88. New Schedule VI

Schedule VI of the Companies Act, 1956 provides the format of balance sheet and Profit and Loss Account of Companies. That is, Companies have to prepare their financial statements in that form. The present schedule VI has about fifty years of age.

We know that MCA is in a path of renovation. During the last one year, the ministry implemented so many modifications. All changes are a part of international standardization.  Implementation of XBRL is important among them. Now the old schedule VI is revamped. This standardization will make it easy to compare the corporates internationally. This overhauling of the Companies Act, 1956 will help to make Indian business and companies competitive and globally recognizable.

Let us go through the major changes introduced through the revised schedule-VI.

1.   As per the Government Notification no. F.No.2/6/2008-C.L-V dated 30-3-2011, the Revised Schedule VI is applicable for the financial year commencing on or after April 1, 2011.

2.   Insurance or banking company, any company engaged in the generation or supply of electricity, and  any other class of company for which a form of Balance Sheet and Profit and Loss account has been specified in or under any other Act governing such class of company are not required to follow the revised Schedule VI.

3.   The Revised Schedule VI has eliminated the concept of Schedules and such information is to be furnished in the Notes to Accounts.

4.   Assets and liabilities are to be bifurcated between current and non-current portions and presented separately on the face of the Balance Sheet.

5.   Same unit must be used for measurement uniformly throughout the Financial Statements and notes thereon

6.   Rounding off requirements (where opted for) have been changed to eliminate the option of presenting figures in terms of hundreds and thousands if turnover exceeds 100 crores.

7.   The Revised Schedule VI prescribes only the vertical format of balance sheet.

8.   Number of shares held by each shareholder holding more than 5 percent shares in the company now needs to be disclosed.

9.   Any debit balance in the Statement of Profit and Loss will be disclosed under the head “Reserves and surplus.”

10.                Specific disclosures are prescribed for Share Application money. The application money not exceeding the capital offered for issuance and to the extent not refundable will be shown separately.

11.                The term “sundry debtors” has been renamed “trade receivables.” ‘Trade receivables’ are defined as dues arising only from goods sold or services rendered in the normal course of business.

12.                The Revised Schedule VI requires separate disclosure of trade receivables outstanding for a period exceeding six months from the date the bill/invoice is due for payment.

13.                Requires the disclosure of all defaults in repayment of loans and interest to be specified in each case

14.                The name “Profit and Loss Account” has been changed to “Statement of Profit and Loss”

15.                The Revised Schedule VI lays down a format for the presentation of Statement of Profit and Loss

The following Disclosures are no longer required:

1.   Disclosures relating to managerial remuneration and computation of net profits for calculation of commission;

2.   Information relating to licensed capacity, installed capacity and actual production;

3.   Information on investments purchased and sold during the year

4.   Investments, sundry debtors and loans & advances pertaining to companies under the same management;

5.   Maximum amounts due on account of loans and advances from directors or officers of the company;

6.   Commission, brokerage and non-trade discounts