CFS Exemptions explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A consolidated balance sheet that repeated every standalone note would be longer and less informative. The exemptions exist to stop exactly that.
The clarification that drives the CFS exemptions
MCA has clarified vide General Circular No. 39/2014 dated 14 October 2014 that Schedule III to the Act read with the applicable Accounting Standards does not envisage that a company while preparing its CFS merely repeats the disclosures made by it under standalone accounts being consolidated. Accordingly, the company would need to give all disclosures relevant for CFS only.
Due note is also taken of the fact that Schedule III itself states that the provisions of the schedule are to be followed mutatis mutandis for Consolidated Financial Statements — the exemptions are an application of that phrase, not an exception to it.
CFS exemptions that dispense with the requirement entirely
| Schedule III requirement | Applicability to CFS |
|---|---|
| Share capital — authorised, issued, subscribed and paid up | It is adequate to present paid up capital and any calls in arrears. The rest has no relevance in the CFS context. |
| Source from which bonus shares are issued (capitalisation of profits or reserves, or from securities premium account) | Not relevant at CFS level and hence may be dispensed with. |
| Disclosure of all unutilized monies out of the issue, indicating the form in which such funds have been invested | Not relevant at CFS level and hence may be dispensed with. |
| Payments to the auditor — as auditor, taxation matters, company law matters, other services, reimbursement of expenses | Not relevant at CFS level and hence may be dispensed with. |
| CSR expenditure for companies covered under section 135 | Not relevant at CFS level and hence may be dispensed with. |
| Disclosures required as per the MSMED Act, 2006 | Not relevant at CFS level and hence may be dispensed with. |
Every item dispensed with is an attribute of the parent as a legal person, not of the group as an economic entity.
Authorised capital, the source of a bonus issue, and the deployment of unutilised issue proceeds are facts about one company's share capital history. Auditor remuneration, section 135 CSR spending and MSMED dues arise from statutory obligations that attach entity by entity.
None of them acquires a meaning at group level by being added up. A consolidated figure for "authorised capital" across a parent and eleven subsidiaries would be a number without a referent.
The requirements that survive are the ones that describe the group's economic position — what it owes, to whom, and how much of it is at risk.
Retained, but only above 10%
For the following four items, disclosure can be limited to those which are material to the CFS; materiality could be considered at 10% of the respective balance sheet item:
- Period and amount of continuing default as on the balance sheet date in repayment of borrowings and interest, specified separately in each case.
- Loans and advances due by directors or other officers of the company, severally or jointly with any other persons, or amounts due by firms or private companies in which any director is a partner, director or member.
- Debts due by directors or other officers, on the same terms.
- Where securities were issued for a specific purpose and the whole or part has not been so used at the balance sheet date, a note on how such unutilized amounts have been used or invested.
Share application money
Share application money pending allotment is classified into equity or liability in accordance with relevant Ind AS — the non-refundable extent under Equity, the refundable extent separately under Other financial liabilities. At the consolidated level, separate disclosure should be given for such monies due outside the group in respect of entities which are consolidated.
That last phrase is the consolidation principle applied to the CFS exemptions generally: amounts within the group are eliminated, and what is disclosed is what the group owes to, or is owed by, the world outside it.
Common mistakes
- Reproducing the full standalone share capital note in the CFS.
- Disclosing auditor remuneration and section 135 CSR spend at group level.
- Applying the 10% filter to items the CFS exemptions dispense with anyway.
- Including intra-group share application money in the CFS disclosure.