Schedule III of the Companies Act (Division I): the complete guide — format, notes and examples for FY 2025-26

Every company's balance sheet in India is built on one page of the law: Schedule III of the Companies Act, 2013. It decides which headings appear on the face of the Balance Sheet and the Statement of Profit and Loss, in what order, what each note must break down, and the general rules on rounding, comparatives and current versus non-current. This guide sets out the complete Schedule 3 format under Division I — the one used by every company that follows Accounting Standards rather than Ind AS — as amended, with illustrative figures, and then links to a detailed guide for each line item and note.

What Schedule III of the Companies Act 2013 is, and who must follow it

Section 129(1) requires the financial statements to give a true and fair view, comply with the accounting standards notified under section 133, and be in the form or forms provided in Schedule III for different classes of companies. Where the Act or an Accounting Standard requires a different treatment or disclosure, General Instruction 1 says the Accounting Standard or the Act prevails and the Schedule stands modified accordingly. The second proviso to section 129(1) takes out insurance and banking companies, electricity companies and any class of company whose form of financial statement is specified under its own governing Act.

Schedule III has three divisions:

• Division I — for companies whose financial statements follow the Accounting Standards. Its heading still refers to the Companies (Accounting Standards) Rules, 2006; those rules have since been replaced by the Companies (Accounting Standards) Rules, 2021, so in practice Division I is the format for every company on AS — which in practice covers most private companies audited by small firms.
• Division II — for companies that follow Ind AS under the Companies (Indian Accounting Standards) Rules, 2015 (inserted in 2016). It has a Statement of Changes in Equity and different wording ("financial assets", "other equity").
• Division III — for non-banking financial companies that follow Ind AS (inserted by G.S.R. 1022(E) in October 2018).

Do not mix the wording: "considered good / doubtful", "reserves and surplus" and "long-term loans and advances" belong to Division I. The rest of this guide covers Division I only.

Schedule III sets the minimum. Its opening note allows line items, sub-line items and sub-totals to be added or substituted on the face where that helps users understand the financial position or performance, or meets an industry requirement. The disclosures in Schedule III are in addition to — not instead of — those required by the Accounting Standards.

The Schedule III balance sheet format (Division I, as amended)

Part I of Division I prescribes the face of the Balance Sheet below. The table shows every heading and sub-heading in the prescribed order, with illustrative figures for a trading company (₹ in lakhs) so you can see how it reads in practice. The figures are an example only.

Note 1 is usually the company information and significant accounting policies. Note 7 here includes the current maturities of long-term borrowings, disclosed separately as item F(v) requires. Behind the face, paragraph 6 of the general instructions to the Balance Sheet (items A to Y) lists what each note must contain. The main ones:

For the ratios — what goes in each numerator and denominator, and how to explain a change of more than 25% — see Schedule III ratios.

The Statement of Profit and Loss format

Part II prescribes the face below. The same illustrative company continues (₹ in lakhs); the profit of ₹40.65 lakhs is the movement in reserves and surplus above, as no dividend was paid.

The general instructions to Part II then require, in the notes:

• Revenue from operations split into sale of products, sale of services, grants or donations (section 8 companies only) and other operating revenues, less excise duty; finance companies show interest and other financial services.
• Other income split into interest, dividend, net gain or loss on sale of investments and other non-operating income.
• Finance costs split into interest, other borrowing costs and applicable exchange differences.
• Additional information — employee benefits expense in four parts, any item of income or expenditure exceeding 1% of revenue from operations or ₹1,00,000 (whichever is higher), payments to the auditor by capacity, CSR spend for companies covered by section 135, exceptional and prior period items, consumption of stores, power and fuel, rent, repairs, insurance, rates and taxes, foreign exchange information, and — since 2021 — undisclosed income, the CSR details and crypto currency.

Part II also applies to the income and expenditure account of a not-for-profit company, in the same way.

General instructions in brief

In the illustration, Total Income is about ₹12.5 crore, so rounding to lakhs with two decimals is within the permitted options.

The 2021 amendments to Schedule III Division I in one table

G.S.R. 207(E) dated 24 March 2021 amended Schedule III (all three divisions) with effect from 1 April 2021; for Division I, so the changes have applied from FY 2021-22. What it added or changed:

Small companies: what changes and what doesn't

Since 1 December 2025, a small company is one with paid-up capital up to ₹10 crore and turnover up to ₹100 crore (other than a public company, a holding or subsidiary company, and the other excluded classes) — see small company definition and the new limits. Small company status changes several things in an audit, but very little in Schedule III:

• No Schedule III exemption. Section 129(1) applies to every company. A small company prepares the same Balance Sheet and Statement of Profit and Loss, with the same notes — ageing, MSME dues, promoters' shareholding, additional regulatory information and the eleven ratios — wherever they apply.
• Cash flow statement. The proviso to section 2(40) allows the financial statements of a one person company, small company or dormant company to exclude the cash flow statement. The amendment of 13 June 2017 (G.S.R. 583(E)) to the 2015 exemption notification for private companies extends this to a private company that is a start-up. Schedule III itself does not prescribe a cash flow format — where one is prepared, AS 3 applies.
• Accounting Standards relaxations are a separate test. They depend on whether the company is a Small and Medium-sized Company under the Companies (Accounting Standards) Rules, 2021, not on the section 2(85) definition. They change measurement and AS disclosures, not the Schedule III format.
• Outside the statements, small company status affects CARO 2020 and internal financial controls reporting — the audit report, not the accounts.

In practice, the disclosures added in 2021 are the ones small-company accounts often leave incomplete. Before signing, run through them along with the other checks before signing the balance sheet.

All Schedule III guides

Basics: format, divisions and general instructions

• Schedule III general instructions: rounding off, units, comparatives and notesThe six General Instructions of Division I paragraph by paragraph, the rounding table after G.S.R. 207(E), a note that will not cast after rounding, and the slips to check.
• Schedule III Division I, II and III: which one applies to your companyWhich Schedule III Division a company uses, the Ind AS triggers that decide it, the presentation differences and what all three share.
• Current and non-current classification under Schedule III: the tests, the operating cycle and examplesThe four asset and four liability tests, the operating cycle, loans repayable on demand, covenant breaches, a 15-item classification table and a worked example.
• Notes to accounts under Schedule III: the list of notes, their order and a formatThe complete numbered list of notes for a small company's Division I accounts, the order convention, cross-referencing rules and an accounting policies skeleton.
• Cash flow statement under AS 3: indirect method worked example and who is exemptComing 7 Nov
• Previous year figures in Schedule III: regrouping, reclassification and first-year accountsComing 9 Nov
• Section 8 company accounts: income and expenditure account under Schedule IIIComing 12 Nov

Balance sheet, item by item

• MSME dues and section 43B(h): the disclosure and disallowance small-company accounts often get wrongWhat the MSMED Act, Schedule III and section 43B(h) require for dues to micro and small suppliers, the year-end traps, and a checklist for the payables file.
• Trade receivables and payables ageing under Schedule III: the format, the buckets and the common slipsThe Division I ageing tables row by row, what ICAI's Guidance Note adds, a worked example, building it from Tally, and the slips to check before signing.
• Share capital note under Schedule III: reconciliation, 5% holders and promoters' shareholdingEvery item of the Division I share capital note, the 2021 promoters' shareholding table with ICAI's extra columns, a worked rights-issue example and the common slips.
• Property, plant and equipment and CWIP ageing under Schedule III: the reconciliation and schedulesThe Division I PPE note line by line — classes, the gross-to-net reconciliation, title deeds, registered valuer, and the CWIP ageing and completion schedules — with worked examples and tie-outs.
• Borrowings under Schedule III: long-term, short-term and current maturities explainedThe Division I long-term and short-term borrowings notes, where current maturities go since 2021, a term loan EMI split and the borrowing-linked regulatory items.
• Loans and advances under Schedule III: related parties, capital advances and loans repayable on demandThe Division I long-term and short-term loans and advances notes, capital advances, advances in the nature of loans, the related party table and a worked example.
• Reserves and surplus under Schedule III: negative surplus, securities premium and other reservesThe Division I reserves and surplus note: the eight sub-heads, movements, the debit balance of profit and loss, restrictions on each reserve and a worked surplus reconciliation.
• Other current liabilities and provisions under Schedule III: what belongs whereThe Division I other current liabilities list, what is not a trade payable, provisions versus accruals, the employee benefit split and a worked note with figures.
• Inventories under Schedule III: classification, valuation note and goods in transitThe Division I inventories note sub-head by sub-head, where goods in transit go, the AS 2 cost and NRV rules, a worked valuation, and the links to stock statements, ratios and CARO.
• Investments under Schedule III: non-current and current, quoted and unquotedThe Division I non-current and current investments notes, trade vs other, quoted and unquoted aggregates, AS 13 measurement, partnership firm details and a worked FY 2025-26 note.
• Cash and cash equivalents and other bank balances under Schedule IIIThe Division I cash note, why ICAI splits it into cash and cash equivalents and other bank balances, the fixed deposit classification, overdrafts and a worked note.
• Deferred tax under Schedule III and AS 22: presentation and the noteWhere deferred tax assets and liabilities sit under Division I, the AS 22 recognition tests, offsetting, MAT credit, a full worked computation and the note format.
• Depreciation under Schedule II: useful lives, residual value, SLM vs WDV, with examplesComing 10 Nov
• Other current and non-current assets: GST, TDS, prepaid and deposits, where each goesComing 11 Nov

Statement of profit and loss

• Revenue from operations vs other income under Schedule III: what goes whereThe Division I revenue and other income notes, GST and excise presentation, other operating revenue vs other income, AS 9 basics, 20 items classified and a worked example.
• Other expenses under Schedule III: the 1% rule and payments to the auditorThe eight items always shown separately, the 1% of revenue or ₹1,00,000 test worked through, the six heads of payments to the auditor, GST on audit fees, and a full format of the note.
• Employee benefits expense and finance costs under Schedule IIIThe four employee benefit sub-heads, the three parts of finance costs, where tax interest, MSME interest, bank charges and directors' fees go, AS 15 and AS 16 points, and a format of both notes.
• Cost of materials consumed, purchases and changes in inventories under Schedule IIIThe three Division I stock-related expense lines, the broad-head notes, the sign convention, worked numbers for a manufacturer, trader and mixed business, and common slips.
• Exceptional, extraordinary and prior period items under Schedule III and AS 5Where exceptional and extraordinary items sit on the face of the Division I profit and loss, how AS 5 defines them and prior period items, ten items classified, a worked presentation and the Ind AS 8 differences.
• Earnings per share under AS 20: basic, diluted and the Schedule III disclosureBasic and diluted EPS under AS 20 — weighted average shares, bonus and rights issue restatement, potential equity shares, the SMC relaxation, the Schedule III face line and two worked examples.
• Statement of profit and loss format under Schedule III: every line, with an exampleEvery line of the Division I Statement of Profit and Loss as amended, the General Instructions and Note 5, a full worked example with discontinuing operations and EPS, and how a Tally P&L maps.

Notes and additional disclosures

• Schedule III ratios: the eleven ratios, their formulas and explaining a change of more than 25%What Schedule III requires, a common basis for each ratio, the 25% test with examples, better explanations and the auditor's checks.
• Related party disclosures (AS 18): 8 items small company accounts often leave outWhat AS 18 requires in the related party note, how it differs from the Companies Act definition, and eight items small company accounts often leave out.
• Additional regulatory information under Schedule III: all 14 items explained with examplesAll fourteen Division I additional regulatory information items, from title deeds and benami property to struck-off companies and intermediaries, with formats, nil wording, evidence and the CARO link for each.
• Contingent liabilities and commitments under Schedule III and AS 29The Division I contingent liabilities and commitments headings, the AS 29 provision test, tax demands, guarantees, a format note and eight items classified, tied to Rule 11(a) and CARO 3(vii)(b).
• CSR, crypto currency and undisclosed income notes under Schedule IIIThe three P&L additional information items added in 2021, with the exact list for each, a worked CSR example, section 135 applicability, unspent CSR deadlines, nil wording and the CARO link.
• Schedule III amendment 2021: every change for Division I companies, in one tableEvery change G.S.R. 207(E) made to Division I of Schedule III, from rounding and current maturities to ageing, promoters' shareholding, the fourteen regulatory items and CSR, with old and new wording and what it means for FY 2025-26.
• Significant accounting policies note: what to write, with sample wording (AS 1)Coming 8 Nov
• Events after the balance sheet date (AS 4): adjust or disclose, with 14 real examplesComing 14 Nov

From trial balance to signed statements

• Balance sheet doesn't tally after mapping? 6 places the difference usually hidesSix places a balance sheet difference hides after mapping a trial balance to Schedule III, and how to find it fast.
• 9 Schedule III mistakes that show up in small company accountsNine presentation and disclosure slips common in small company accounts, with the Division I requirement and the fix for each.
• From Tally trial balance to draft Schedule III statements: a step-by-step workflow for small firmsTwo trial balances, ledger mapping, the inputs a TB cannot give you, notes before the face, cash flow, ratios, tie-outs and the review.
• Mapping Tally groups to Schedule III heads: a ledger-by-ledger guideAll 28 predefined Tally groups mapped to Division I heads, the ledgers inside each that usually belong elsewhere, worked splits and a mapping checklist.
• Schedule III compliance checklist: every Division I disclosure, line by line (FY 2025-26)A line-by-line Division I disclosure checklist: general instructions, Balance Sheet notes A to Y with the fourteen regulatory items, and the Statement of Profit and Loss notes, each with its reference and a Y/N/NA column.
• Who signs the balance sheet: section 134, directors, CFO, CS, auditor and UDINComing 6 Nov

Free formats and tools

• Schedule III format in Excel: balance sheet, profit and loss and notes for FY 2025-26The complete Division I balance sheet, Statement of Profit and Loss and notes skeleton as tables for Excel, how to link and check them, and the template slips to avoid.
• Schedule III ratio calculator: the 11 ratios computed from your trial balanceOne example company taken from trial balance to all eleven Schedule III ratios for both years, the 25% variance flags, sample explanations and the Excel formulas.
• Ageing schedule format in Excel for Schedule III: receivables and payablesThe Schedule III receivables and payables ageing grids ready to copy, and how to build them in Excel from a Tally bill-wise export, with formulas, a worked example and the checks.

How to use these guides

The guides above follow the order in which you meet Schedule III on a file:

1. Basics — confirm the division, and settle rounding, units, comparatives and current/non-current classification before drafting a single note.
2. Balance sheet, item by item — open the guide for each line as you draft or review that note: what goes in it, the prescribed sub-classification and a format with figures.
3. Statement of profit and loss — revenue versus other income, the expense heads and the additional information.
4. Notes and additional disclosures — the regulatory information, contingent liabilities, CSR and the other notes that are easy to leave out.
5. Trial balance to signed statements — mapping ledgers to Schedule III heads and a line-by-line compliance check before the partner signs.
6. Free formats and tools — the Schedule III format and ageing schedules laid out in full, and the ratio workings.

Each guide quotes the requirement from Division I as amended and the relevant Accounting Standard, and says where practice usually goes wrong. For the wider finalisation sequence — from the trial balance to the signed report — use the company audit finalisation checklist.

Frequently asked questions

Sources

• Companies Act, 2013 (as amended) — sections 2(40), 129 and Schedule III, India Code
• 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)
• Small company limits — G.S.R. 880(E), 1 December 2025 (Gazette)
• Exemptions to private companies (start-up cash flow) — G.S.R. 583(E), 13 June 2017 (Gazette)
• Companies (Accounting Standards) Rules, 2021 — G.S.R. 432(E)

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