17 June 2025
The Institute of Chartered Accountants of India (ICAI) has issued a Guidance Note on Financial Statements of Non-Corporate Entities, which became effective from Financial Year 2024-25 onwards. This guidance note prescribes illustrative templates for financial statements, including the balance sheet, in a vertical format. While this guidance note from ICAI is not a direct legal mandate under the Income Tax Act, it sets a standard for good financial reporting practices. Tax auditors, being Chartered Accountants, are bound by ICAI guidelines. Therefore, it is highly expected and practically becoming mandatory for all the entities, especially those undergoing tax audits, to adopt this new vertical format for consistency, transparency, and comparability.
All Companies registered under the Companies Act, 2013 must prepare their balance sheets as per Schedule III of the Companies Act, which mandates a vertical format.