Trade receivables and payables ageing under Schedule III: the format, the buckets and the common slips

The ageing tables for trade receivables and trade payables arrived with the Schedule III amendment notified by G.S.R. 207(E), effective from 1 April 2021. Several years on, they still cause trouble in small-company files: a template copied from an Ind AS client with the wrong row headings, payables aged in receivable buckets, an ageing total that does not agree with the note, or a "disputed" row that nobody can explain. This article sets out exactly what Division I (non-Ind AS) requires, what ICAI's Guidance Note adds, a worked example, how to build the figures from Tally, and the slips worth checking for before you sign.

Where the requirement sits in Division I

G.S.R. 207(E) inserted the ageing requirement in three places in Part I of Division I:

• Trade receivables (current) — heading P, item (i), which replaced the old requirement to state separately the receivables outstanding for more than six months from the due date.
• Long-term trade receivables — under heading M, Other non-current assets, a new item (iv). If the company has receivables classified as non-current, they need their own ageing table.
• Trade payables — a new heading FB, "Trade payables due for payment", inserted after FA (the MSME disclosures).

The older requirements remain alongside: receivables are still sub-classified as secured considered good, unsecured considered good and doubtful; the allowance for bad and doubtful debts is still shown separately; and debts due from directors, officers, and firms or private companies in which a director is a partner, director or member are still stated separately. ICAI's Guidance Note on Division I also confirms that comparatives are prepared on the same lines as the current year — so the previous-year ageing table is needed too.

The trade receivables table

Division I prescribes four rows and five ageing buckets, "outstanding for following periods from due date of payment":

Note the wording. Division II (Ind AS) uses six rows, including "which have significant increase in credit risk" and "credit impaired". Those rows belong to the Ind AS expected-credit-loss model and have no place in a Division I note. A Division I company showing them is a sign that the template came from somewhere else.

The Guidance Note explains that "disputed" is not defined in Schedule III; whether a dispute exists depends on the facts, and it means a disagreement between the parties demonstrated by some positive evidence. It also points out that a dispute is not always an indicator of credit risk, and vice versa — so "disputed" and "doubtful" are two separate judgements. A disputed debt can be considered good, and an undisputed one can be doubtful.

The trade payables table

Heading FB prescribes a different shape: four rows and only four buckets, again from the due date of payment.

There is no "considered good / doubtful" split for payables, and no six-month bucket. The Guidance Note clarifies that rows (i) and (ii) carry only undisputed dues. On the face of the balance sheet, trade payables are split between dues of micro and small enterprises and dues of other creditors; the "MSME" row in the ageing table should be reconcilable with that split and with the MSMED Act disclosures under heading FA, so prepare all three from the same list of suppliers. The ageing row is labelled "MSME", while the face and heading FA cover micro and small enterprises only; Schedule III and the Guidance Note do not say whether medium enterprises belong in the row, so state the basis used and keep it consistent.

Due date, unbilled and "not due"

Three points decide which column an amount goes into.

• Age from the due date, not the invoice date. Both tables say "from due date of payment". The Guidance Note describes the due date as the date payment falls due under the terms agreed between buyer and supplier. For payables, it adds that where a due date has been renegotiated or an invoice revised, the original or revised due date is used depending on the agreed terms.
• No due date specified. Schedule III says the disclosure is then made from the date of the transaction. For payables, the Guidance Note treats the transaction date as the date the liability is recognised in the books. For current receivables it adds that, where no due date is specifically agreed, the normal credit period allowed by the company should be considered in computing the due date. Whatever basis you use, record it in the working paper.
• Unbilled and not due. Schedule III requires unbilled dues to be disclosed separately. To make the table's total agree with the amount in the note, the Guidance Note adds two columns before the ageing buckets: Unbilled and Not due. Amounts not yet due are not aged. For payables, unbilled dues include accruals that are not provisions under AS 29; the Guidance Note clarifies that a provision is not an unbilled trade payable.

The Guidance Note also deals with amalgamations: where ageing is given, the original date is used, and if that information is not available, the fact should be stated.

A worked example

A company has trade receivables (gross) of ₹48,50,000 at 31 March 2026, all current. Credit terms are 60 days. The ageing, built from bill-wise outstandings, comes out as follows (₹ thousand):

Now tie it to the rest of the note:

• Considered good in the ageing is 4,330 + 130 = 4,460. That should equal secured considered good plus unsecured considered good in the sub-classification — say 500 secured (against customer deposits) and 3,960 unsecured. The Guidance Note expects the disputed and undisputed amounts for each category to add up to the same category in the separate disclosure.
• Doubtful in the ageing is 240 + 150 = 390. The allowance for bad and doubtful debts shown separately would normally be 390, giving net receivables of 4,460. If the allowance is different, the working paper should explain why.
• The total of 4,850 agrees with the gross receivables in the note, which agrees with the trial balance after reclassifying credit balances (advances from customers) out of debtors.

The payables table is built the same way, with the MSME row taken from the confirmed list of micro and small suppliers and the four payable buckets.

Building the ageing from Tally

The ageing is only as good as the bill-wise data behind it.

• Where bill-wise details are maintained on party ledgers, Tally's outstandings reports give bill-by-bill balances with bill dates and, where credit periods are entered, due dates. Check which date the report is ageing by, and that the period bands match Schedule III — five bands for receivables, four for payables.
• Unadjusted receipts and "On Account" entries often sit against a party without being matched to bills. They make the old bills look outstanding when they have in fact been paid. Have the client adjust them against bills before you take the report.
• Where bill-wise details are not maintained, a common practice is to age the closing balance on a first-in, first-out basis: assume receipts settle the oldest invoices first, and attribute the closing balance to the most recent invoices. This is a practical method, not something Schedule III or the Guidance Note prescribes. Use it only where it reflects how the party actually pays, and say so in the working paper. Specific disputes and retentions need to be identified separately.
• Reclassify before ageing. Credit balances in debtors (advances from customers) and debit balances in creditors (advances to suppliers) are not trade receivables or payables. Ageing the net figure hides both.
• Both years. Keep last year's ageing in the file; if last year's signed statements did not present the table correctly, the comparative will need regrouping.

The audit angle

• Doubtful debts. The ageing is evidence for the provision. Amounts more than one or two years past due, and disputed balances, are where the recoverability discussion should start. The allowance for doubtful debts is an accounting estimate, so SA 540 applies. Subsequent receipts after the year end are often the most persuasive evidence that an old balance is good.
• Confirmations. Balance confirmations under SA 505, selected with the ageing in hand, also test whether "disputed" is complete — a customer that does not agree the balance may have a dispute the client has not recorded.
• MSME interest. Under the MSMED Act, a micro or small supplier must be paid by the date agreed in writing, which cannot be more than 45 days from the day of acceptance or deemed acceptance, or, where there is no agreement, within 15 days of acceptance (section 15 read with section 2(b)). On delay, compound interest with monthly rests at three times the bank rate notified by the RBI is payable (section 16), and that interest is not allowed as a deduction in computing income under the Income-tax Act, 1961 (section 23). Any MSME amount in the ageing buckets is, by definition, past its due date, so it raises an immediate question on interest under section 16 and on the unpaid-interest disclosures under heading FA; amounts in the 1–2 year or older buckets are the clearest cases. Check also that the due date used for an MSME supplier does not run beyond the 45-day limit, or an overdue amount may be sitting in the Not due column. The income-tax side for FY 2025-26 is section 43B(h) of the Income-tax Act, 1961 — covered in our article on MSME dues, section 43B(h) and disclosure.
• Old payables. Large "more than 3 years" payable balances raise questions of their own: are they genuinely payable, disputed, or ready to be written back?

Common slips to check before signing

On a small-company file, most of these are quick to check, provided the bill-wise data is clean. The ageing working then becomes useful twice: once for the disclosure, and again as evidence for the provision and the MSME interest question.

Frequently asked questions

Sources

• 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)
• ICAI — SA 505 External Confirmations
• ICAI — SA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures
• Micro, Small and Medium Enterprises Development Act, 2006 — sections 15, 16 and 23
• Income-tax Act, 1961 — section 43B(h) (FY 2025-26)