Profit and Loss Account – Schedule III Companies Act 2013 (2024)

Articles discuss Profit and Loss Account – Schedule III Companies Act

PART II-STATEMENT OF PROFIT AND LOSS

Name of the Company………………..

Profit and loss statement for the year ended ………………….

GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS

1. The provisions of this Part shall apply to the income and expenditure account referred to in subclause (ii) of clause (40) of section 2 in like manner as they apply to a statement of profit and loss.
2. (A) In respect of a company other than a finance company revenue from operations shall disclose separately in the notes revenue from—

(a) Sale of products;

(b) Sale of services;

[(ba) Grants or donations received (relevant in case of section 8 companies only),]

(c) Other operating revenues;

Less:

(d) Excise duty.

(B) In respect of a finance company, revenue from operations shall include revenue from—

(a) Interest; and

(b) Other financial services.

Revenue under each of the above heads shall be disclosed separately by way of notes to accounts to the extent applicable.p&l schedule III companies act.

3. Finance Costs

Finance costs shall be classified as:

(a) Interest expense;

(b) Other borrowing costs;

(c) Applicable net gain/loss on foreign currency transactions and translation.

4. Other income

Other income shall be classified as:

(a) Interest Income (in case of a company other than a finance company);

(b) Dividend Income;

(c) Net gain/loss on sale of investments;

(d) Other non-operating income (net of expenses directly attributable to such income).

5. Additional Information

A Company shall disclose by way of notes additional information regarding aggregate expenditure and income on the following items:—

(i)

(a) Employee Benefits Expense [showing separately

(i) salaries and wages,

(ii) contribution to provident and other funds,

(iii) expense on Employee Stock Option Scheme (ESOP) and Employee Stock Purchase Plan (ESPP),

(iv) staff welfare expenses].

(b) Depreciation and amortisation expense;

(c) Any item of income or expenditure which exceeds one per cent. of the revenue from operations or Rs.1,00,000, whichever is higher;

(d) Interest Income;

(e) Interest expense;

(f) Dividend income;

(g) Net gain/loss on sale of investments;

(h) Adjustments to the carrying amount of investments;

(i) Net gain or loss on foreign currency transaction and translation (other than considered as finance cost);

(j) Payments to the auditor as (a) auditor; (b) for taxation matters; (c) for company law matters;

(d) for management services; (e) for other services; and (f) for reimbursem*nt of expenses;

(k) In case of Companies covered under section 135, amount of expenditure incurred on corporate social responsibility activities;

(l) Details of items of exceptional and extraordinary nature;

(m) Prior period items;

(ii) (a) In the case of manufacturing companies,—

(1) Raw materials under broadheads.

(2) goods purchased under broadheads.

(b) In the case of trading companies, purchases in respect of goods traded in by the company under broadheads.

(c) In the case of companies rendering or supplying services, gross income is derived from services rendered or provided under broadheads.Profit and Loss Account – Schedule III Companies Act 2013.

(d) In the case of a company, which falls under more than one of the categories mentioned in (a),

(b) and (c) above, it shall be sufficient compliance with the requirements herein if purchases, sales and consumption of raw material and the gross income from services rendered are shown under broadheads.

(e) In the case of other companies, gross income is derived under broadheads.

(iii) In the case of all concerns having worked in progress, works-in-progress under broadheads.

(iv) (a) The aggregate, if material, of any amounts set aside or proposed to be set aside, to reserve, but not including provisions made to meet any specific liability, contingency or commitment known to exist at the date as to which the balance sheet is made up.

(b) The aggregate, if material, of any amounts withdrawn from such reserves.

(v) (a) The aggregate, if material, of the amounts set aside to provisions made for meeting specific liabilities, contingencies or commitments.

(b) The aggregate, if material, of the amounts withdrawn from such provisions, as no longer required.

(vi) Expenditure incurred on each of the following items, separately for each item:—

(a) Consumption of stores and spare parts;

(b) Power and fuel;

(c) Rent;

(d) Repairs to buildings;

(e) Repairs to machinery;

(f) Insurance;

(g) Rates and taxes, excluding taxes on income;

(h) Miscellaneous expenses,

(vii) (a) Dividends from subsidiary companies.

(b) Provisions for losses of subsidiary companies.

(viii) The profit and loss account shall also contain by way of a note the following information, namely:—

(a) Value of imports calculated on a C.I.F basis by the company during the financial year in respect of—

1. Raw materials;
2. Components and spare parts;

III. Capital goods;

(b) Expenditure in foreign currency during the financial year on account of royalty, know-how, professional and consultation fees, interest, and other matters;

(c) Total value if all imported raw materials, spare parts and components consumed during the financial year and the total value of all indigenous raw materials, spare parts and components similarly consumed and the percentage of each to the total consumption;

(d) The amount remitted during the year in foreign currencies on account of dividends with a specific mention of the total number of non-resident shareholders, the total number of shares held by them on which the dividends were due and the year to which the dividends related;

(e) Earnings in foreign exchange classified under the following heads, namely:—

1. Export of goods calculated on F.O.B. basis;
2. Royalty, know-how, professional and consultation fees;

III. Interest and dividend;

1. Other income, indicating the nature thereof.

Note:— Broadheads shall be decided to consider the concept of materiality and presentation of the true and fair view of financial statements.

[ (ix) Undisclosed income

The Company shall give details of any transaction not recorded in the books of accounts that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act, 1961) unless there is immunity for disclosure under any scheme and also shall state whether the previously unrecorded income and related assets have been appropriately recorded in the books of account during the year.;

(x) Corporate Social Responsibility (CSR)

Where the company is covered under section 135 of the companies act, the following shall be disclosed concerning CSR activities:-

(a) the amount required to be spent by the company during the year,

(b) amount of expenditure incurred,

(c) the shortfall at the end of the year,

(d) total of previous years shortfall,

(e) reason for the shortfall,

(f) nature of CSR activities,

(g) details of related party transactions, e.g., contribution to a trust controlled by the company

in relation to CSR expenditure as per relevant Accounting Standard,

(h) where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements in the condition during the year should be shown separately.

(xi) Details of CryptoCurrency or Virtual Currency

Where the Company has traded or invested in Cryptocurrency or Virtual Currency during the financial year, the following shall be disclosed:-

(a) profit or loss on transactions involving Cryptocurrency or Virtual Currency

(b) amount of currency held as at the reporting date,p&l schedule III companies act

(c) deposits or advances from any person for the purpose of trading or investing in Crypto Currency/ virtual currency.]