Analysis of amendments in Schedule III to the Companies Act, 2013

  • Blog|Company Law|
  • 4 Min Read
  • By Taxmann
  • |
  • Last Updated on 18 July, 2022

Companies Act 2013 Schedule III

Schedule III to the Companies Act, 2013 was amended on March 24, 2021, to improve the quality and reliability of financial statements. Some new disclosures were also added to Schedule III, such as disclosures about promoter shareholding and subsidiaries, reconciliation of statements filed with banks for the purpose of working capital, benami transactions, and loans to promoters, etc. The amendments to Schedule III are applicable from 1st April 2021.

On analyzing the amendments in Schedule III and CARO 2020, it can be stated that the majority of the modifications made in Schedule III and CARO 2020 are to match the two reporting frameworks and improve transparency between the company and the users of financial statements. It further enabled to reduce the risk of fraud and other unethical behavior on part of the companies.

CARO 2020 provides a para-wise commentary on Companies (Auditor’s Report) Order. It is a complete guide on the applicability and the matters that need to be reported by an Auditor on CARO, supplemented by Clause-wise Ready Reckoner, FAQs, Case Studies, in a Nutshell, etc.

Before going to amendments on Schedule III, first let’s pay a little attention to know about Schedule III is? Basically, in lay man language to make uniformity in financial statements, 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.

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

A brief snippet of the amendments in Schedule III:- 

    1. Shareholding of Promoters: As compared to earlier version, the entities shall now disclose the shares held by the promoters at the end of the financial year and % change during the year in notes to accounts in tabular format as mentioned in the Schedule.
    2. Rounding Off: It is mandatory for the companies to round off the figures appearing in the financial statements on the basis of ‘Total Income’. Earlier this provision was optional and round off was done on the basis of ‘Turnover’.
    3. Short Term Borrowings: From 1 April 2021 onwards, the current maturities from long term borrowings is required to be separately disclosed in the financial statements.
    4. Trade Payables Due For Payments: Gone are those days where ageing schedule for only receivables were made. From now onwards, it shall be prepared for trade payables also which are due for payment, in a tabular form, whether or not, due date of payment is specified on bill. However, unbilled dues shall be separately disclosed.
    5. Disclosure for Tangible and Intangible Asset: At the beginning and end of the reporting period, a reconciliation of the gross and net carrying amounts of each class of assets showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation and other adjustments and the related depreciation and impairment losses or reversals shall be disclosed separately, if  the changes is 10% or more in each class of asset.
    6. Trade Receivables outstanding: Ageing schedule shall be prepared for trade receivables in a tabular form in a manner as notified by MCA, whether or not, due date of payment is specified on bill. However, unbilled dues shall be separately disclosed.
    7. Borrowing from Banks and Financial Institutions: At balance sheet date, the companies shall disclose the details of those funds which were borrowed from banks and financial institutions for a specific purpose.
    8. 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 agreement are executed.
    9. Loan Granted to Promoters, Directors, KMPs and the Related Parties: The company shall disclose all the loans and advances in the nature of loan granted to promoter director and KMPs and related parties, severally or jointly with any other person either repayable on demand, without specifying any terms or period of repayment.
    10. Benami Property: 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.
    11. Willful Defaulter: If any company is declared as wilful defaulter by the bank or financial institution or any other lender then disclosures shall be made by the company in the manner prescribed.
    12. Ratios: Companies shall disclose the all those ratios which are prescribed and shall explain the items included in numerator and denominator for computing the above ratios. Moreover, if any change in the ratio is more than 25% as compared to the preceding year then explanation for the same shall be provided.
    13. Undisclosed income: Where a company has surrendered or disclosed any income under the relevant provisions of the Income Tax Act and which are not disclosed earlier shall be disclosed in the books of accounts, unless there is immune impact.
    14. Corporate Social Responsibility: Where a company under section 135 of the Companies Act, 2013, then disclosure shall be made in the manner prescribed in the Schedule III to the Companies Act, 2013.
    15. Crypto Currency or Virtual Currency: If any company has traded or invested in Crypto Currency or Virtual Currency then following disclosures shall be made in the financial statements:-
      • Profit and loss made from crypto currencies.
      • Amount of currency held at reporting date.
      • Deposit or advance taken from any person for trading or investment in crypto.
Indian Accounting Standards (Ind AS) contains the updated Indian Accounting Standards issued under the Companies (Indian Accounting Standard) Rules, 2021. It provides a complete understanding of the definitions, entities liable to apply Ind AS, and exemptions.


If we sum up our discussion, all of the changes made to Schedule III are intended to increase transparency and reliability of financial statement users, which is critical because, as we can see in today’s era, investor confidence in financial statements is dwindling due to an increase in instances of fraud and non-compliance, which has resulted in the collocation of funds.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

3 thoughts on “Analysis of amendments in Schedule III to the Companies Act, 2013”

  1. It would be helpful if Illustrative Financial Statement for the year ending 31.3.22 is shared for complying with the amendments.

    1. Thanks for the feedback. For the time being, it is advised to refer to the detailed guidelines upon such amendments, as provided by ICAI in the Guidance note on Schedule III of Companies Act, 2013.

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