SC03B - Schedule III Division II - Ind AS Financial Statements

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Scope and hierarchy General instructions Statement architecture Balance Sheet Changes in Equity Profit and Loss / OCI Notes register Ageing schedules Regulatory information Ratios Ind AS overlay Consolidation Cases and exam traps Audit close checklist Sources

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Purpose and boundary

Division II is a statutory format plus an Ind AS overlay

Division II applies to companies preparing financial statements under the Companies (Indian Accounting Standards) Rules, 2015. It prescribes minimum face and note disclosures; the applicable Ind AS, Companies Act and sector regulations remain additional.

Balance Sheet

Ind AS line items with financial/non-financial separation.

Profit and Loss

Profit or loss, OCI and total comprehensive income.

Changes in Equity

Share capital, reserves and OCI movements.

Cash flows and notes

Ind AS 7 cash flows plus detailed notes.

Do not use Division I by analogy. Division II has distinct face items, OCI, financial-instrument classifications, SoCE architecture and Ind AS-specific note requirements.

General Instructions 1-9

Statutory preparation rules

Clause	Control	Professional decode
1	Applicability	Every company to which Ind AS applies prepares financial statements under Division II, subject to modifications required by the Act or Ind AS.
2	Ind AS override and order of liquidity	Ind AS-driven treatment and disclosure changes modify the Schedule. The relevant Ind AS may permit presentation in order of liquidity instead of current/non-current.
3	Additive disclosures	Schedule III disclosures supplement, and do not replace, disclosures required by Ind AS or the Companies Act.
4	Notes and cross-references	Notes provide disaggregation and information not recognised on the face. Every face item must cross-reference related notes; avoid both excessive detail and over-aggregation.
5	Rounding	Rounding is based on total income: below Rs.100 crore, nearest hundreds/thousands/lakhs/millions or decimals; Rs.100 crore or more, nearest lakhs/millions/crores or decimals. Use one unit consistently.
6	Comparatives	Show the immediately preceding reporting period for all face items and notes except the first financial statements after incorporation.
7	Materiality	Disclose all items that could individually or collectively influence users' economic decisions, based on size, nature or both.
8	Defined terms	Terms used in Division II carry the meanings assigned in Ind AS.
9	Other law and sector overlay	Specific standalone disclosures required by another Act or regulation remain additional to Division II.

Minimum presentation: Balance Sheet, Statement of Changes in Equity, Statement of Profit and Loss and Notes. A cash flow statement is prepared where applicable under the relevant Ind AS.

End-to-end control model

Financial statement assembly

Ledger close

Complete measurement, consolidation and tax entries.

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Classification

Ind AS line item, current/non-current, OCI and equity reserve.

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Disaggregation

Face statements, notes, ageing and ratios.

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Evidence

Registers, banks, tax, legal, valuation and group tie-outs.

Part I

Balance Sheet architecture

Family	Face block	Contents
Assets	Non-current assets	PPE; CWIP; investment property; goodwill; other intangibles; intangible assets under development; biological assets other than bearer plants; financial assets; deferred tax assets; other non-current assets.
Assets	Current assets	Inventories; financial assets including investments, trade receivables, cash and cash equivalents, other bank balances, loans and others; current tax assets; other current assets.
Assets	Held for sale / distribution	Non-current assets classified as held for sale and disposal groups under Ind AS 105 are shown separately where applicable.
Equity	Equity share capital and other equity	Equity classification follows Ind AS 32. Other equity is supported by the Statement of Changes in Equity.
Liabilities	Non-current liabilities	Financial liabilities including borrowings, lease liabilities, trade payables and other financial liabilities; provisions; deferred tax liabilities; other non-current liabilities.
Liabilities	Current liabilities	Financial liabilities including borrowings, lease liabilities, trade payables and other financial liabilities; other current liabilities; provisions; current tax liabilities.
Special	Regulatory deferral accounts	Presented in accordance with the relevant Ind AS where applicable.

Order of liquidity

Use only when permitted by the relevant Ind AS and when it provides reliable and more relevant information.

Third balance sheet

Required at the beginning of the earliest comparative period for a material retrospective policy application, restatement or reclassification.

Legal form vs substance

Preference shares, convertibles and application money are classified under Ind AS, not merely by legal title.

Current classification: Operating cycle, trading purpose, expected realisation/settlement within 12 months and unrestricted cash tests drive current/non-current presentation. Rights existing at the reporting date are critical.

Statement of Changes in Equity

Separate the source and nature of every equity movement

Column / reserve	Required movement logic
Equity share capital	Opening balance, prior-period error, restated opening, movements during year and closing balance.
Share application money pending allotment	Classify as equity or liability under Ind AS; refundable amount is a financial liability.
Equity component of compound instruments	Present the equity component separately from the liability component.
Reserves and surplus	Capital reserve, securities premium, other reserves and retained earnings, with movements.
OCI - debt instruments	Fair value changes in debt instruments through OCI, including recycling treatment.
OCI - equity instruments	Fair value changes in equity instruments designated through OCI; not recycled to profit or loss.
Cash flow hedge reserve	Effective portion of qualifying cash flow hedges.
Revaluation surplus	Movement arising from permitted revaluation models.
Foreign currency translation reserve	Exchange differences from translating foreign operations.
Other OCI and warrants	Other specified OCI items and money received against share warrants.

Special note: Remeasurements of defined benefit plans and own-credit-risk fair value changes may be presented within retained earnings with separate note disclosure or in a separate reserve column, consistent with Division II and the relevant Ind AS.

Part II

Statement of Profit and Loss and OCI

Line	Block	Presentation
I-III	Income	Revenue from operations; other income; total income.
IV	Expenses	Materials; stock-in-trade; inventory changes; employee benefits; finance costs; depreciation/amortisation; other expenses.
V-VIII	Profit before tax	Profit before exceptional items and tax; exceptional items; current tax; deferred tax.
IX-XIII	Operations	Continuing operations, discontinued operations and total profit or loss for the period.
XIV	Other comprehensive income	Items not reclassified and items that may be reclassified, each with related income tax.
XV	Total comprehensive income	Profit or loss plus OCI.
XVI-XVIII	Earnings per share	Basic and diluted EPS for continuing operations, discontinued operations and total operations.

OCI classification map

Classification	Illustrative item	Control consequence
Will not be reclassified	Changes in revaluation surplus	Generally stays in equity; transfers within equity may occur.
Will not be reclassified	Remeasurements of defined benefit plans	Recognised in OCI and not recycled to profit or loss.
Will not be reclassified	Equity instruments through OCI	Fair value changes not recycled on disposal.
Will not be reclassified	Own credit risk on designated financial liabilities	Presented in OCI unless treatment creates or enlarges an accounting mismatch.
Will not be reclassified	Share of OCI of associates/JVs not recyclable	Follow underlying nature of the investee item.
May be reclassified	Foreign operation translation differences	Reclassified on disposal or partial disposal as required by Ind AS 21.
May be reclassified	Debt instruments through OCI	Reclassified to profit or loss on derecognition or impairment mechanics under Ind AS 109.
May be reclassified	Effective portion of cash flow hedges	Reclassified when the hedged item affects profit or loss or included in a non-financial asset/liability.
May be reclassified	Share of OCI of associates/JVs recyclable	Follow underlying nature of the investee item.
Either class	Other specified OCI	Classify according to the relevant Ind AS and disclose the related tax.

Notes to financial statements

Professional disclosure register

Ref	Disclosure family	Key controls
A	Property, plant and equipment / right-of-use assets	Class-wise gross carrying amount and accumulated depreciation/impairment reconciliation; additions, disposals, acquisitions, revaluation and exchange differences; ROU assets separately or in class.
B	Investment property	Cost/depreciation/impairment reconciliation and fair value disclosures under Ind AS 40; Schedule III asks whether disclosed fair value is based on a registered valuer.
C	Goodwill and intangible assets	Goodwill separately; class-wise intangible reconciliation; indefinite-life judgements and impairment disclosures under Ind AS 36.
D	Biological assets other than bearer plants	Present and disclose in line with Ind AS 41; bearer plants are PPE under Ind AS 16.
E	Financial assets	Investments, trade receivables, loans and other financial assets; measurement categories, allowances and risk disclosures interact with Ind AS 107/109.
F	Inventories	Classify by nature; use carrying amount measurement and write-down disclosures required by Ind AS 2.
G	Cash and bank balances	Separate cash equivalents, other bank balances, restrictions and repatriation constraints.
H	Share capital	Reconciliation, rights, restrictions, holdings, more-than-5% shareholders, five-year history, convertibles, calls unpaid, forfeitures and promoter shareholding.
I	Other equity	Nature and purpose of reserves; movements; retained earnings; OCI reserves; warrants and compound-instrument equity.
J	Borrowings and lease liabilities	Instrument classification, security, guarantees, maturity, defaults and current/non-current portions; lease liabilities shown separately.
K	Trade payables	MSME and other creditors, disputed balances and ageing schedule; unbilled dues separately.
L	Provisions and taxes	Employee and other provisions; current tax and deferred tax balances and movements under Ind AS 12/19/37.
M	Revenue, finance costs and other income	Operating revenue, grants/donations for section 8 companies, finance-cost classes and non-operating income.
N	Expenses and material items	Employee benefits including share-based payments, depreciation/amortisation, auditor payments, exceptional items and items over 1% of revenue or Rs.10 lakh, whichever is higher, subject also to materiality.
O	Contingencies and commitments	Claims, guarantees and other contingent liabilities; capital and other commitments; disclosures under Ind AS 37 remain additional.
P	Related parties and group interests	Ind AS 24 disclosures plus Companies Act-specific loans/advances, group structure and CFS requirements.

Cross-reference discipline: Every face line item must tie to a note, and each note must reconcile to the trial balance, underlying subledger and supporting evidence.

Ageing and project schedules

Four statutory schedules that must reconcile

Schedule	Buckets	Required segmentation and origin
Trade receivables	<6 months; 6-12 months; 1-2 years; 2-3 years; >3 years	Undisputed/disputed x considered good/significant increase in credit risk/credit impaired. Start from due date; transaction date where no due date; unbilled dues separately.
Trade payables	<1 year; 1-2 years; 2-3 years; >3 years	MSME, others, disputed MSME and disputed others. Start from due date; transaction date where no due date; unbilled dues separately.
CWIP	<1 year; 1-2 years; 2-3 years; >3 years	Projects in progress and temporarily suspended; total must reconcile. Overdue/cost-overrun projects require completion schedule.
Intangible assets under development	<1 year; 1-2 years; 2-3 years; >3 years	Projects in progress and temporarily suspended; total must reconcile. Overdue/cost-overrun projects require completion schedule.

Common failure: Using invoice date instead of contractual due date, ignoring credit notes and advances, mixing unbilled balances into buckets or failing to reconcile the ageing total to the face line.

Additional regulatory information

Sixteen evidence-heavy disclosure blocks

Item	Topic	Control
i	Title deeds	Property-wise details where title deeds are not in the company name; include holder relationship, holding date and dispute status.
ii	Investment-property valuation	State whether fair value disclosed for investment property is based on a registered valuer.
iii	PPE / ROU revaluation	State whether a revaluation of PPE, including right-of-use assets, is based on a registered valuer.
iv	Intangible revaluation	State whether revaluation of intangible assets is based on a registered valuer.
v	Demand / no-term loans	Amounts and percentage of loans or advances in the nature of loans to promoters, directors, KMP and related parties that are repayable on demand or without repayment terms.
vi	CWIP	Ageing and completion schedules, including separately disclosed suspended projects.
vii	Intangibles under development	Ageing and completion schedules, including separately disclosed suspended projects.
viii	Benami property	Property, amount, beneficiaries, balance-sheet mapping, proceedings, status and management view.
ix	Lender statements	Reconcile quarterly current-asset statements filed with banks/financial institutions to books and explain material differences.
x	Wilful defaulter	Declaration date and amount/nature of defaults where declared by a bank, financial institution or lender.
xi	Struck-off companies	Counterparty, transaction type, balance and relationship for transactions with struck-off companies.
xii	Charges	Details and reasons for charges or satisfaction not registered within the statutory period.
xiii	Layers	CIN, relationship and holding where prescribed limits on layers are not complied with.
xiv	Ratios	Disclose 11 ratios, numerator/denominator definitions and reasons for changes of more than 25%.
xv	Schemes of arrangement	Confirm accounting in accordance with the approved scheme and accounting standards; explain deviations.
xvi	Fund routing	Disclosures and management declarations for intermediaries, ultimate beneficiaries, funding parties, compliance with law and absence of PMLA violation.

Ownership: These disclosures require input from finance, treasury, tax, legal, secretarial, projects, HR, valuation and business teams. They cannot be completed reliably from the general ledger alone.

Ratio framework

Eleven ratios and the movement threshold

Ratio	Indicative working formula	Purpose
Current ratio	Current assets / Current liabilities	Short-term liquidity.
Debt-equity ratio	Debt / Shareholders equity	Financial leverage; define debt consistently.
Debt service coverage ratio	Earnings available for debt service / Debt service	Debt servicing capacity.
Return on equity	Profit after tax / Average shareholders equity	Return earned for equity holders.
Inventory turnover	Cost of goods sold or revenue basis / Average inventory	Inventory velocity; disclose chosen basis.
Trade receivables turnover	Revenue from credit sales / Average trade receivables	Collection efficiency.
Trade payables turnover	Net credit purchases / Average trade payables	Supplier-payment cycle.
Net capital turnover	Revenue / Working capital	Revenue generated per unit of working capital.
Net profit ratio	Net profit / Revenue	Profitability after all costs.
Return on capital employed	EBIT / Capital employed	Operating return on long-term capital.
Return on investment	Income or gain from investment / Time-weighted investment	Investment-specific performance; define by class.

Disclosure rule: Explain the items included in each numerator and denominator. Explain a change only when it is more than 25% compared with the preceding year; an exact 25% change does not cross the statutory wording.

Ind AS interface

Standards that commonly change presentation or notes

Standard	Area	Division II interaction
Ind AS 1	Presentation	Materiality, going concern, comparative information, third balance sheet and consistency of presentation.
Ind AS 7	Cash flows	Operating, investing and financing classification; cash/cash-equivalent reconciliation and financing-liability changes.
Ind AS 8	Policies and errors	Retrospective policy changes and prior-period error restatements, including third balance sheet when material.
Ind AS 10	Events after reporting period	Adjusting events, non-adjusting events and proposed dividend disclosure.
Ind AS 12	Income taxes	Current/deferred tax, OCI/equity tax allocation and uncertain tax positions where relevant.
Ind AS 19 / 102	Employee benefits / share-based payments	OCI remeasurements, defined benefit disclosures and equity/cash-settled awards.
Ind AS 21	Foreign exchange	Functional currency, foreign operations and translation reserve.
Ind AS 24	Related parties	Relationships, transactions, balances, commitments and KMP compensation.
Ind AS 32 / 107 / 109	Financial instruments	Equity-liability classification, measurement categories, ECL, liquidity, market and credit risk.
Ind AS 33	EPS	Basic/diluted EPS for continuing, discontinued and total operations.
Ind AS 36 / 37	Impairment and provisions	Cash-generating units, goodwill impairment, provisions, contingencies and commitments.
Ind AS 40 / 41	Investment property / biological assets	Separate face presentation and required measurement/fair-value disclosures.
Ind AS 103 / 110 / 111 / 112 / 28	Business combinations and group reporting	Goodwill, NCI, consolidation, joint arrangements, equity method and interest disclosures.
Ind AS 105	Held for sale and discontinued operations	Separate balance-sheet and profit/loss presentation.
Ind AS 113	Fair value	Hierarchy, valuation techniques, inputs and sensitivity for Level 3.
Ind AS 115 / 116	Revenue and leases	Contract balances and disaggregation; ROU assets and separate lease liabilities.

Principle: Schedule III tells you the minimum display structure. The recognition, measurement, classification, derecognition and risk disclosures come from the applicable Ind AS.

Part III

Consolidated financial statements overlay

Owners and NCI

Allocate profit or loss, OCI and total comprehensive income between owners of the parent and non-controlling interests.

Equity presentation

Present NCI separately within equity in the Balance Sheet and Statement of Changes in Equity.

Equity method

Present investments accounted for using the equity method and the group share of investee results.

Additional group table: Disclose entity-wise shares in consolidated net assets, profit or loss, OCI and total comprehensive income for parent, Indian/foreign subsidiaries, NCI, associates and joint ventures, with eliminations/adjustments as applicable.

Practical application and examination

Cases that test classification and disclosure

1. Redeemable preference shares

Situation: A company labels redeemable preference shares as share capital because legal form says shares.

Professional conclusion: Ind AS 32 classification controls. A plain-vanilla mandatory redemption obligation is generally a financial liability, with the related return presented as finance cost.

2. Equity investment through OCI

Situation: Management sells an FVOCI equity investment and proposes recycling cumulative OCI to profit.

Professional conclusion: For an irrevocably designated equity instrument through OCI, cumulative fair value changes are not recycled to profit or loss; transfer within equity may be made.

3. Retrospective restatement

Situation: A material prior-period error affects opening inventory and retained earnings of the earliest comparative.

Professional conclusion: Present a third balance sheet at the beginning of the earliest comparative period and provide Ind AS 8 disclosures.

4. Receivable ageing

Situation: A receivable has no contractual due date and management leaves it outside ageing.

Professional conclusion: Use transaction date for ageing where no due date is specified and disclose unbilled dues separately.

5. Current liability after waiver

Situation: A covenant breach exists at year-end; lender waiver arrives after reporting date.

Professional conclusion: Classification depends on rights existing at the reporting date under the current Ind AS 1 requirements. Evaluate the governing standard and disclose subsequent waiver appropriately.

6. OCI tax

Situation: Defined benefit remeasurement is shown net of tax without a tax note.

Professional conclusion: OCI must show items and related income tax consistently; tax effects may be presented net or gross with adequate note disaggregation under Ind AS 12.

7. Investment property fair value

Situation: The entity uses cost model but omits fair value because it does not remeasure the asset.

Professional conclusion: Ind AS 40 requires fair value disclosure even under the Indian cost model, subject to limited exceptions; Schedule III also asks whether the valuation is by a registered valuer.

8. Fund routing confirmation

Situation: The books contain pass-through advances but management relies only on a generic representation.

Professional conclusion: Build transaction-level evidence for intermediaries, ultimate beneficiaries, funding parties and legal compliance before making the Schedule III declarations.

Year-end close and audit

Ind AS Division II sign-off checklist

Ind AS applicability and Division II conclusion documented.
Sector-specific format and order-of-liquidity assessment approved.
Rounding unit selected using total income and applied consistently.
Comparatives and third-balance-sheet trigger assessed.
All recognition and measurement entries completed.
Financial instruments classified and ECL reconciled.
Preference shares and compound instruments analysed.
Lease liabilities and ROU assets mapped separately.
OCI items classified, tax-effected and mapped to SoCE.
Share capital and promoter data tied to statutory registers.
Borrowings, defaults, security and lender statements confirmed.
MSME population and payable ageing validated.
Receivable ageing tied to due dates and ECL segmentation.
CWIP and intangible-project schedules approved by project owners.
Registered-valuer disclosures supported.
Title deeds, benami, struck-off and charges reviews complete.
All 11 ratios independently recalculated and movements explained.
Scheme accounting and fund-routing representations evidenced.
CSR, undisclosed income and crypto disclosures assessed.
CFS universe, NCI, equity method and eliminations approved.
Face statements, notes and subledgers fully cross-referenced.

Release gate: Balance Sheet + Profit and Loss + OCI + SoCE + cash flows + notes + regulatory schedules must form one internally consistent reporting system.

Primary source register

Legal and accounting source basis

Companies Act, 2013 - Schedule III Division II

India Code consolidated text, pages 305-328 of the official PDF.

https://www.indiacode.nic.in/bitstream/123456789/2114/5/A2013-18.pdf

G.S.R. 404(E), 6 April 2016

Inserted Division II for companies applying the Companies (Indian Accounting Standards) Rules, 2015.

Official Gazette / MCA notification as reflected in India Code footnotes.

G.S.R. 1022(E), 11 October 2018

Amendments including lease-liability presentation and selected terminology.

Official Gazette / MCA notification as reflected in India Code footnotes.

G.S.R. 207(E), 24 March 2021

Expanded statement formats, ageing schedules, ratios and additional regulatory information, effective 1 April 2021.

Official Gazette / MCA notification as reflected in India Code footnotes.

Companies (Indian Accounting Standards) Rules, 2015, as amended

Current Ind AS requirements remain an additional and controlling overlay.

MCA / ICAI notified Ind AS text.

Reviewed 27 June 2026. This publication is an educational professional reference and is not a substitute for entity-specific accounting, legal, tax, audit or regulatory advice.

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Primary category: Accounting, Audit & Ind AS
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