Financial Reporting & Audit Requirements
Financial Reporting Requirements
In India, financial reporting requirements for different types of entities are governed by relevant statutes. A brief summary of this is given below:
| Types of entities | Preparation of financial statements mandatory or not | Relevant statute* | Reporting standards of accounting records | Remarks | Reporting timeline# |
|---|---|---|---|---|---|
| Proprietorship | Yes1 | Income Tax Act, 1961 | Cash basis of accounting / Accounting Standards as issued by the Institute of Chartered Accountants of India (ICAI) | Applicable only if the turnover exceeds the limits specified under the relevant statute2 |
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| Partnership Firm | Yes | Income Tax Act, 1961 | Cash basis of accounting / Accounting Standards as issued by the ICAI | Applicable only if the turnover exceeds the limits specified under the relevant statute3 |
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| Limited Liability Partnership | Yes | Limited Liability Partnership Act, 2008 | Cash basis of accounting / Accounting Standards as issued by the ICAI | Only if the turnover exceeds the limits specified under the relevant statute4 | Six months from the end of the financial year |
| Listed Public Limited Company | Yes | Companies Act, 2013, Securities and Exchange Board of India Guidelines, and any other relevant statute depending upon the nature of business and activities of the company | Ind AS as notified under the Companies Act, 2013 or such other accounting standards as may be applicable under the relevant statute | In case the company falls under a special statute, then the requirements of such special statute shall prevail | 60 days from the end of the financial year5. Additionally, listed companies are also required to furnish quarterly financial results within 45 days from the end of the quarter except for the last quarter |
| Unlisted Public Company | Yes | Companies Act, 2013 | Accounting Standards or Ind AS^ as notified under the Companies Act, 2013, or such other accounting standards as may be applicable under the relevant statute | In case the company falls under a special statute, then the requirements of such special statute shall prevail6 | Six months from the end of the financial year |
| Private Company | Yes | Companies Act, 2013 | Accounting Standards or Ind AS^ as notified under the Companies Act, 2013, or such other accounting standards as may be applicable under the relevant statute | In case the company falls under a special statute, then the requirements of such special statute shall prevail | Six months from the end of the financial year |
| Charitable Trust | Yes | Relevant Trust Act and Income Tax Act, 19617 | Cash basis of accounting / Accounting Standards as issued by the ICAI |
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| Societies | Yes | Respective Society Act and Income Tax Act, 1961 | Cash basis of accounting / Accounting Standards as issued by the ICAI |
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| Liaison Office/ Branch Office/ Project Office | Yes | Companies Act 2013, Foreign Exchange Management standards Act, Insurance Regulatory and Development Act 1999 | Accounting standards as notified under the Companies Act, 2013 | Six months from the end of the financial year. | |
| Banks | Yes | Banking Regulation Act, 1949 | Ind AS^^ as notified under the Companies Act, 2013, or such other accounting standards as may be applicable under the relevant statute | 60 days from the end of the financial year. | |
| Non-Banking Financial Institutions (NBFC) | Yes | Reserve Bank of India (RBI) and the Companies Act, 2013 | Accounting Standards or Ind AS^^ as notified under the Companies Act, 2013, or such other accounting standards as may be applicable under the relevant statute | Applicable only if the turnover exceeds the limits specified under the relevant statute | 60 days / within 6 months from the end of the financial year from the end of the financial year |
#Timeline for submission of financial information with relevant statutory authorities.
*The Preface to the Statements of Accounting Standards issued by the ICAI states the following - “Efforts will be made to issue Accounting Standards which are in conformity with the provisions of the applicable laws, customs, usages and business environment of our country. However, if due to subsequent amendments in the law, a particular Accounting Standard is found to be not in conformity with such law, the provisions of the said law will prevail, and the financial statements should be prepared in conformity with such law.” For e.g. - Banks need to prepare financial statements as per the Banking Regulation Act, 1949.
**The due date for filing the Tax Audit report in case of international or specified domestic transactions as per sec 92E is 31 October whereas the Income Tax Return due date is 30 November.
^ Ind AS
Ind AS are the Indian Accounting Standards converged with International Financial Reporting Standards (IFRS). Hence, Ind AS is primarily based on IFRS issued by the International Accounting Standard Board (IASB) with certain general differences between Ind AS and IFRS.
^^ Ind AS
The RBI has notified the deferment of implementation of Ind AS till further notice on 22 March 2019.
- 1. When the turnover of a proprietorship is less than a specified threshold, financial reporting is not applicable
- 2.INR 10 million in the case of business and INR 5 million – in the case of profession.
- 3.Ibid
- 4.As per the Limited Liability Partnership Act, 2008, the audit of books of account would be mandatory when the turnover exceeds INR 4 million and contribution exceeds INR 2.5 million
- 5.The requirements have been stipulated by the Securities Exchange of Board of India (SEBI)
- 6.Banking, financial services, insurance and electric companies where the form and contents of the financial statements are governed by respective statutes
- 7.Depending upon the territory of registration and the purpose of the trust
- 8.Where form no. 49C and annual activity certificate is required to be filed/furnished, then the date of furnishing such form and certificate shall be within 60 days from and six months from the end of the financial year respectively
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