CSR, crypto currency and undisclosed income notes under Schedule III

The CSR disclosure in Schedule III, the crypto currency disclosure and the undisclosed income disclosure all arrived together: G.S.R. 207(E) of 24 March 2021 inserted them as items (ix), (x) and (xi) of paragraph 5 ("Additional information") of the General Instructions for the Statement of Profit and Loss in Division I, with effect from 1 April 2021. They are easy to overlook because they sit with the P&L notes, not with the better-known additional regulatory information in the balance sheet instructions. This guide gives the exact list for each item, a format table with illustrative figures, sample nil wording, and the matching CARO 2020 clause. For the rest of the format, see our Schedule III guide.

The three P&L additional information items at a glance

Schedule III has no small company exemption, so a small company that meets a trigger discloses it. CARO is different: where the company is outside CARO under paragraph 1(2), clauses 3(viii) and 3(xx) are simply not reported, but the notes still apply. The fourteen balance sheet items added by the same notification are covered in additional regulatory information under Schedule III.

Undisclosed income disclosure under Schedule III

Item (ix) requires the company to give details of any transaction not recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as search, survey or any other relevant provision), unless there is immunity for disclosure under any scheme. It must also state whether the previously unrecorded income and related assets have been properly recorded in the books during the year. For FY 2025-26 the 1961 Act is still the relevant law: the Income-tax Act, 2025 applies from tax year 2026-27, and Schedule III still refers to the 1961 Act.

ICAI's Guidance Note on Division I (para 10.14) reads the item narrowly:

• "Surrendered or disclosed" means a voluntary admission by the company, demonstrable from its returns. An addition made by the assessing officer that the company disputes is not reportable. Even if the company chooses not to appeal, the Guidance Note says it cannot be presumed to have surrendered the income.
• A retracted statement made during a search or survey, withdrawn on the ground that it was obtained under coercion, is not treated as surrendered or disclosed.
• "Properly recorded" includes disclosure in the financial statements sufficient for a user to understand the impact. If it is not recorded, give the reason.

The Guidance Note's format, with an illustrative row:

The section number and facts above are only an example; use the provision actually invoked. On the accounting, the CARO Guidance Note asks the auditor to evaluate whether the surrendered income should be classified as an extraordinary item, keeping in view AS 5. Nil wording: "No transactions not recorded in the books of account have been surrendered or disclosed as income during the year in the tax assessments under the Income-tax Act, 1961." Evidence: the assessment orders and returns of the year, any search or survey statements, and a representation that all assessments completed during the year have been informed to the auditor. CARO 3(viii) asks the same question, and its Guidance Note (para 61) extends the review to assessments completed after the year end but before the report where the income relates to the year or earlier years.

Who is covered: section 135 applicability

The CSR item applies to a company "covered under section 135". Section 135(1) covers every company with, during the immediately preceding financial year, any one of:

• net worth of ₹500 crore or more,
• turnover of ₹1,000 crore or more, or
• net profit of ₹5 crore or more.

For most small-firm clients the net profit test is the one that bites. "Net profit" here is computed under section 198, not the profit before tax in the accounts, so the test needs its own working. A small company by the ₹10 crore and ₹100 crore limits can still be covered: a private company with ₹2 crore paid-up capital, ₹40 crore turnover and ₹6 crore net profit (and no holding or subsidiary relationship) is a small company and therefore outside CARO, yet it is still covered by section 135. Where the amount to be spent does not exceed ₹50 lakh, section 135(9) dispenses with the CSR Committee and the Board performs its functions.

The amount required is at least 2% of the average net profits of the three immediately preceding financial years (fewer, if the company is younger). The Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on 23 March 2026 and reported on by a Joint Parliamentary Committee in August 2026, proposes raising the net profit trigger to ₹10 crore and allowing more time for the transfer to the Unspent CSR Account. Until any change is enacted and brought into force, the thresholds above apply.

CSR disclosure in Schedule III: the eight items and a format

Item (x) lists:

1. amount required to be spent by the company during the year,
2. amount of expenditure incurred,
3. shortfall at the end of the year,
4. total of previous years' shortfall,
5. reason for shortfall,
6. nature of CSR activities,
7. details of related party transactions, e.g. contribution to a trust controlled by the company in relation to CSR expenditure, as per the relevant Accounting Standard,
8. where a provision is made for a liability incurred by entering into a contractual obligation, the movements in the provision during the year, shown separately.

This sits alongside the older item 5(i)(k), the amount of CSR expenditure, which ICAI recommends showing as a separate line, "CSR expenditure", with the break-up in a note (see other expenses under Schedule III). The Guidance Note on Division I (para 10.13) also asks for the amount spent split between construction or acquisition of an asset and other purposes, each as paid in cash and yet to be paid, and recommends disclosing the unspent amount transferred to a Schedule VII fund (section 135(5)) or to the Unspent CSR Account (section 135(6)), even though Schedule III itself does not ask for it.

Worked example. Section 198 net profits: FY 2022-23 ₹6.20 crore, FY 2023-24 ₹7.10 crore, FY 2024-25 ₹8.30 crore. Average ₹7.20 crore; 2% = ₹14.40 lakh for FY 2025-26. The company spent ₹10.90 lakh. Of the ₹3.50 lakh shortfall, ₹2.50 lakh relates to an ongoing school-building project and ₹1.00 lakh to other projects.

Schedule III does not define "total of previous years' shortfall". A common reading is that it shows earlier years' shortfalls that have not yet been dealt with, for example an ongoing project's amount still sitting in the Unspent CSR Account, which has to be spent within three financial years or moved to a Schedule VII fund. If the company spent more than required, the excess may be set off against the requirement of up to three succeeding years under rule 7(3) of the CSR Policy Rules, with a Board resolution (the excess does not include any surplus arising out of CSR activities); many companies also show the excess carried forward.

Whether the unspent amount is provided for is an AS 29 question; the CARO Guidance Note (para 85(m)) asks the auditor to check that a provision has been recorded at the balance sheet date, to the extent necessary under AS 29, for the unspent amount. Where it is, it is presented under provisions; see other current liabilities and provisions under Schedule III. The related party contribution in (g) should also appear in the AS 18 note; our related party disclosures checklist covers that side.

Unspent CSR: the account, the fund and CARO 3(xx)

The Board's report must also give the reasons for not spending (section 134(3)(o)). Default attracts a penalty under section 135(7): on the company, twice the amount required to be transferred or ₹1 crore, whichever is less.

Because many reports are signed before 30 September, the CARO Guidance Note (para 85(r)) deals with the timing: where the six-month period has not elapsed at the report date, the auditor reports on information up to that date and says that the period has not yet expired. Reports on earlier years' non-compliance are also given under 3(xx). See CARO 2020 clauses that are easy to get wrong.

Crypto currency disclosure under Schedule III

Item (xi) applies where the company has traded or invested in crypto currency or virtual currency during the financial year. It then discloses:

1. profit or loss on transactions involving crypto currency or virtual currency,
2. amount of currency held as at the reporting date,
3. deposits or advances from any person for the purpose of trading or investing in crypto currency or virtual currency.

The Guidance Note on Division I (para 10.15) describes virtual currency as a digital representation of value, other than the rupee or a foreign currency, that functions as a unit of account, store of value and medium of exchange, and crypto currency as a form of it relying on cryptography. The notified Accounting Standards do not deal specifically with crypto holdings, so disclose the accounting policy adopted (AS 1). On the tax side, for FY 2025-26 the Income-tax Act, 1961 treats these as virtual digital assets (section 2(47A)), taxes transfer income at 30%, allowing no deduction other than cost of acquisition and no set-off of the losses (section 115BBH) and requires 1% TDS on consideration (section 194S); a tax computation with these sections is a clue that the note is needed. Nil wording, where companies choose to give one: "The Company has not traded or invested in crypto currency or virtual currency during the year." There is no CARO clause; the evidence is a representation and a scan of the bank statements and ledgers for exchange transfers.

Nil wording and the audit file

Schedule III asks for these details only where the trigger is met; it does not require nil statements. Many companies give a one-line negative statement so the reader can see the item was considered. Before it goes in, each "no" should rest on something:

A nil statement copied from last year is the risk: a survey this year, or a crossing of the ₹5 crore net profit line, changes the answer. Document why each item does not apply, and read the notes with the CARO report so that the two say the same thing.

Frequently asked questions

Sources

• Schedule III amendment — G.S.R. 207(E), 24 March 2021 (Gazette)
• Companies Act, 2013 — sections 134(3)(o), 135, 198, Schedule III Division I and Schedule VII (India Code, as amended)
• ICAI — Guidance Note on Division I – Non Ind AS Schedule III to the Companies Act, 2013 (Revised January 2022), paras 10.13–10.15
• ICAI — Guidance Note on CARO 2020 (Revised 2022 Edition), paras 61, 85 and 86
• Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended by G.S.R. 40(E), 22 January 2021 — rules 2(1)(i) and 7(3)
• Income-tax Act, 1961 — sections 2(47A), 115BBH and 194S
• PRS Legislative Research — The Corporate Laws (Amendment) Bill, 2026

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