Detailed analysis of changes brought in by ministry of corporate affairs in Schedule III of Companies Act 2013; dated 24th March 2021 – Balance Sheet

Section 467 of the companies act 2013, gives powers to the central government to alter any of the regulations, rules, tables, forms, and other provisions contained in any of the Schedules to this Act, by exercising the powers of section 467 central government hereby makes amendments in Schedule III of companies act which shall be effective from 1st April 2021. Details of amendments are discussed in detail below:

  • Depending upon the turnover Total Income of the company, the figures appearing in the Financial Statements may shall be rounded off as given below
Turnover Total Income Rounding off
(a) less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or millions, or decimals there of
(b) one hundred crore rupees or more To the nearest lakhs, millions or crores, or decimals thereof

Part I- Balance Sheet

1. under the heading “II Assets”, under sub-heading “Non-current assets”, after the words “Property, Plant and Equipment”, the words “and Intangible assets” shall be inserted and for the words “Tangible Assets”, the words “Property, Plant and Equipment” shall be substituted

Non-Current Assets

  • (a) Property, Plant and Equipment and Intangible assets
    • Tangible assets Property, Plant and Equipment
    • Intangible Assets

Changes related to Notes to accounts relating to Balance Sheet Items

2. In Notes to accounts, where details of share capital and related disclosures are given additional disclosure in the form of “shareholding of promoters” shall be given in below-listed format:

Shares held by promoters at the end of the year % change during the year****
S. No. Name of Promoter No. of Shares % of total shares

3. In Notes, under short term borrowings, current maturities of long-term borrowings shall be disclosed separately.

4. Under trade payables and related disclosures, a separate disclosure of Trade Payable due for payment and ageing schedule thereof shall be given Trade payable due for repayment

Particulars Outstanding for following periods from due date of payments  
  Less than 1 year 1-2 years 2-3 years More than 3 years Total
Disputed dues MSME          
Disputed dues Others          

5. under the heading “G. Other current liabilities”, item (a) shall be omitted;

In notes, item (a) of other current liabilities is Current maturities of long-term debt, since this is being incorporated in short term borrowings, therefore item (a) I.e., Current maturities of long-term debt shall be deleted

6. For tangible assets, the companies preparing schedule of fixed assets mentioning therein details of gross block, depreciation and netblock, are not required to prepare any additional schedule.

7. For intangible assets also, a reconciliation as prepared in case of tangible assets shall be prepared. The reconciliation shall cover gross and net carrying amounts of each class of assets at the beginning and end of the period showing additions, disposals, acquisitions through business combinations, changes due to revaluations and other adjustments related to depreciation, impairment or reversals shall be disclosed separately.

8. After the amendment under schedule III, security Deposits shall not be disclosed under Long Term Loans & Advances

9. Under Other non- current assets, an item shall be added after item (i) “Long Term trade receivables” by the name of Security Deposits

10. Under other non-current assets after long term trade receivables, following ageing schedule shall be given

Particulars Outstanding for following periods from the due date of payments
Less than 6 months 6 months – 1 years 1-2 years 2-3 years More than 3 years Total
Undisputed Trade receivables – considered good
Undisputed Trade receivables – considered doubtful
Disputed Trade receivables – considered good
Disputed Trade receivables – considered doubtful

11. For trade receivables as well, below schedule shall be given:

Particulars Outstanding for following periods from the due date of payments
Less than 6 months 6 months – 1 years 1-2 years 2-3 years More than 3 years Total
Undisputed Trade receivables – considered good
Undisputed Trade receivables – considered doubtful
Disputed Trade receivables – considered good
Disputed Trade receivables – considered doubtful

12. A separate heading after heading V, shall be added:

Heading VA. Here the company will disclose the reason of utilization of funds for the purposes other than for which it was borrowed and shall also disclose the purposes for which the funds was utilized

13. Heading “Y” shall be added to obtain additional regulatory information

Here the company needs to disclose below listed additional disclosures:

a) Details required to given of all the immovable property, where title deeds are not held in the name of the company, other than properties where the company is the lessee and the lease agreement are duly executed in favour of the lessee

b) In cases where revaluation has been done in case of PPE, the company shall disclose if the valuation was done by registered valuer as per rule 2 of the companies (Registered Valuers and Valuation) Rules, 2017

c) If the company has given any loans and advances to promoters, directors, KMPs and other related parties (as per the provisions of companies act 2013) and that loans or advances are either repayable on demand or without specifying any terms or period of repayment, then disclosures shall be given in below mentioned format:

Type of Borrower Amount of loans or advances in the nature of loans outstanding Percentage to the total Loans and Advances in the nature of Loans
Related Parties

d) Ageing schedule for Intangible assets under development and Capital Work in Progress (CWIP) shall be given.

e) Company shall disclose details of benami property, if any proceedings have been initiated or pending against the company for holding any benami property under Benami Transactions (Prohibition) Act, 1988 and the rules made thereunder, below mentioned details shall be disclosed:

    • Details and Year of acquisition of such property
    • Amount of property
    • Beneficiary details
    • Reference in the balance sheet, if the property is disclosed in books
    • If the property is not in the books, then the facts shall be disclosed with reasons
    • Nature of proceedings and company’s stand thereon shall also be disclosed

f) Company needs disclose if the books of accounts are tallied with the quarterly or monthly returns filed with banker in cases where company has borrowed funds from banks on the basis securities of current assets. If the statements and books of accounts aren’t tallied, a separate reconciliation needs to be provided.

g) A disclosure regarding willful defaulter shall be given where company is declared as willful defaulter by any bank or financials institution or other lenders. The disclosure shall cover below listed points:

    • Date of declaration of willful defaulter
    • Details of default (amount and nature of defaults)

h) The company shall also disclose any transactions with struck off companies under section 248 of companies act 2013 or section 560 of companies act 1956, details shall cover name of struck off company, nature of transaction, amount outstanding and relationship with struck off company.

i) If the company is yet to register any charge or satisfaction with Registrar of companies beyond the statutory period, detailed reason thereof shall be given

j) Now the company is required to disclose below listed ratios along with explanation of items included in numerator and denominator while calculating the ratios:

    • Current Ratio
    • Debt- Equity Ratio
    • Debt Service Coverage Ratio
    • Return on Equity Ratio
    • Inventory turnover ratio
    • Trade Receivable turnover ratio
    • Trade Payable turnover ratio
    • Net capital turnover ratio
    • Net Profit Ratio
    • Return on capital employed ratio
    • Return on investment ratio

Explanation is required if there’s change of more than 25% as compare to preceding financial year.

k) Where the 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 standards’ and any deviation in this regard shall be explained.

l) Utilization of Borrowed funds and share premium:

Where company has received funds from any persons or entities including foreign entities with the understanding that company shall directly or indirectly lend or invest or provide any guarantee, security or the like on behalf of fund providers (the parties to be funded or the parties to whom guarantee is being provided are identified either by the funding party or on any other person on behalf of funding party), then the company shall disclose the following:

      • date and amount of fund received from Funding parties with complete details of each Funding party
      • date and amount of fund further advanced or loaned or invested other intermediaries or Ultimate Beneficiaries along with complete details of the other intermediaries’ or ultimate beneficiaries
      • date and amount of guarantee, security or the like provided to or on behalf of the Ultimate Beneficiaries
      • 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).

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April 2021