ICSI material and practitioner summaries of the 2021 notification. Before you quote a clause in a report or a client email, read the notification text on mca.gov.in.
Which division applies
| Division | Applies to | Notable feature |
|---|---|---|
| Division I | Companies whose financial statements follow the Companies (Accounting Standards) Rules (Indian GAAP) | Balance sheet in vertical format, current and non-current split |
| Division II | Companies, other than NBFCs, that follow Ind AS | Adds the statement of changes in equity, and other comprehensive income in the profit and loss statement |
| Division III | NBFCs that follow Ind AS | Assets and liabilities shown in order of liquidity, not as current and non-current |
Schedule III does not apply to banking and insurance companies, which follow their own regulators' formats. The general instructions also say that where the Act or an accounting standard needs a different presentation, the Schedule is read as modified to match.
The balance sheet in outline
The main heads, as in the format:
- Equity and liabilities: shareholders' funds (share capital, reserves and surplus); money received against share warrants; non-current liabilities (long-term borrowings, deferred tax liabilities, other long-term liabilities, long-term provisions); current liabilities (short-term borrowings, trade payables, other current liabilities, short-term provisions).
- Assets: non-current assets (property, plant and equipment and intangible assets, capital work-in-progress, non-current investments, long-term loans and advances); current assets (current investments, inventories, trade receivables, cash and cash equivalents, short-term loans and advances).
The statement of profit and loss runs from revenue from operations and other income, through the expense heads (cost of materials, purchases of stock-in-trade, changes in inventories, employee benefit expense, finance costs, depreciation and amortisation), to profit before and after tax and earnings per share. Division II adds other comprehensive income.
What the 2021 amendment added
The table below follows summaries of the notification. Several items are worded in the Schedule as disclosures "where applicable", so confirm the exact trigger in the text.
| Disclosure | What is asked |
|---|---|
| Trade receivables ageing | Buckets of under 6 months, 6 months to 1 year, 1 to 2, 2 to 3 and over 3 years; undisputed and disputed, each split into good and doubtful; unbilled dues shown separately |
| Trade payables ageing | Buckets of under 1 year, 1 to 2, 2 to 3 and over 3 years; MSME, others and disputed dues; unbilled dues separately |
| CWIP and intangibles under development | Ageing by period; suspended projects shown separately; completion schedule for overdue or over-budget projects |
| Title deeds | Immovable property not held in the company's name (properly executed leases excluded) |
| Revaluation | Whether based on a registered valuer's report |
| Loans to promoters, directors, KMPs and related parties | Those repayable on demand or without fixed terms |
| Promoters' shareholding | Holding at year end and change during the year |
| Ratios | Current ratio, debt-equity, debt service coverage, return on equity, inventory turnover, receivables turnover, payables turnover, net capital turnover, net profit ratio, return on capital employed and return on investment, with numerator and denominator, and an explanation where the change from the prior year exceeds 25% |
| Wilful defaulter | Whether a lender has declared the company one |
| Benami property | Proceedings under the Benami Transactions (Prohibition) Act, 1988 |
| Struck-off companies | Transactions with companies struck off under section 248 |
| Charges | Charges or satisfactions not registered within the statutory period |
| Layers of subsidiaries | Compliance with the permitted number of layers |
| Others | Undisclosed income surrendered in tax assessments, CSR, crypto or virtual currency, utilisation of borrowed funds and share premium, compliance with approved schemes of arrangement, quarterly statements to banks against the books |
Rounding off is now keyed to total income rather than turnover. The same day, the Companies (Accounts) Amendment Rules, 2021 required accounting software to keep an audit trail.
Where it shows up in audit working papers
- Opening the file: map each trial balance ledger to a Schedule III line. The trial balance to Schedule III linked Excel formulas post shows one way, and the trial balance format gives you the starting layout.
- Disclosure review: work through the Schedule III checklist line by line and record the evidence for each "nil" answer.
- Ratios: recompute them in the Schedule III ratio calculator and challenge any movement above 25%.
- Reporting: several disclosures (title deeds, wilful defaulter, benami, struck-off companies) are cross-checked in the CARO 2020 clause-by-clause guide.
Worked example (illustrative numbers)
A private company reports trade receivables of ₹4,80,00,000 at year end, of which ₹3,10,00,000 is under 6 months, ₹95,00,000 is 6 to 12 months, ₹50,00,000 is 1 to 2 years (₹20,00,000 of this disputed) and ₹25,00,000 is over 3 years and doubtful. The ageing note must show those buckets, the disputed amount separately, and the doubtful balance under its own column, and the total must agree to the face of the balance sheet. If the receivables turnover ratio moved from 6.0 to 4.2 (a fall of 30%), the ratio note needs an explanation, since the change is above 25%.
Frequently asked questions
What is the difference between Schedule III Division I and Division II?
Division I serves companies following Indian GAAP accounting standards. Division II serves non-NBFC companies following Ind AS and adds the statement of changes in equity and other comprehensive income.
Are the 2021 disclosures applicable to every company?
The amendment was notified for all three divisions from 1 April 2021. Some items depend on facts, such as CSR under section 135. Check each item's trigger.
Do the ratios need an explanation every year?
Each ratio is disclosed with its formula components. An explanation is needed where the change from the preceding year is more than 25%.
Does Schedule III apply to banks and insurers?
No. Banking and insurance companies follow the formats set by their own regulators.
Use the Schedule III checklist with the statutory audit applicability and due date guide to close the financial statements review.
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error