Division III Applicability 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.
Three divisions of Schedule III now exist, and which one an entity uses is decided not by size but by what kind of business it carries on.
How the three divisions arrived, and Division III applicability with them
| Notification | Effect |
|---|---|
| S.O. 902(E) dated 26 March 2014 | Schedule III applies for financial statements prepared for the financial year commencing on or after 1 April 2014 |
| G.S.R. 404(E) dated 6 April 2016 | Schedule III amended to include a format for companies preparing statements in compliance with the Companies Ind AS Rules — the original becoming Division I, the new one Division II |
| G.S.R. 1022(E) dated 11 October 2018 | Schedule III amended to include a format for an NBFC preparing statements in compliance with the Companies Ind AS Rules — Division III |
| Notification dated 24 March 2021 | Certain additional presentation and disclosure requirements included and some existing requirements changed, applying from the financial year commencing on or after 1 April 2021 |
Every Non-Banking Financial Company as defined in the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 to which Indian Accounting Standards apply shall prepare its financial statements in accordance with this Schedule, or with such modification as may be required under certain circumstances.
The base definition is a Non-Banking Financial Company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934. But the Companies Ind AS Rules definition then expressly includes:
Housing Finance Companies · Merchant Banking companies · Micro Finance Companies · Mutual Benefit Companies · Venture Capital Fund Companies · Stock Broker or Sub-Broker Companies · Nidhi Companies · Chit Companies · Securitisation and Reconstruction Companies · Mortgage Guarantee Companies · Pension Fund Companies · Asset Management Companies · Core Investment Companies.
Several of these are not regulated by the RBI at all — housing finance companies answer to the NHB, stock brokers and asset management companies to SEBI. The inclusion is about the nature of the balance sheet, not about who supervises it: an entity whose assets are predominantly financial needs a liquidity-ordered format, whoever its regulator happens to be.
Comparatives and the first Ind AS year
Except in the case of the first financial statements laid before the company after incorporation, the corresponding amounts (i.e. comparatives) for the immediately preceding period are to be disclosed in the financial statements including the Notes to Accounts.
Under Ind AS 101, a company's first Ind AS financial statements shall include at least three balance sheets, two statements of profit and loss, two statements of cash flows and two statements of changes in equity and related notes. The Guidance Note does not deal with the presentation aspects of reconciliations required as part of first Ind AS financial statements.
Division III applicability to interim financial statements
Ind AS 34 governs the position, and the Guidance Note quotes it directly:
- Para 9 — if an entity publishes a complete set of Financial Statements in its interim financial report, the form and content of those statements shall conform to the requirements of Ind AS 1 for a complete set.
- Para 10 — if an entity publishes a set of condensed Financial Statements, those condensed statements shall include, at a minimum, each of the headings and subtotals that were included in its most recent annual Financial Statements and the selected explanatory notes as required by this Standard. Additional line items or notes shall be included if their omission would make the condensed interim Financial Statements misleading.
In case a company is presenting condensed interim Financial Statements, its format should also conform to that used in the company's most recent annual Financial Statements, i.e. which would be as per Division III to Schedule III.
Division III applicability to listed NBFCs and electricity companies
Listed entities shall follow guidelines issued by SEBI by way of circulars prescribing formats for publishing financial results (quarterly, half-yearly and annual), which are guided by the relevant provisions of the Ind AS and Division III to Schedule III, and may make suitable modifications as applicable.
And for companies generating or supplying electricity, neither the Electricity Act, 2003 nor the rules framed thereunder prescribe any specific format. Section 1(4) of the Companies Act applies to electricity companies to the extent it is not inconsistent with the provisions of the Electricity Act, so Division III, Division I or Division II as applicable may be followed by such companies till the time any other format is prescribed by the relevant statute.
Common mistakes
- Reading Division III applicability as limited to RBI-registered NBFCs.
- Omitting the third balance sheet in the first Ind AS year.
- Publishing condensed interim statements in a format other than Division III.
- Treating the 24 March 2021 changes as optional for periods from 1 April 2021.