Other current and non-current assets: GST, TDS, prepaid and deposits, where each goes

A draft balance sheet comes back with ₹40 lakh in "Other current assets": GST credit, TDS, prepaid insurance, a rent deposit, an advance for a machine, an FD and last year's refund. It agrees with the trial balance, but on ICAI's Guidance Note much of it does not belong there, and some of it has a named head in Schedule III itself. This guide takes each balance in turn and says where it belongs under Division I of Schedule III, which answers come from the text, which from ICAI's Guidance Note, and where practice differs. Law as at 31 October 2026; figures are illustrative. For the loans note itself see loans and advances under Schedule III, and for the tests see current and non-current classification. Ind AS companies use Division II, which has different heads.

The four heads, and what Schedule III says about each

Two consequences follow from note S. First, it has no sub-heads, so each item needs its nature stated; a single line reading "Others" does not meet "specify nature". Second, it comes last. A balance that fits inventories, trade receivables, cash or loans and advances goes there first.

The trouble is that Schedule III does not name GST, TDS or prepaid expenses at all. The fuller answer comes from the Guidance Note on Division I (Revised January 2022). Para 2.3 of that note describes Guidance Notes as "recommendatory in nature", and adds that an auditor should examine whether an accounting recommendation has been followed and, if not, consider whether his report needs a disclosure. So a departure is possible, but it should be a reasoned one on file.

Two questions for every balance

What is it? Para 8.7.6 says other loans and advances include items in the nature of advances recoverable in cash or kind, and names prepaid expenses, advance tax and GST credit. Para 8.8.5 applies the same guidance to the short-term head. Para 8.8.6 gives unbilled revenue and unamortised premium on forward contracts as examples of other current assets.

When will it be realised? Each balance is split at the reporting date into its current and non-current parts, on the note 1 tests in the General Instructions. Para 8.7.6 sends an item to the long-term head if it is not expected to be realised within twelve months or the operating cycle, whichever is longer. "Realised" here includes use: GST credit is realised by paying output tax with it, and a prepaid amount by receiving the service. Base the split on the client's expected facts, such as the refund status or the credit run-rate, not on the Tally group.

Placement table: 16 balances

"Text" means Schedule III itself, "GN" means the Guidance Note, and "Practice" means neither names the item, so this is the usual reading.

The Tally side of this, including which group each ledger usually sits in, is in Tally groups to Schedule III mapping.

GST, TDS and advance tax: placement and netting

GST credit. Tie the balance to the electronic credit ledger at 31 March and to any credit held back because it is not yet in GSTR-2B. Credit that is blocked goes to the cost of the item, not to a tax credit balance. Accumulated credit that will not be used or refunded within twelve months, as often happens with an inverted duty structure, is non-current. Do not net CGST credit against SGST payable, or SGST credit against CGST payable: section 49(5)(e) and (f) of the CGST Act bar that use. IGST credit can go to any head, and CGST or SGST credit to IGST once IGST credit is used up (sections 49, 49A and 49B; Circular 98/17/2019-GST). Each GSTIN is a distinct person under section 25(4), so do not net balances of different GSTINs either. See GST ledgers in Tally.

Advance tax and TDS. Division I has no "current tax" asset line, so the asset goes to loans and advances under the Guidance Note. Many companies use other current assets instead. The provision for tax goes to short-term provisions. Whether the two are shown net is an AS 22 question:

• AS 22 para 27 says current tax assets and liabilities should be offset if the enterprise has a legally enforceable right to set off the recognised amounts and intends to settle net.
• Para 28 says that right normally exists where both relate to income taxes under the same governing law and the law permits a single net payment.
• AS 22 does not say "same year". The usual practice is to net a year's advance tax and TDS against that year's provision, which keeps old refunds and old demands visible. Some net across open years on the same-law reasoning, though in our view para 28's single net payment is harder to show there. Decide, keep the two years consistent, and give the gross figures in the note.

Keep one TDS receivable ledger per year, as in TDS ledgers set up for 26AS, or the netting cannot be matched to anything. An excess of tax paid over the provision is an asset; an excess of provision is a short-term provision, as shown in other current liabilities and provisions. A refund of an earlier year that is under dispute, with no date in sight, is the usual non-current item. Test it for recoverability as well. MAT credit entitlement is separate: see deferred tax under Schedule III.

Where the Guidance Note and practice part ways

Prepaid expenses. The Guidance Note lists them in loans and advances. Published accounts very often show them under other current assets. Read strictly, note S takes only what fits nowhere else, so the Guidance Note's position is the safer one. Whichever is used, a three-year AMC needs splitting: the part beyond twelve months is non-current. If you change the presentation, regroup the comparatives and say so (previous-year figures).

Current security deposits. Division I has no current line for them. Para 8.8 of the Guidance Note says that where a non-current item has no current head, the current part goes under the short-term category as a separate line. Its example still places deposits under long-term loans and advances, as they were before 2021, and that points to short-term loans and advances. Since the non-current part now sits in other non-current assets, other current assets is also defensible. Either way, keep it as its own line.

Unbilled revenue. Para 8.8.6 names it as an example of other current assets. Para 8.7.7 also says an entity may have an unconditional right to consideration before invoicing, recording an unbilled receivable, which goes in the Unbilled column of the ageing table. Where only the invoice is outstanding, trade receivables with that column fits better (ageing schedule). Where the right still depends on further performance, other current assets fits better.

Unamortised costs. Be careful what para 8.7.7 does and does not say. AS 26 para 5 excludes discount or premium on borrowings, ancillary borrowing costs, share issue expenses and discount on shares from its scope. The Guidance Note says ancillary borrowing costs and discount or premium on borrowings could be amortised over the loan period under AS 16. It records that certain companies take the view that these items and share issue costs can be amortised over the period of benefit, normally 3 to 5 years, says Schedule III does not deal with the accounting, and allows the unamortised part to be shown as "Unamortized expenses" under other current or non-current assets. Beyond AS 16, that is a presentation answer, not an endorsement of deferral. Share issue expenses may also be written off against securities premium under section 52(2)(c). Preliminary expenses are different: AS 26 para 56 expenses start-up costs when incurred, so an old balance there needs correcting, not placing.

Interest accrued. Neither text names interest accrued on deposits. It is not an advance, so other current assets is the natural home. On a cumulative FD maturing after twelve months, the interest comes with the principal, so by the test it is non-current.

Advances to suppliers. A normal order advance is a trade advance. An amount or period far beyond normal practice may be in the nature of a loan to the extent of the excess (GN 8.9.3.2), which feeds the additional regulatory information, as worked in the loans article. A debit balance in a creditor's ledger belongs here too, not netted in trade payables.

Secured, doubtful, directors: what applies where

Two practical readings. Para 8.7.7 says guidance may be drawn from the long-term loans section to the extent applicable, so if a large deposit or claim is doubtful, show it and its provision openly. And on our reading, the 2021 move took long-term security deposits out of the words "loans and advances due by directors", so a long-term rent deposit with a director's firm is not literally in that line. A current deposit shown in short-term loans and advances is within note R(iv). A firm in which a director is a partner is a related party under section 2(76)(iii), and under AS 18 para 3(e) where the director or other key person can significantly influence it, so state the deposit separately anyway. Note W of Part I also requires a statement if the Board thinks an asset, other than PPE, intangible assets and non-current investments, will not realise its stated value, but para 8.8.7.10 observes that following the standards should normally leave nothing to state.

Worked example: from the trial balance to four notes

A private company at 31 March 2026, in rupees. The company follows the Guidance Note for prepaid, GST and tax balances, shows a current deposit in short-term loans and advances, and defers loan processing charges over the loan term.

The four heads add back to the trial balance figure, which is the first check. The short-term note then reads as follows, with the previous-year column alongside in the actual accounts:

(i) Includes ₹30,000 due by an officer of the company.

The disputed refund and the protest payment would normally also prompt a look at the contingent liabilities note, since the demand behind them may be disclosed there.

Checklist before the notes go to review

• Open every line in other current assets. Each states its nature, and none of them fits a named head that the firm's policy would otherwise use.
• GST credit is tied to the electronic credit ledger, with the part unusable within twelve months moved to non-current, with no CGST against SGST netting and none across GSTINs.
• Advance tax and TDS are held year by year, tied to Form 26AS / AIS, with the AS 22 netting basis recorded and gross figures in the note.
• Old refunds are confirmed against the portal or an order, and tested for recoverability.
• Prepaid expenses over twelve months are split.
• Long-term security deposits are in other non-current assets. Current ones are on their own line.
• Capital advances are non-current, and none sit in CWIP or among short-term advances.
• FDs are read by maturity date, margin money by lien, and accrued interest follows the payout date.
• Long-term trade receivables have their own ageing table.
• Claims, sale proceeds of PPE and reimbursements are out of trade receivables.
• Anything labelled "unamortised" is outside AS 26 and has a policy. Preliminary expenses are nil.
• Amounts due by directors, officers and their concerns are stated separately, doubtful items and allowances are shown, and advances are tested for loan-like excess.
• The previous year is presented on the same basis, or regrouped and said so.

Frequently asked questions

Sources

• Companies Act, 2013: Schedule III, Division I, Part I, General Instructions and notes L, M, R, S and W; sections 2(76) and 52(2) (India Code, amended text)
• ICAI: Guidance Note on Division I, Non Ind AS Schedule III to the Companies Act, 2013 (Revised January 2022), paras 2.3, 8.7.6, 8.7.7, 8.8, 8.8.4 to 8.8.6, 8.8.7.10 and 8.9.3.2
• Companies (Accounting Standards) Rules, 2021: AS 18 para 3; AS 22 paras 27 and 28; AS 26 paras 5 and 56
• Schedule III amendment: G.S.R. 207(E), 24 March 2021
• CGST Act, 2017: sections 25(4), 49(5), 49A and 49B
• CBIC Circular 98/17/2019-GST, 23 April 2019: order of utilising input tax credit

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