Schedule III general instructions: rounding off, units, comparatives and notes

Before Part I (the Balance Sheet) and Part II (the Statement of Profit and Loss), Division I of Schedule III opens with six short paragraphs of General Instructions. They are easy to skip and they decide a lot: whether the format can be changed, where Accounting Standard disclosures go, how notes are referenced, whether comparatives are needed — and the rule that trips up small-company files most visibly, rounding off. This guide goes through the Schedule III general instructions paragraph by paragraph, with the rounding off Schedule III now requires, a worked example of a note that will not cast after rounding, and the slips to check before signing. It covers Division I (companies following the Accounting Standards); Ind AS companies use Division II, which has its own, similarly worded instructions. For the whole format, see our Schedule III guide.

Schedule III general instructions at a glance

A Note after paragraph 6 adds that Schedule III sets out the minimum requirements, and that line items, sub-line items and sub-totals are added or substituted on the face where relevant to understanding the company's position or performance, for industry-specific requirements, or to comply with the Act or the Accounting Standards.

Paras 1 and 2: Accounting Standards override, and add to, the format

ICAI's Guidance Note on Division I points out that this reverses the usual rule. Ordinarily, where an Accounting Standard conflicts with the law, the law prevails; Schedule III instead gives overriding status to the Accounting Standards and the other requirements of the Act (Guidance Note, para 6.2).

The Guidance Note's own example (para 6.4) is cash and cash equivalents. Schedule III lists margin money deposits and bank deposits with more than 12 months' maturity in the break-up of "Cash and cash equivalents", but under AS 3 those are not cash equivalents. The resolution suggested is to change the caption to "Cash and bank balances", with two sub-headings — "Cash and cash equivalents" (AS 3 items only) and "Other bank balances". Another example (para 13.6): the transitional provisions of AS 21 exempt comparatives in the first consolidated statements, even for an existing group, and that exemption prevails over Schedule III's comparatives rule.

Paragraph 2 works the other way: Schedule III does not replace the AS disclosures. Disclosures an AS requires on the face — the Guidance Note cites the pre-tax gain or loss on disposal of assets attributable to a discontinuing operation under AS 24 — are made on the face even though the format has no line for them. Disclosures required by the Act, such as political contributions under section 182(3), go in the notes; and disclosures required by other laws must also be made in the financial statements — the Guidance Note's example is the MSMED Act disclosure, which has since been built into Schedule III itself (paras 6.8 to 6.10).

Paras 3 and 6: notes, cross-references and AS terms

Paragraph 3(i) gives notes two jobs: narrative description or disaggregation of items that are recognised, and information about items that do not qualify for recognition — contingent liabilities and commitments are the obvious examples (Guidance Note, para 6.12). Paragraph 3(ii) requires each item on the face to be cross-referenced to its related note, and asks for a balance between excessive detail and too much aggregation. The Guidance Note treats that balance as a matter of professional judgement (para 6.13).

Paragraph 6 says the terms used in Schedule III have their Accounting Standard meaning. The Guidance Note's example is "related parties", which is read with AS 18 (para 6.16) — relevant every time you prepare the related party disclosures under AS 18 or the loans to related parties under the additional regulatory information.

The Note after paragraph 6 lets a company add line items and sub-totals. The Guidance Note gives EBITDA on the face of the Statement of Profit and Loss, computed consistently with the policy disclosed, and sub-totals of current assets and current liabilities on the face of the Balance Sheet as examples (paras 6.17 and 6.18).

Rounding off Schedule III requires: the table after G.S.R. 207(E)

Paragraph 4 is the one with numbers. G.S.R. 207(E), effective 1 April 2021, made two changes to it: "may" became "shall", and the test changed from "Turnover" to "Total Income". The same notification renamed line III of the Statement of Profit and Loss from "Total Revenue (I + II)" to "Total Income (I + II)" — revenue from operations plus other income.

Three consequences follow.

• Full rupees are out. The Guidance Note says rounding off is now compulsory and a company cannot continue to disclose full figures (para 6.15). Statements printed "in ₹" to the last rupee do not meet the rounding off requirements of the Companies Act's Schedule III, however common they still are in small-company files.
• Other income counts. A company with revenue from operations of ₹97 crore and other income of ₹4 crore has Total Income of ₹101 crore — so hundreds and thousands are no longer available to it; it must use lakhs, millions or crores.
• Decimals are allowed in every band — "₹ in lakhs" to two decimals is the most common choice for small companies, and is permitted below and above ₹100 crore.

Schedule III does not say which year's Total Income decides the band; the usual reading is the current year's line III, since the instruction applies to the statements being prepared. Where the company is near ₹100 crore, record the figure and the band chosen in the working papers.

The same amount in each permitted unit:

One unit, used uniformly

Paragraph 4(ii) says that once a unit of measurement is used, it should be used uniformly in the financial statements. The Guidance Note reads this as requiring all figures in the statements including the notes to be in the same denomination (para 6.14). The Part I and Part II formats carry a "(Rupees in …)" heading for the purpose. A typical presentation:

"Unless otherwise stated" covers figures not shown in the chosen unit — number of shares, ratios, and per-share amounts such as face value and earnings per share, which are given in rupees. Schedule III's rounding instruction covers the Balance Sheet, the Statement of Profit and Loss and the notes; the cash flow statement is not part of Division I's formats (the Guidance Note says it is prepared under AS 3, para 4.1.2), but in practice it is presented in the same unit so that it can be agreed with the statements.

Worked example: the note that will not cast

Take Note 9 above. The current-year ledger balances from the trial balance, in rupees:

Each line was rounded down by roughly ₹450, and the four small differences add up to ₹1,830 — enough to push the total from 31.59 to 31.61. If the note shows 31.61 at the foot, it does not add; if it shows 31.59, it does not agree with the face (which carries the rounded ledger total) or with the trial balance.

Schedule III and the Guidance Note do not prescribe a method for this. Common practice is:

1. Round the source figures, not the display. Formatting a cell in Excel to two decimals only hides the decimals; the totals still add the unrounded values, so the printed column will not cast. Round each line with a formula (for example =ROUND(B5/100000,2)).
2. Fix the total to the rounded true figure — 31.61 here — so the note agrees with the face and with the trial balance.
3. Absorb the difference in one line, usually the largest or the most judgemental one. In the example, employee dues becomes 9.83 instead of 9.81 — the presentation shown above. Keep the adjustment visible in the working.
4. Repeat at statement level. After rounding every face line, the Balance Sheet can be out by 0.01 or 0.02; resolve it the same way rather than leaving a visible difference.

Small balances need a decision too: ₹3,200 is 0.03 lakh, but ₹400 rounds to 0.00. In practice such amounts are shown as 0.00 with a footnote ("amount below ₹500"), or with an asterisk explained in the note, so a reader does not take 0.00 for nil.

Rounding differences are only one source of casting errors; if the difference is larger than a few hundredths, look at why a balance sheet does not tally after mapping before blaming rounding.

Para 5: comparatives, including the first year

Paragraph 5 requires the corresponding amounts for the immediately preceding reporting period for all items in the statements, including notes. The Guidance Note adds that comparatives are prepared on the same lines as the current year (para 6.5) — so new disclosures, such as the ageing tables, need a previous-year column too.

• First financial statements after incorporation are the only exception in Schedule III itself (the AS 21 exemption for first consolidated statements is noted above). A company incorporated on 10 August 2025 presents its first statements for the period to 31 March 2026 with no comparatives. Under section 2(41), for a company incorporated on or after 1 January, the first financial year ends on 31 March of the following year — that longer first period still has no comparatives.
• Same unit for both years. When a company moves from full rupees to lakhs, last year's signed figures are re-expressed in lakhs; they are not pasted in rupees beside a lakh column.
• Regrouping. Where last year's figures are regrouped or reclassified to match this year's presentation, the usual practice is to say so in a note and keep the working that ties the regrouped column back to last year's signed statements.

A CY vs PY check on the draft is the quickest way to spot a comparative that no longer agrees with last year's signed accounts.

The P&L threshold: 1% of revenue or ₹1,00,000

One more number from the General Instructions for the Statement of Profit and Loss belongs with the rounding rules. Paragraph 5(i)(c) requires any item of income or expenditure which exceeds one per cent of revenue from operations or ₹1,00,000, whichever is higher, to be disclosed separately in the notes. The Guidance Note applies it to the other expenses note (para 9.5.7). Note the base: this test uses revenue from operations, while the rounding test uses Total Income. For a company with revenue from operations of ₹8 crore, the threshold is ₹8 lakh — so an "Office expenses" item of ₹11 lakh must be shown separately in the note, not buried in miscellaneous expenses.

Common slips to check before signing

• Full-rupee statements carried over from before 2021, or "₹ in rupees" headings on a draft generated from the books.
• Mixed units — face and most notes in lakhs, but a note pasted in rupees (the MSME note, the related party note and the ageing tables are frequent culprits).
• Hundreds or thousands used when Total Income has reached ₹100 crore — often because only revenue from operations was looked at.
• Display-only rounding in Excel, so printed columns do not add and notes differ from the face by 0.01.
• Comparatives in a different unit, missing from new notes, or regrouped without a note.
• Missing note references on the face, or references pointing to the wrong note after notes were renumbered.
• Division II wording in a Division I set, which usually means the template came from an Ind AS client.

Most of these are introduced when the statements are put together; see Tally trial balance to draft Schedule III statements for a workflow that fixes the unit and the rounding method at the start rather than on signing day.

Frequently asked questions

Sources

• Companies Act, 2013 — Schedule III, Division I, General Instructions and section 2(41) (India Code, amended text)
• Schedule III amendment — G.S.R. 207(E), 24 March 2021 (Gazette)
• ICAI — Guidance Note on Division I – Non Ind AS Schedule III to the Companies Act, 2013 (Revised January 2022), paras 6.2–6.19, 9.5.7 and 13.6
• ICAI — Accounting Standards (AS 3, AS 18, AS 21, AS 24)

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