CA Pragathi Gudur*

With the ever-increasing stringency in the regulatory framework and disclosure requirements under various provisions of law, MCA, vide notification dated March 24, 2021 has further prescribed a list of numerous additional disclosures required in the financial statements by amending schedule III to the Companies Act, 2013.

The amendments have been brought to bring more transparency by providing for various disclosures including dealing with struck off companies, details of benami property, undisclosed income etc. which shall be applicable from FY 2021-22.

Key Amendments are divided into three divisions

In recent years, there have been substantial changes in the reporting requirement by the auditors, but no such corresponding amendments were made in Schedule-III for the preparation of the financial statements. Thus, to align the company’s financial statements in accordance with the auditor’s reporting requirements, the following amendments have been discussed in this write-up.

In this article changes introduced in CARO and amendments applicable to Division I entities are dealt with.


Changes made in Schedule III will be applicable for Financial Statements prepared for FY 2021-22 but because comparative figures for 2020-21 will be required to be disclosed in FY 2021-22, therefore, these changes should be considered while finalizing financials of the current financial year also.

Purpose of amendment:

MCA aims to bring in more transparency in reporting aspects which have been discussed in this article.

 Summary of changes in CARO 2020:

Description Number of Clauses
Retained Clauses 7
Retained Clauses – with Changes 7
Deleted clauses 1
Newly introduced 5
Re-introduced 2
CARO 2020 21
Sub Clauses 47

Below is the synopsis of the changes in CARO 2020:

Newly Added

(7 Clauses)


(7 Clauses)


(7 Clauses)



Transaction Not recorded in Books Fixed Assets Acceptance of deposits Managerial Remuneration
Ability of Company to meet its Liabilities Inventory Maintenance of cost records
CSR Transfer of Unspent Amount to Fund Repayment of Loans granted by Company Loans, Investments, securities & guarantee’s Sec 185 & 186
Statutory Auditor Resignation Default in repayment of dues Application of funds raised
CFS: reference to negative remarks in Subsidiary CARO Reporting of Frauds Related Party Transactions
Internal Audit System (CARO 2003) Nidhi Company Non Cash Transactions
Cash Loss (CARO 2003) Registration with RBI Payment of statutory dues

Amendments in Schedule III of Companies Act, w.e.f. 1st April 2021

Summary of changes – Division I

A. Enhanced Disclosure for more oversight on Governance

1. Promoter shareholding

2. MSME disclosure on face of B/S

3. Registration and satisfaction of charges

4. More than 2 layers of subsidiaries

5. Compliance with Scheme of Arrangement

6. Working capital reconciliation: Statements filed with banks reconciled with Books of account

7. Revaluation impact beyond 10%

8. Revaluation by Registered Valuer

B. Financial Discipline

1. Ratios

2. Ageing of Trade Payables and Trade Receivables

3. CWIP analysis

4. Transactions not recorded in books; undisclosed income etc

C. Money laundering

1. Dealing with Struck off companies

2. Benami transactions

3. Immovable property not held in company name

4. Wilful Defaulter declaration

5. Loans Given/ Loans received for transfer to other entities

6. End use of borrowed funds

7. Loans and Advances to Promoters/ Directors/ relatives

8. Dealings in Crypto currency/ crypto assets

D. Minor changes/ edits

1. Rounding off Total Income vs. Turnover

2. Replace Total Revenue by Total Income

3. Grants/ Donations for Section 8 companies as Operating income

4. Security Deposit shift from Loans and Advances to Other Non-Current Assets

5. Tangible Assets replaced by Property, Plants and Equipment & Intangible Assets

6. Lease liabilities presentation for Ind AS Entities

7. SOCIE revised for Ind AS entities

8. NBFC disclosure of CRAR and other ratios

General Instruction for preparation of Balance Sheet:

1. Rounding off: For the purpose of rounding off the figures appearing in the Financial Statements, the total income of the Company shall now be considered as the basis instead of turnover of the company.

Total Income Rounding off
Less than 100 Crore Rupees To the nearest hundreds, thousands, lakhs or millions or decimals thereof
100 Crore Rupees or more To the nearest lakhs, millions or crores, or decimals thereof

Prior to the amendment, the same was to be adopted on a voluntary basis for companies preparing their financials as per Companies (Accounting Standards) Rules, 2006 and the nearest unit was based on the turnover of the company.

Difference between Turnover and Total Income

Turnover: As per Sec 2(91) of the Companies (Amendment) 2017,” means the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both by a company during a financial year

Total Income:

a Revenue from Operations XXX
b Other Income XXX
Total Income XXX

Additional Disclosure in Notes to Balance Sheet:

1. Promoter’s shareholding: The note on Share Capital in the Financial Statements shall mention details of the Shareholding of the Promoters along with changes, if any, during the Financial Year as per the below format:

Shares held by promotes at the end of the Year % Change during the Year
S no Promoter’s name No. of Shares* % of Total Shares**  

Promoter means a person:

a. who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92; or

b. who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or

c. in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act;

Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity;

*Details shall be given separately for each class of shares

**Percentage change shall be computed with respect to the number at the beginning of the year or if issued during the year for the first time then with respect to the date of issue

2. Trade Payables ageing schedule: The note on Trade Payables due for payment by the company shall consist of an ageing schedule “Trade payables due for payment”

Trade payables ageing Schedule

(Amount in Rs.)

Particulars Outstanding for following periods from due date of payment Total
Less than 1 year 1-2 years 2-3 years More than 3 years
(i) MSME
(ii) Others
(iii) Disputed dues – MSME
(iv) Disputed dues – Others

3. Trade Receivables ageing schedule: The note on Long Term Trade Receivables in Other non -current assets due for payment to the Company shall consist of an ageing schedule as follows:

Trade payables ageing Schedule

(Amount in Rs.)

Particulars Outstanding for following periods from the date of payment^ Total
Less than 6 months 6m to 1 year 1-2 years 2-3 years More than 3 years
(i)  Undisputed Trade receivables- considered good
(ii)  Undisputed Trade Receivables- Considered Doubtful
(iii) Disputed Trade Receivables considered good
(iv) Disputed Trade Receivables considered doubtful

^similar information shall be given 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.

4. Title Deed of Immovable Property not held in name of the Company

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 below 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 deed held in the name of the company 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*

^Relative here means relative as defined in the Companies Act, 2013.

*Promoter here means promoter as defined in the Companies Act, 2013.

5. Disclosure on Revaluation of Assets:

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.

6. Disclosure on Loans/ Advance to Directors/ KMP/ 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 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

Type of borrower Amount of loan or advance in the nature of loan Outstanding Percentage to the total Loans and Advances in the nature of loans
Related Parties

7. Capital Work-in Progress (CWIP)

For capital work in progress, whose completion is overdue or has exceeded its cost compared to its original plan, following CWIP completion schedule shall be given

(Amount in Rs.)

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

Project 2

Note: Details of projects where activity has been suspended shall be given separately.

8. Intangible assets under development:

a. For Intangible assets under development, following ageing schedule shall be given:

Intangible assets under development Amount in CWIP for a period of Total*
Less than 1 year 1-2 years 2-3 years More than 3 years
Projects in progress

Projects temporarily suspended

*Total shall tally with the amount of Intangible assets under development in the balance sheet.

b. For Intangible assets under development, whose completion is overdue or has exceeded its cost compared to its original plan, following Intangible assets under development completion schedule shall be given:

Intangible assets under development To be completed in
Less than 1 year 1-2 years 2-3 years More than 3 years
Project 1

Project 2

Note: Details of projects where activity has been suspended shall be given separately.

9. Details of Benami Property held:

Where any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder, the company shall disclose the following:

a. Details of such property, including year of acquisition,

b. Amount thereof,

c. Details of Beneficiaries,

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

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 a better of the transaction or as the transferor then the details shall be provided,

g. Nature of proceedings, status of same and company’s view on same.

10. Working Capital/Borrowings:

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, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

11. Wilful Defaulter & End use of Funds:

Where a company is a declared wilful defaulter 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)

“Wilful Defaulter” here means a person or an issuer who or which is categorized as a willful 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.

Borrowings from banks and Financial Institutions

Disclosure on utilization of borrowings: Where the Company has not used the borrowings from banks and financial institutions for the purpose for which it was taken at the Balance Sheet date, the Company shall disclose the details of where they have been used.

12. Solvency:

Following Ratios to be disclosed in Notes to Accounts:

(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

Note: The company shall explain the items included in numerator and denominator for computing the above ratios. Explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding year.

13. Details in respect of Utilization of Borrowed funds and share premium shall be provided in respect of:

a. Transactions where an entity has provided any advance, loan, or invested funds to any other person (s) or entity/ entities, including foreign entities.

b. Transactions where an entity has received any fund from any person (s) or entity/ entities, including foreign entity.

14. 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 Struck off Company Nature of transactions with struck-off Company Balance Outstanding Relationship with the Struck off company, if any, to be disclosed
Investments in securities
Shares held by stuck off Company
Other outstanding balances (to be specified)

15. 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.

16. 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.

17. 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 (Corporate Restructuring) of the Companies Act, 2013 the Company shall disclose that:

a. 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

b. in accordance with accounting standards and

c. deviation in this regard shall be explained

18. Total Income:

Under the heading “III. Total Revenue (I +II)”, for the word “Revenue”, the word “Income” shall be substituted;

Hereafter it shall be called as “Total Income”

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

-in paragraph 2, in item (A), after sub-item (b), the following shall be inserted, namely:

“(ba) Grants or donations received (relevant in case of section 8 companies only)”

19. Undisclosed Income:

In “Additional Information” under General Instructions for Preparation of Statement of Profit and Loss,

(ix) Undisclosed income shall be included after item (viii)

The Company shall give details of any transaction not recorded in the books of accounts

a. that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961

b. unless there is immunity for disclosure under any scheme and

c. also shall state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year

20. 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 year’s 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.

21. Crypto 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.

*(Author CA Pragathi Gudur is associated with Ravi Ladia and Co.)

Author Bio

Qualification: CA in Practice
Company: Ravi Ladia & Co.
Location: Hyderabad, Telangana, India
Member Since: 15 Sep 2018 | Total Posts: 7
I am a qualified Chartered Accountant and a fellow member of the ICAI since 2012. I stood All India 41st Rank in CA Final and 43rd Rank in CA Inter. I specialise in Direct Taxes and GST. View Full Profile

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  1. Anonymous says:

    All of the amendments are fine but where do we get the sample for preparation of the Schedule III Balance sheet for companies at this moment and is it mandatory to provide the Ratios in a separate schedule?

  2. jay shah says:

    As per the notification, amendment to Sch III are applicable in preparation of financial statements for
    the financial year commencing on or after 1st April, 2021 (i.e FY 2021-22 and not FY 2022-23 stated in the article. Attention is also drawn to GUIDANCE NOTE ON DIVISION I – NON IND AS SCHEDULE III TO THE COMPANIES ACT, 2013 (Revised January, 2022 Edition) issued by the ICAI.

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