Schedule III of the Companies Act, 2013 provides the manner in which the company registered under the Act should prepare its ‘Balance Sheet’, ‘Statement of Profit and Loss’ and ‘notes’.
Schedule III is divided into the following three divisions –
| Particulars | Details |
| Division I | Financial Statements for a company whose Financial Statements are required to comply with the Companies (Accounting Standards) Rules, 2006 |
| Division II | Financial Statements for a company whose Financial Statements are drawn up in compliance with the Companies (Indian Accounting Standards) Rules, 2015 |
| Division III | Financial Statements for NBFC (Non-Banking Financial Company) whose Financial Statements are drawn up in compliance with the Companies (Indian Accounting Standards) Rules, 2015 |
Applicability and non-applicability of Schedule III of the Companies Act, 2013 –
As per provisions of section 129 of the Companies Act, 2013, the financial statement of the company shall be in form/ forms as provided in Schedule III. However, as per proviso to section 129(1), Schedule III will not be applicable to –
- Insurance company;
- Banking company;
- Any company engaged in the generation/ supply of the electricity;
- Any class of company for which a form of a financial statement is specified under the Act governing such class of company.
Division I to Schedule III of the Companies Act, 2013 –
Division I to Schedule III covers the financial statement of the company which is required to comply with the Companies (Accounting Standards) Rules, 2006. Division I to Schedule III covers the following –
1. General Instructions for preparation of Balance Sheet and Statement of Profit & Loss of a company;
2. Part I – Balance Sheet (format) along with general instructions for preparation of Balance Sheet:
3. Part II – Statement of Profit & Loss along with general instructions for preparation of Statement of Profit & Loss.
Highlighting some general instructions –
- Disclosure requirements of the other provisions of the Companies Act and the Accounting Standards as applicable to the company will prevail over Schedule III.
- Disclosure requirements as specified in Schedule III are additional. Such disclosure as per Schedule III doesn’t substitute disclosure requirements of the Accounting Standards as prescribed under the Companies Act, 2013.
- Notes to accounts shall contain information in addition to that presented in the Financial Statement.
- Rounding off of the figures in the Financial Statement in the following manner –
| Total income of the company | Rounding off of the figures in the Financial Statement |
| Less than INR 100 Crores | Figures in the Financial Statement should be rounded off to the nearest hundreds, thousands, lakhs or millions, or decimals thereof. |
| INR 100 Crores or more | Figures in the Financial Statement should be rounded off to the nearest lakhs, millions or crores, or decimals thereof. |
- The company is required to provide corresponding figures of the immediately preceding reporting period of all the items shown in the Financial Statement (including notes). However, in the case of the first Financial Statement, no such corresponding figures are to be provided.
- The terms used in the Schedule shall be as per the relevant applicable Accounting Standards.
Division II to Schedule III of the Companies Act, 2013 –
Financial Statement in accordance with Division II to Schedule III is to be prepared by every company to which Indian Accounting Standards apply.
Division II to Schedule III consists of the following –
1. General Instructions for preparation of the Financial Statement of a company that is required to comply with Ind AS;
2. Part I – Balance Sheet (format) along with general instructions for preparation of Balance Sheet:
3. Part II – Statement of Profit & Loss along with general instructions for preparing of the Statement of Profit & Loss.
4. Part III – General Instructions for preparation of the Consolidated Financial Statements
Highlighting some general instructions –
- Disclosure requirements of the other provisions of the Companies Act including Indian Accounting Standards (except the option of presenting assets and liability in order of the liquidity as provided by the relevant Indian Accounting Standards) will prevail over Schedule III.
- Disclosure requirements as specified in Schedule III are additional and the same doesn’t substitute disclosure requirements specified in the Indian Accounting Standards.
- Additional disclosure as specified in the Indian Accounting Standards shall be made in the notes/ by way of additional statement except where it is required to be disclosed on the face of the Financial Statement.
- Notes to accounts shall contain information in addition to that presented in the Financial Statement.
- Rounding off of the figures in the Financial Statement in the following manner –
| Total income of the company | Rounding off of the figures in the Financial Statement |
| Less than INR 100 Crores | Figures in the Financial Statement should be rounded off to the nearest hundreds, thousands, lakhs or millions, or decimals thereof. |
| INR 100 Crores or more | Figures in the Financial Statement should be rounded off to the nearest lakhs, millions or crores, or decimals thereof. |
- The company is required to provide corresponding figures of the immediately preceding reporting period of all the items shown in the Financial Statement (including notes). However, in the case of the first Financial Statement, no such figures are to be provided.
- The terms used in the Schedule shall have the same meaning as prescribed in the Indian Accounting Standards.
Division III to Schedule III of the Companies Act, 2013 –
Financial Statement in accordance with Division III to Schedule III is to be prepared by every non-banking financial company to which Indian Accounting Standards apply. Notably, the non-banking financial company here means a non-banking financial company as defined in the Companies (Indian Accounting Standards) (Amendment) Rules, 2016.
Division III to Schedule III consists of the following –
1. General Instructions for preparation of the Financial Statement of a non-banking financial company that is required to comply with Indian Accounting Standards;
2. Part I – Balance Sheet (format) along with general instructions for preparation of Balance Sheet:
3. Part II – Statement of Profit & Loss along with general instructions for preparing of the Statement of Profit & Loss.
4. Part III – General Instructions for preparation of the Consolidated Financial Statements.
Highlighting some general instructions –
- Disclosure requirements of the other provisions of the Companies Act including Indian Accounting Standards (except the option of presenting assets and liability in accordance with current, non-current classification as provided by the relevant Indian Accounting Standards) will prevail over Schedule III.
- Disclosure requirements as specified in Schedule III are additional and the same doesn’t substitute disclosure requirements specified in the Indian Accounting Standards.
- Additional disclosure as specified in the Indian Accounting Standards shall be made in the notes/ by way of additional statement except where it is required to be disclosed on the face of the Financial Statement.
- Notes to accounts shall contain information in addition to that presented in the Financial Statement.
- Rounding off of the figures in the Financial Statement in the following manner –
| Total income of the Non-Banking Financial Company | Rounding off of the figures in the Financial Statement |
| Less than INR 100 Crores | Figures in the Financial Statement should be rounded off to the nearest hundreds, thousands, lakhs or millions, or decimals thereof. |
| INR 100 Crores or more | Figures in the Financial Statement should be rounded off to the nearest lakhs, millions or crores, or decimals thereof. |
- NBFC is required to provide corresponding figures of the immediately preceding reporting period of all the items shown in the Financial Statement (including notes). However, in the case of the first Financial Statement, no such figures are to be provided.
- The terms used in the Schedule shall have the same meaning as prescribed in the Indian Accounting Standards.
Frequently Asked Questions (FAQs) –
Some of the relevant Frequently Asked Questions with regard to Schedule III of the Companies Act, 2013 are highlighted hereunder –
Q.1 What is Schedule III of Companies Act?
Ans. Schedule III of the Companies Act, 2013 prescribes the manner in which the ‘Balance Sheet’, ‘Statement of Profit and Loss’ and ‘notes’ of the company are to be prepared.
Q.2 What is the applicability of Schedule III of the Companies Act?
Ans. Schedule III is applicable to all the companies except the insurance company; banking company; any company engaged in the generation/ supply of the electricity and any class of company for which a form of the financial statement is specified under the Act governing such class of company.
Q.3 Is Schedule III applicable to all companies?
Ans. As per proviso to section 129(1) of the Companies Act, 2013, Schedule III doesn’t apply to insurance and banking company; any company engaged in the generation/ supply of the electricity and any class of company for which a form of the financial statement is specified under the Act governing such class of company.
Q.4 What are the divisions in Schedule III?
Ans. There are three divisions in Schedule III. Division I is applicable to the company that is required to comply with Companies (Accounting Standards) Rules, 2006. Division II is applicable to the company that is required to comply with the Companies (Indian Accounting Standards) Rules, 2015 and Division III is applicable to the non-banking financial company that is required to comply with the Companies (Indian Accounting Standards) Rules, 2015.
Q.5 What is Schedule 3 part 1 of the Companies Act, 2013?
Ans. Schedule 3 part 1 of the Companies Act, 2013 covers the Balance Sheet format along with the guidelines for the preparation of the same.
Q.6 When was Schedule III first made applicable?
Ans. Schedule III is first made applicable for the Balance Sheet and Statement of Profit & Loss to be prepared for the Financial Year commencing on or after 1st April 2014.
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