Navigate the professional repository
Section, Rule, Form and company-class control
This page is integrated with the section index, Rules and MCA Forms repository, company-class matrix and transaction workflows. Current MCA/Gazette instruments and portal instruction kits control.
What Division I does in two minutes
Primary formats
Balance Sheet and Statement of Profit and Loss, supported by notes and a cash-flow statement where applicable.
Balance-sheet notes
Detailed line-item classification and disclosure register, culminating in regulatory information.
Mandatory ratios
Methods must be disclosed and movements above 25% must be explained.
Major disclosure expansion
Ageing, title deeds, CWIP, lender statements, fund routing and governance disclosures.
Who uses Division I and what overrides it?
Division I population
Companies preparing financial statements under notified Accounting Standards rather than Ind AS, unless a sector-specific law prescribes a different format.
Sector exceptions
Insurance, banking, electricity and any other class governed by a separately specified financial-statement form follow that sector framework, with Companies Act overlays as applicable.
Hierarchy
Companies Act and Accounting Standards first; Schedule III next; industry requirements, legal orders, scheme terms and regulator directions then overlay the presentation.
The statutory presentation rules
1. Modify presentation when required
Add, amend, substitute, delete or reclassify heads and sub-heads where the Act or Accounting Standards require it.
2. Disclosures are cumulative
Schedule III disclosures do not replace Accounting Standard or Companies Act disclosures.
3. Notes and cross-references
Notes provide disaggregation and non-recognised information; every face item should cross-reference its note. Avoid both over-aggregation and immaterial clutter.
4. Rounding based on total income
Below INR 100 crore: hundreds, thousands, lakhs or millions. INR 100 crore or more: lakhs, millions or crores. Use the selected unit consistently.
5. Comparatives
Present immediately preceding-period amounts for every face item and note, except the first financial statements after incorporation.
6. Definitions
Interpret terms using the applicable Accounting Standards; present additional subtotals or line items when relevant.
Face format and presentation logic
| Section | Head | Required face components |
|---|---|---|
| I. Equity and liabilities | Shareholders funds | Share capital; reserves and surplus; money received against share warrants |
| Share application money pending allotment | Present separately; refundable portion belongs in current liabilities | |
| Non-current liabilities | Long-term borrowings; deferred tax liabilities (net); other long-term liabilities; long-term provisions | |
| Current liabilities | Short-term borrowings; trade payables split between MSME and others; other current liabilities; short-term provisions | |
| II. Assets | Non-current assets | PPE and intangible assets; CWIP; intangible assets under development; non-current investments; deferred tax asset; long-term loans and advances; other non-current assets |
| Current assets | Current investments; inventories; trade receivables; cash and cash equivalents; short-term loans and advances; other current assets |
Current and non-current decision framework
Expected realisation, consumption or settlement within the operating cycle is current even when the cycle exceeds 12 months.
Held primarily for trading is current.
Expected realisation/settlement within 12 months is current.
Restricted cash and liabilities without an unconditional 12-month deferral right need careful classification.
Operating cycle
Time from acquisition of assets for processing to their realisation in cash. Use 12 months only when the cycle cannot be identified.
Trade receivable
Amount due for goods sold or services rendered in the normal course of business.
Trade payable
Amount due for goods purchased or services received in the normal course of business.
Balance-sheet disclosures A to Y
| Clause | Disclosure family | Professional decode |
|---|---|---|
| A | Share capital | Authorised/issued/subscribed/paid-up reconciliation; rights and restrictions; holding-company holdings; >5% shareholders; five-year bonus/non-cash/buy-back history; convertibles; calls unpaid; forfeitures; promoter shareholding and percentage change. |
| B | Reserves and surplus | Nature and purpose of each reserve; movements; surplus appropriations; negative surplus presentation; earmarked reserves called funds. |
| C | Long-term borrowings | Instrument-wise classification; security; guarantees; maturity/redemption; repayment terms; continuing defaults. |
| D-E | Other long-term liabilities and provisions | Trade payables/others; employee benefits and other provisions by nature. |
| F | Short-term borrowings | Demand loans, related-party loans, deposits and other advances; secured/unsecured; guarantees; defaults; current maturities separately. |
| FA-FB | Trade payables and MSME | MSMED disclosures plus ageing by MSME/others/disputed categories; unbilled dues separately. |
| G-H | Other current liabilities and provisions | Lease maturities, accrued interest, advance income, unpaid dividends, refundable application money, matured deposits/debentures, employee benefits and other provisions. |
| I-J | PPE and intangible assets | Class-wise reconciliation of gross/net carrying amount, additions, disposals, business combinations, revaluation, depreciation/amortisation and impairment; leased assets and five-year revaluation/reduction trail. |
| K-N | Investments and non-current assets | Trade/other investment classification; related bodies; quoted/unquoted; valuation basis; diminution; loans/advances classification; long-term receivable ageing; director/officer exposures. |
| O-S | Current assets | Inventory classes and valuation; receivable ageing; cash restrictions/margins/long deposits; short-term loans and advances; residual current assets. |
| T-W | Off-balance-sheet and use-of-funds | Contingent liabilities, commitments, proposed dividend, specific-purpose securities and borrowings, recoverability concerns. |
| Y | Additional regulatory information | Title deeds, registered-valuer revaluation, demand loans to specified persons, CWIP/intangible development ageing, benami property, current-asset statements to lenders, wilful defaulter, struck-off entities, charges, layers, ratios, schemes and fund-routing declarations. |
Four separate ageing/completion architectures
Trade payables
Buckets: less than 1 year, 1-2 years, 2-3 years and more than 3 years. Categories: MSME, others, disputed MSME and disputed others. Age from due date; use transaction date where no due date exists. Disclose unbilled dues separately.
Trade receivables
Buckets: less than 6 months, 6 months-1 year, 1-2 years, 2-3 years and more than 3 years. Split undisputed/disputed and good/doubtful. Age from due date or transaction date; show unbilled dues separately.
CWIP
Age projects in progress and temporarily suspended projects. For overdue or cost-overrun projects, present expected completion bands.
Intangibles under development
Use the same ageing and completion logic as CWIP, with separate disclosure of suspended activity.
Fourteen disclosure blocks added to the close process
| No. | Disclosure | What must be controlled |
|---|---|---|
| 1 | Title deeds not in company name | Property-by-property table; exclude duly executed leases in favour of the company; explain dispute/status. |
| 2 | Revaluation | State whether PPE revaluation is based on a registered valuer. |
| 3 | Loans or advances to promoters/directors/KMP/related parties | Show demand/term-less outstanding amount and percentage of total loans and advances. |
| 4 | CWIP ageing and completion | Age projects in progress and suspended projects; separately disclose overdue/cost-overrun completion schedule. |
| 5 | Intangibles under development | Ageing and completion schedule equivalent to CWIP. |
| 6 | Benami property | Property, amount, beneficiaries, book treatment, proceedings, status and management view. |
| 7 | Current-asset statements filed with lenders | Confirm agreement with books; reconcile and explain material differences. |
| 8 | Wilful defaulter | Date of declaration and nature/amount of defaults. |
| 9 | Transactions with struck-off companies | Entity, transaction nature, balance and relationship. |
| 10 | Unregistered charges/satisfaction | Details and reasons for delay beyond statutory period. |
| 11 | Number of layers | Identify downstream companies beyond permitted layers and relationship/holding. |
| 12 | Eleven ratios | Define numerator/denominator and explain >25% year-on-year changes. |
| 13 | Schemes of arrangement | Confirm accounting follows both the approved scheme and accounting standards; explain deviation. |
| 14 | Intermediaries and ultimate beneficiaries | Disclose fund-routing chains, guarantees/security and statutory compliance declarations for funds advanced or received. |
Eleven ratios, consistent definitions and movement explanations
| Ratio | Common working formula | Purpose | Control |
|---|---|---|---|
| Current ratio | Current assets / Current liabilities | Liquidity | define consistently |
| Debt-equity ratio | Total debt / Shareholders equity | Leverage | define consistently |
| Debt service coverage ratio | Earnings available for debt service / Debt service | Debt repayment | define consistently |
| Return on equity ratio | Profit after tax / Average shareholders equity | Equity return | define consistently |
| Inventory turnover ratio | Cost of goods sold / Average inventory | Inventory efficiency | define consistently |
| Trade receivables turnover ratio | Net credit revenue / Average trade receivables | Collection efficiency | define consistently |
| Trade payables turnover ratio | Net credit purchases / Average trade payables | Supplier-payment cycle | define consistently |
| Net capital turnover ratio | Revenue from operations / Working capital | Working-capital productivity | define consistently |
| Net profit ratio | Profit after tax / Revenue from operations | Profitability | define consistently |
| Return on capital employed | EBIT / Capital employed | Operating return | define consistently |
| Return on investment | Income or gain from investment / Time-weighted investment base | Investment return | define consistently |
Worked movement test
Current year
Current assets INR 900 lakh / current liabilities INR 600 lakh = 1.50.
Previous year
Current assets INR 720 lakh / current liabilities INR 600 lakh = 1.20.
Change
(1.50 - 1.20) / 1.20 = 25%. The statutory explanation threshold is a change of more than 25%; exactly 25% does not cross that wording.
Face format and note disclosures
| Line | Face presentation |
|---|---|
| I | Revenue from operations |
| II | Other income |
| III | Total income |
| IV | Expenses: materials, stock-in-trade, inventory change, employee benefits, finance costs, depreciation/amortisation, other expenses |
| V-IX | Profit before exceptional/extraordinary items and tax; exceptional items; extraordinary items; profit before tax |
| X | Current and deferred tax |
| XI-XV | Continuing and discontinuing operations, tax thereon and profit/loss for period |
| XVI | Basic and diluted earnings per equity share |
Revenue from operations
Non-finance companies split products, services, section 8 grants/donations where relevant and other operating revenues. Finance companies present interest and other financial services.
Finance costs
Interest expense, other borrowing costs and applicable foreign-exchange gain/loss treated as finance cost.
Material items
Disclose any income or expenditure exceeding 1% of revenue from operations or INR 1 lakh, whichever is higher, subject to materiality and appropriate aggregation.
Auditor payments
Separate audit, taxation, company-law, management, other services and reimbursements.
Additional note families
- Employee benefit expense components, depreciation/amortisation, interest, dividends, investment gains/losses and carrying-value adjustments.
- Manufacturing/trading/service broad-head disclosures, work-in-progress, reserve/provision movements and specified expense categories.
- Imports on CIF basis, foreign-currency expenditure, imported/indigenous consumption, dividend remittances and foreign-exchange earnings.
- Undisclosed income surrendered in tax proceedings and whether related income/assets are recorded.
- CSR expenditure details, shortfalls, activities, related-party transactions and contractual provisions.
- Crypto or virtual-currency profit/loss, holdings and deposits/advances for trading or investment.
Division I consolidation overlay
Mutatis mutandis
Apply the standalone Balance Sheet and P&L requirements to consolidated statements, together with applicable Accounting Standards.
Allocation
Present profit or loss attributable to minority interest and owners of the parent; present minority interests separately within equity.
Entity-wise additional information
Show parent, Indian/foreign subsidiaries, minority interest, associates and joint ventures with their percentage and amount contribution to consolidated net assets and profit/loss.
Compact Division I presentation example
Illustrative INR lakh figures for training only; notes and policies would accompany these primary statements.
Balance Sheet
| Particulars | 31 Mar 2026 | 31 Mar 2025 |
|---|---|---|
| Share capital | 500 | 500 |
| Reserves and surplus | 1,240 | 990 |
| Long-term borrowings | 780 | 900 |
| Deferred tax liability | 40 | 32 |
| Trade payables - MSME | 55 | 42 |
| Trade payables - others | 310 | 280 |
| Other current liabilities and provisions | 265 | 230 |
| Total equity and liabilities | 3,190 | 2,974 |
| PPE and intangible assets | 1,360 | 1,310 |
| CWIP and intangibles under development | 190 | 155 |
| Non-current investments and assets | 270 | 260 |
| Inventories | 445 | 390 |
| Trade receivables | 510 | 475 |
| Cash and cash equivalents | 185 | 164 |
| Other current assets | 230 | 220 |
| Total assets | 3,190 | 2,974 |
Statement of Profit and Loss
| Particulars | FY 2025-26 | FY 2024-25 |
|---|---|---|
| Revenue from operations | 3,600 | 3,120 |
| Other income | 75 | 62 |
| Total income | 3,675 | 3,182 |
| Materials and inventory movements | 1,825 | 1,575 |
| Employee benefits | 620 | 548 |
| Finance costs | 110 | 122 |
| Depreciation and amortisation | 205 | 194 |
| Other expenses | 475 | 429 |
| Profit before tax | 440 | 314 |
| Current and deferred tax | 118 | 84 |
| Profit after tax | 322 | 230 |
Audit-ready control checklist
- Confirm the company belongs in Division I and no sector format applies.
- Freeze total-income rounding unit and apply consistently.
- Map every TB account to a face line and note.
- Document operating cycle and current/non-current judgements.
- Reconcile share capital to statutory registers and filings.
- Obtain promoter shareholding movement data by class.
- Reconcile borrowings, security, defaults and lender confirmations.
- Perform MSME identification and interest assessment.
- Rebuild payable and receivable ageing from contractual due dates.
- Reconcile PPE/intangible registers to GL and depreciation.
- Prepare title-deed and legal-dispute register.
- Review CWIP and development projects for ageing and overrun.
- Reconcile current-asset statements filed with lenders.
- Screen counterparties against struck-off companies.
- Review charge registration status and layers compliance.
- Calculate all 11 ratios from approved definitions.
- Draft explanations for ratio movements above 25%.
- Obtain fund-routing and ultimate-beneficiary representations.
- Reconcile tax-surrendered income to books.
- Cross-check CSR and virtual-currency disclosures.
- Tie face statements, notes, cash flow and Board's report.
- Complete CFS entity universe and non-consolidation assessment.
Professional application
Case 1 - customer balance has no stated due date
The invoice is 10 months old but no payment term exists.
Case 2 - bank stock statement differs from books
Quarterly inventory submitted to a lender exceeds the final ledger by INR 75 lakh.
Case 3 - ratio changes by exactly 25%
Debt-equity rises from 0.80 to 1.00.
Case 4 - title is in the promoter's personal name
A factory land parcel used by the company for eight years remains registered to a promoter.
Points commonly answered incorrectly
| Trap | Correct position |
|---|---|
| Schedule III replaces Accounting Standards | False. The requirements are cumulative. |
| Every company uses Division I | False. Ind AS companies use Division II; Ind AS NBFCs use Division III; sector laws may prescribe other formats. |
| Ageing always starts from invoice date | False. Use due date; transaction date only where no due date is specified. |
| Exactly 25% ratio movement needs mandatory explanation | The wording is more than 25%. |
| Cash flow is part of the face format in Schedule III Division I | Cash-flow presentation arises through section 2(40), section 129 and applicable Accounting Standards/exemptions, not as a separate face template in Division I. |
| Current means due within 12 months only | False. The operating-cycle test may make an item current beyond 12 months. |
| Unbilled receivables belong in an ageing bucket | They are disclosed separately. |
| A prior-year note can simply be rolled forward | False. Regulatory disclosures require fresh legal, lender, tax and governance evidence. |
Rapid professional answers
Can a line item be added?
Yes. Add or substitute line items/subtotals when required for understanding, sector needs, the Act or Accounting Standards.
Which figure controls rounding?
Total income, not turnover, after the 2021 amendment.
Can ratio formulas differ by company?
Yes, where the definition is appropriate, transparent and consistently applied. Explain numerator and denominator.
Are all “other” balances acceptable?
No. Material balances need nature-based disaggregation; residual headings cannot hide significant classes.
Does Schedule III prescribe recognition?
Primarily presentation and disclosure. Recognition and measurement come from the Act and applicable Accounting Standards.
What is the strongest close control?
A disclosure-owner matrix linking each note to source evidence, reconciliation, reviewer and approval status.
Legal-source register
Schedule III, Division I, pages 283-306 of the consolidated PDF; section 129 and related financial-statement provisions.
Major Schedule III amendments effective 1 April 2021, including ageing schedules, regulatory information, ratios and additional P&L disclosures.
G.S.R. 679(E), 4 September 2015; G.S.R. 404(E), 6 April 2016; G.S.R. 1022(E), 11 October 2018.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Accounting, Audit & Ind AS
- Official starting point
- www.icai.org
Page source links
The prior page did not embed a page-specific external source. The category authority above is the minimum verification starting point; a specific instrument should be added when available.