Schedule III financial statements format: the three Divisions, the 2021 disclosures, and the formats for LLPs and firms

The short answer

Schedule III (Schedule 3) to the Companies Act, 2013 sets out the form of a company's balance sheet and statement of profit and loss and what the notes to them disclose. It runs in three Divisions: Division I for a company that is not on Ind AS, Division II for a company that is, and Division III for a non-banking financial company on Ind AS. Firms, proprietorships and LLPs are not companies; their formats are in two ICAI Guidance Notes of August 2023.

The Ministry of Corporate Affairs amended it by notification G.S.R. 207(E) of 24 March 2021, for financial years beginning on or after 1 April 2021. It added ageing schedules for trade receivables, trade payables and capital work-in-progress, the promoters' shareholding, eleven ratios and a block of additional regulatory information, and it made rounding off mandatory in Division I.

Which format applies to which entity

A company prepares its statements on Schedule III. The original Schedule III became Division I in 2016, the format for a company under the Companies (Accounting Standards) Rules. Division II was inserted for a company that complies with the Companies (Indian Accounting Standards) Rules, 2015. Division II does not apply to an NBFC adopting Ind AS under rule 4(1)(iv) of those Rules; Division III is its format. Under the second proviso to section 129(1), its Schedule III requirement does not bind an insurance or banking company, a company generating or supplying electricity, or any class of company whose form is specified under the Act that governs it.

A partnership firm, a proprietorship, a trust or an association has no format in the Companies Act. In August 2023 the ICAI issued Guidance Notes on Financial Statements of Non-Corporate Entities and, separately, of Limited Liability Partnerships; it had already described an LLP as a corporate form of entity, outside its guidance for non-corporate entities. Both were made effective for periods from 1 April 2024, then relaxed for 2024-25, when they could be applied voluntarily. On 31 March 2026 the ICAI phased them in: for accounting periods beginning on or after 1 April 2025 where turnover exceeds ₹ 5,00,00,000, and for all entities from 1 April 2026. A firm above that turnover prepares its 2025-26 accounts on the Guidance Note.

Six formats, entity by entity

The six formats OptiFinancials prepares a set in, in the product's order, each with the entity it is for and what it carries.

Division II and Division III follow from whether the company prepares its statements under the Ind AS Rules, not from a choice of presentation. An NBFC on Ind AS uses Division III.

The Division I balance sheet, line by line

Part I of Division I, the form of balance sheet for a company not on Ind AS, in the rows and numerals OptiFinancials prints, with the note each line refers to.

The 2021 amendment headed this block property, plant and equipment and intangible assets, and renamed its tangible assets line property, plant and equipment. Trade payables carry two classes on the face, micro and small enterprises and others.

What the 2021 amendment added to Division I

The disclosures G.S.R. 207(E) of 24 March 2021 added to Division I, and its change to rounding, numbered as the instructions number them: paragraph 6 of those for the balance sheet, paragraph 5 of those for the statement of profit and loss, and General Instruction 4.

The same notification amended Division II and Division III. Division II also put lease liabilities on the face and substituted the Statement of Changes in Equity.

Ratios, rounding and the notes behind the face

The eleven ratios Division I asks for are the 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 and return on investment. For each, the company explains the items in the numerator and the denominator, and it explains any ratio that changed by more than 25% against the preceding year.

Rounding off in Division I and Division II is set by total income. Division II prints the bands: with total income less than one hundred crore rupees, figures are rounded to the nearest hundreds, thousands, lakhs or millions, or decimals of them; at one hundred crore rupees or more, to the nearest lakhs, millions or crores, or decimals of them. Once a unit is used, it is used throughout. In Division I the 2021 amendment replaced may with shall, and turnover with total income, in the rounding instruction, so rounding is no longer optional for a company outside Ind AS.

The face is the shortest part of the set. Each line refers to a note, and the 2021 schedules sit in those notes: the payables ageing with trade payables, the receivables ageing with trade receivables, the promoters' shareholding with share capital.

Where the work goes when it is done by hand

Done by hand, the set starts from a trial balance exported to a spreadsheet. Each ledger is mapped to a head and a note. Borrowings, loans and advances, provisions and other assets are split between the non-current and the current half, because Division I prints each on both halves of the face. The previous year is mapped the same way, so that the comparatives agree with the statements signed last year.

The 2021 schedules cannot be read off a trial balance. The ageing runs from the due date of each bill, or from the date of the transaction where no due date is set, so it needs the bill-wise outstanding, not the ledger balance. The promoters' holding comes from the company's share records, and the regulatory information from its own records and answers. A change to one mapping moves a figure on the face, in a note and often in a ratio, and each has to be redone.

What OptiFinancials does

OptiFinancials prepares the set from a trial balance fetched live from TallyPrime through the OptiVida Connector, in six formats: NCE V1.2, ICAI LLP, Schedule III Div I, Schedule III Div II, Schedule III Div III and ICAI NPO Guide. The CA chooses the format at New, report by report. Each ledger is classified through five levels. Which statement and which side are derived from the grouping, never asked of the AI; for the grouping and the sub-head, the AI and the CA's picker are handed the same list. In the second year it opens with the prior-year mappings applied first.

Under Division I it prints the balance sheet above, a statement of profit and loss with earnings per share, and thirty-one notes: share capital at note 3, earnings per share at note 29, the eleven ratios at note 30 and the additional regulatory information at note 31. The ageing schedules are derived from Tally's bill-wise details, with the disputed and doubtful amounts entered by the preparer. What no ledger holds is entered on screen and printed as entered: the promoters' holding on note 3, the weighted number of shares behind earnings per share, the principal repaid behind the debt service coverage ratio and every item of note 31. The ratios are computed, and a check fails until every ratio that moved by more than 25% carries an explanation.

The unit is chosen on Basic Info, from hundreds to crores, for presentation only: the statement model holds exact rupees, so the balance check is never affected by it. The output is an Excel workbook and a PDF, rendered from one model, and every figure in the workbook is a computed value, not a formula. Any failing check puts a DRAFT banner on both statements naming the failure. Which Division applies and the answers to the regulatory questions stay with the CA, as does a cash flow statement under Division I, where section 2(40) requires one.