APPLICABILITY OF VERTICAL BALANCE SHEET

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The Institute of Chartered Accountants of India (ICAI) has introduced a Guidance Note mandating a vertical balance sheet format for non-corporate entities from FY 2024-25. While not a direct legal requirement under the Income Tax Act, it's becoming practically mandatory for entities undergoing tax audits due to ICAI guidelines. Companies Act 2013 already requires a vertical format for all registered companies.

Urvashi@0311

Urvashi@0311 (Querist)

16 June 2025 HIII!!!
vertical balance sheet for the tax audit is mandatory??
vertical balance sheet is applicable to who ???

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

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.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

27 September 2025 Good luck..

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