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Recent years have seen many changes in which the business is being conducted and the stringent regulatory requirements which the business community needs to adhere to. The recent failure of many corporates has added a burden on the audit community to provide more information in the Auditor’s report. Newly issued Companies (Auditor and Report Order) 2020 is one such steps where the auditors are required to provide additional disclosures on the financial statements. Recent amendments in the Schedule III of the Companies Act is a step to align the Company’s financial statements in accordance with the auditor’s reporting requirements. The Ministry of Corporate Affairs vide Notification dated 24 March 2021 has amended Schedule III to the Companies Act, 2013, which shall be effective from the 1st day of April 2021.

It is important to start preparing the companies for the revised Schedule III and the comparatives of the period ended 31.03.2021 has to be provided while preparing the financial statements for the period ended 31.03.2022. The companies need to take proactive steps to make changes in the existing systems, controls and processes, enhance the IT infrastructure & align with the additional reporting requirements of CARO 2020.

In the following paragraphs, we would discuss the changes/amendments/new clauses which have been inserted in Schedule III of Companies Act.

Recent amendments in Schedule III of Companies Act 2013

a. General Instructions

There has been change in the nomenclature

  • The term 'Turnover' has been substituted with 'Total Income'
  • Rounding off has been made compulsory. For the purpose of rounding off 'Total Income' has been considered as the basis.
  • For Total income less than 100 crores, nearest hundred, thousand, lakhs or million has to be considered
  • For Total income more than 100 crores, nearest lakhs, millions or crores

b. Balance Sheet & Notes

The term 'Tangible Assets' has been replaced with 'Property, Plant & Equipment' even for the companies for which Indian GAAP is applicable.

To align with the requirements of CARO 2020, if due to revaluation, the change is 10% or more of the net carrying value of each item in Property, Plant & Equipment, such disclosure has to be shown separately. Further, the title deed of immovable property not held in the name of the company has to be shown separately for 'retired from active use, held for disposal & others'

Ageing for Capital Work in Progress in the following manner for PPE as well as Intangible assets:


Amount in CWIP for period of



< 1 year

1-2 years

    1. years

‘>3 years


Projects in progress


Projects temporarily suspended


For CWIP whose completion is overdue or has exceeded its cost compared to the original plan, following information has to be provided


Amount in CWIP for period of



< 1 year

1-2 years

    1. years

‘>3 years


Project 1


Project 2


c. Notes to the financial statement

i. Share capital – Disclosure of shareholding of promoters and percentage of change during the year has been added for all companies. (Currently only the listed companies to make specific disclosures). The disclosure has to be made in the following manner.

Shares held by promoters during the year

% change during the year


Name of promoter

No. of shares

% of total shares


ii. Current maturities of long-term borrowings which was earlier disclosed under the head 'other current liabilities', have to be disclosed under 'Short term borrowings'.

iii. Ageing schedule of Trade payables have to the provided in the following manner:


Outstanding from due date of payment



< 1 year

1-2 years

    1. years

‘>3 years






Disputed dues - MSME


Disputed dues - Others


iv. Security deposits which were earlier disclosed under 'Long Term Loans & Advances' is to be disclosed under 'Other non-current assets'.

v. Loans and advances in nature of loans are granted to promoters, directors, KMPs and the related parties either severally or jointly that are:

  • Repayable on demand OR
  • Without specifying any terms or period of payment

vi. Ageing has to be provided for Trade Receivables under the non-current assets and Trade Receivables


Outstanding from due date of receipt



<6 months

6 m – 1 year

1-2 years

2-3 years

>3 years


Undisputed Trade receivables – considered good


Undisputed Trade receivables – considered doubtful


Disputed Trade receivables – considered good


Disputed Trade receivables – considered doubtful


vii. New insertion – Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the Balance Sheet date, the company shall disclose the details where they have been used.

viii. New insertion - Disclosure has to be made where any proceedings have been initiated or pending against the company for holding any benami property under Benami Transactions (Prohibition) Act, 1988.

ix. Where the company has borrowings from banks or financial institutions on the basis of security of current assets, it has to make the following disclosures:

  • Whether the quarterly return or statements of current assets filed with banks or financial institutions are in agreement with books of accounts
  • If not, summary of reconciliation and material discrepancies

x. Where the company is declared to be willful defaulter by any bank, financial institution or other lender, details have to be provided regarding details of default and date of willful default.

xi. Where the company has any transaction with Companies struck off under Section 248 of Companies Act, 2013 the company shall disclose the nature transaction.

xii. Register of charges or satisfaction with Registrar of Companies if not done, the details and the reason thereof shall be disclosed.

xiii. Following ratios are needed to be disclosed:

  • Current ratio
  • Debt Equity ratio
  • Debt service coverage ratio
  • Return on equity ratio
  • Inventory turnover ratio
  • Trade receivables turnover ratio
  • Trade payables turnover ratio
  • Net capital turnover ratio
  • Net profit ratio
  • Return on capital employed
  • Return on investment

Explanation has to be provided for any change in ratio for more than 25% as compared to the preceding year.

d. Statement of Profit & Loss accounts & Notes

1. The term 'Total Revenue' has been substituted with the term 'Total Income'.

2. Grants & Donations received (Section 8 companies) to be disclosed under 'Revenue from operations'

3. Undisclosed income – Details of transactions not recorded but disclosed in the surrender or undisclosed during the income tax assessment.

4. The companies to which S.135 of the Companies Act is applicable following disclosure is required to be provided:

  • Amount required to be spent by the company during the year
  • Amount of expenditure incurred
  • Shortfall at the end of the year
  • Total of previous year shortfall
  • Reason for shortfall
  • Provision made for contractual obligation

5. Details of crypto currency or virtual currency

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Category Corporate Law, Other Articles by - CA Amrita Chattopadhyay