Changes in Schedule III w.e.f FY 2021-22

  • The Ministry of Corporate Affairs, Government of India, issued notifications dated 24th March 2021 to amend Schedule III.
  • The purpose of the amendment in Schedule III is to enhance the quality of financial statements and improve the reliability of financial statements for its users.
  • In amended Schedule III some new disclosures have been added, such as disclosures about promoter shareholding and subsidiaries, reconciliation of statements filed with banks for the purpose of working capital, Benami transactions, loans to promoters, etc.

Brief description of Schedule III

Schedule III provides a general reporting format of financial statements. It is divided into three parts, that is, Division I, Division II, and Division III.

  • Division I is applicable to entities preparing their financial statements as per the Companies (Accounting Standards) Rules, 2006;
  • Division II is applicable to entities preparing their financial statements as per the Companies (Indian Accounting Standards) Rules, 2015; and
  • Division III is applicable to non-banking financial institutions preparing their financial statements as per Ind AS.

Amendments in Schedule III from FY 2021-22 Introduced by MCA

Rounding off: Now it has been made mandatory for the companies to round off the figures appearing in the Financial Statements. The round-off is to be done on the basis of “Total Income” instead of “Turnover” which was done earlier.

(Total Income = Revenue from operations + Other Income)

Promoter Shareholdings: Now the companies are also required to disclose the shares held by the promoters at the end of the FY. If there is any change in shareholding then that also be disclosed in %.

Short-term borrowings: Now it has become mandatory for the company to disclose “the current maturities from long term borrowings” separately in the financial statements. So now the current maturities of all long-term borrowings will be disclosed under ‘short-term borrowings’ and not under long-term borrowings and other current liabilities.

Trade Payable: Now the companies are required to make aging of Trade Payable which are due for payment. If no due date is specified then the date of the transaction will be taken as the due date of payment and aging to be done accordingly. Unbilled bills are also required to be disclosed separately. The aging is to be disclosed in the specified format.

Property, Plant and Equipment (PPE’s) and Intangible Assets:  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 the 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.

Security Deposits: Now this is to be disclosed under the head “Other non-current assets” instead of “Long term loans and advances”.

Trade Receivables: Now the companies are required to make an aging schedule for Trade receivables outstanding in the specified format. Where no due date of payment is specified in that case disclosure shall be from the date of the transaction. Unbilled dues shall be disclosed separately.

Utilisation of loans/borrowings taken from banks and financial institutions: Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken, then at the balance sheet date the company shall disclose the details of where they have been used.

Title deeds of Immovable Property: The companies have to give the details of all those immovable properties whose title deeds are not in the name of the company, except those immovable properties in which the company is lessee, and lease agreements are executed. If the same is held jointly with others, details to the extent of the company’s shares shall be disclosed. The details are to be given in specified format in reason of not holding in company name also needs to be disclosed.

Revaluation of Property, Plant and Equipment: Where the company has revalued its PPE’s then the company shall disclose 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. In case the company has not used a registered valuer for such fair value/revaluation purposes, the fact needs to be disclosed in the financial statements.

Loan or advances to Promoters, Directors, KMPs and the Related Parties: Following disclosures shall be made where Loans or Advances in the nature of loans are granted to promoters, Directors, KMPs, and the related parties (as defined under the Companies Act, 2013,) either severally or jointly with any other person, that are:

(a) repayable on demand or

(b) without specifying any terms or period of repayment

Capital Work in Progress (CWIP) & Intangible Assets (IA’s): For Capital-work-in progress and Intangible assets, the company is required to give an aging schedule in the specified format. Further, for CWIP and IA’s whose completion is overdue or has exceeded its cost compared to its original plan, the aging schedule shall be given separately. Also, details of projects where activity has been suspended shall be given separately.

Details of Benami Property held: Company shall disclose all the Benami property in which proceedings have been initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rule made thereunder, disclosures shall be made in the manner prescribed.

 The following details need to be disclosed:-

(a) Details of such property, including the year of acquisition,

(b) Amount thereof,

(c) Details of Beneficiaries,

(d) If the property is in the books, then reference to the item in the Balance Sheet,

(e) If the 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 abetter of the transaction or as the transferor then the details shall be provided,

(g) Nature of proceedings, the status of same, and company‘s view on same.

Qurterly/Monthly Statement submitted to Banks: Where the Company has borrowings 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, a summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

Wilful Defaulter: Where a company is a declared wilful defaulter by any bank or financial institution or other lenders, the following details shall be given:

(a) Date of declaration as wilful defaulter,

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

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 Companies Act, 1956, the Company shall disclose the following details: –

  • Name of the struck off company
  • Nature of transactions with struck-off Companies such as Investments in securities, Trade Receivables, Payable, etc.
  • Balance outstanding
  • Relationship with the Struck off company, if any, to be disclosed

Registration/ satisfaction of charges or 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.

Analytical Ratios: Now the company has to disclose 11 specified ratios. The company shall explain the items included in the numerator and denominator for computing the specified ratios. Further, 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 the preceding year.

The following Ratios are to be disclosed:-

(a) Current Ratio,

(b) Debt-Equity Ratio,

(c) Debt Service Coverage Ratio,

(d) Return on Equity Ratio,

(e) Inventory turnover ratio,

(f) Trade Receivables turnover ratio,

(g) Trade payables turnover ratio,

(h) Net capital turnover ratio,

(i) Net profit ratio,

(j) Return on Capital employed,

(k) Return on investment.

Undisclosed income: The Company shall give details of any transaction not recorded in the books of accounts that have 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 and also shall state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.

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

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

(b) amount of expenditure incurred,

(c) the shortfall at the end of the year,

(d) total of the previous year’s shortfall,

(e) reason for the 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.

Details of Cryptocurrency or Virtual Currency:

Where the Company has traded or invested in Cryptocurrency or Virtual Currency during the financial year, the following shall be disclosed:

(a) profit or loss on transactions involving Cryptocurrency 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.


  • Authorities are expected to have increased openness and strengthened the financial reporting system in light of recent firm failures. Many aspects of auditing and reporting would entail the use of IT tools and procedures, both from the perspective of the auditors and the auditee.
  • It is also worth noting that the new legislation not only lays accountability on the corporation’s board of directors but also on the auditors. The auditors must use their auditing techniques to verify the directors’ disclosure statements in the financial statements and then issue an independent auditors report to the company’s shareholders.