ICAI Non-Corporate Entity Financial Statements Format

The ICAI Non-Corporate Entity (NCE) financial statements format is the format recommended by the ICAI for entities that are neither companies nor LLPs — sole proprietorships, partnership firms, AOPs, HUFs, trusts and societies. It presents a Balance Sheet and Statement of Profit and Loss on the same current / non-current basis as Schedule III, but the funding side uses Owners'/Partners' funds. Following the ICAI announcement dated 31 March 2026 it applies in phases — from FY 2025-26 to entities whose turnover exceeds Rs 5 crore, and from FY 2026-27 to all entities.

When it applies — the phased applicability

This is the part that has moved twice, so it is worth stating precisely. The ICAI issued the Guidance Note in August 2023, effective for financial statements covering periods beginning on or after 1 April 2024. By announcement dated 19 September 2025 the Council relaxed that: for the annual reporting period 2024-25 the Guidance Note could be applied voluntarily. Then, at its 451st meeting held on 30–31 March 2026, the Council settled the position by announcement dated 31 March 2026 — the Guidance Notes apply to non-corporate entities in a phased manner:

One practical point worth noting: the phased announcement is dated 31 March 2026 — the last day of FY 2025-26. Phase I therefore lands on a year that had already run its course, so for many firms the first application of the format is being done on a completed year rather than planned for at the start of it.

The relaxation announcement also clarified that it changed nothing about the applicability of the Accounting Standards or the Framework for the Preparation and Presentation of Financial Statements — those continue to apply on their own terms, independently of which presentation format is used.

What “Guidance Note” means for compliance

A Guidance Note is recommendatory, not a notified statutory schedule — but recommendatory does not mean optional in practice. Under the ICAI's clarification on the authority attached to its documents, a member who does not apply a relevant Guidance Note must take reasonable and adequate care over the alternative procedures adopted and document the rationale. Discharging the attest function, the auditor must examine whether the recommendations have been followed; the ICAI's FAQs state that where the client does not present the financial statements in the prescribed format, the auditor is required to disclose that in the report, and must exercise professional judgement on whether the departure warrants a modified opinion under the Standards on Auditing.

Which entities it covers

A non-corporate entity is any business or professional entity other than a company incorporated under the Companies Act and an LLP incorporated under the LLP Act. In the ICAI's own list that takes in sole proprietorship firms, Hindu Undivided Families, registered and unregistered partnership firms, associations of persons, bodies of individuals, resident welfare associations, societies registered under any law, private and public trusts whether registered or not, statutory corporations, autonomous bodies and authorities, and any other form of organisation carrying on business or professional activity.

The Guidance Note does not apply where:

• a format or principle is specifically prescribed by the relevant statute, regulator or authority;
• an autonomous body under the Government of India must compile its accounts in the uniform format prescribed by the Ministry of Finance; or
• the ICAI has given specific guidance for that kind of entity — educational institutions, political parties and not-for-profit organisations among them.

Non-Corporate Entity Balance Sheet format

The full ICAI format, line for line, shown for a partnership firm keeping fixed and current capital accounts. Note numbers follow the ICAI template — entity information is always Note 1, accounting policies Note 2, and the capital accounts Note 3 (3a/3b under the fixed + current method).

Statement of Profit and Loss format

The defining difference from Schedule III sits between IX and XI: Partners' remuneration is an appropriation on the face, outside Total Expenses, cross-referred to the partners' account schedule — while interest on partners' capital stays inside Finance costs, exactly as the Guidance Note requires.

Not-for-profit variant: Sources and Application of Funds

Not-for-profit organisations sit outside this Guidance Note. The ICAI's FAQs are explicit that where it has given specific guidance for a class of entity, that guidance governs — and for NPOs the relevant document is the ICAI Technical Guide on Accounting for Not-for-Profit Organisations, which recommends its own formats. So a charity does not simply drop into the commercial format below; it reports on the fund basis the Technical Guide sets out.

A charitable trust or society that answers yes to not-for-profit reporting swaps the commercial halves for Sources of Funds and Application of Funds, opens with its Unrestricted and Restricted funds (backed by a fund-movement note), and prepares an Income and Expenditure Account in three columns per year — Unrestricted funds, Restricted funds and Total — ending in the excess of income over expenditure (or of expenditure over income) carried to the General Fund.

MSME vs Large: the two-tier classification

This is a separate question from which formatyou use, and it is governed by a separate announcement. Under the ICAI's Revised Criteria for classification of Non-company entities for applicability of Accounting Standards— approved by the Council at its 433rd meeting held on 13–15 August 2024 and effective for accounting periods commencing on or after 1 April 2024 — non-company entities fall into just two categories: Micro, Small and Medium Sized Entities (MSMEs) and Large entities. It supersedes the four-level (Level I to Level IV) criteria issued in March 2021.

A non-company entity is an MSME if it meets all of the following:

• its equity or debt securities are not listed, and are not in the process of listing, on any stock exchange in India or abroad;
• it is not a bank, financial institution or insurance company;
• its turnover (excluding other income) does not exceed Rs 250 crore in the immediately preceding accounting year;
• it does not have borrowings exceeding Rs 50 crore at any time during the immediately preceding accounting year; and
• it is not a holding or subsidiary of an entity that is not an MSME.

The announcement adds an explanation that matters in practice: an entity qualifies as an MSME if these conditions are satisfied as at the end of the relevant accounting period.

A Large entityis any non-company entity that is not an MSME. Large entities must comply in full with all Accounting Standards, while MSMEs are given specified exemptions and relaxations. In the Accounting Standards themselves, the term “Level I” now reads as a Large entity, “Levels II to IV” read as an MSME, and the terms “Small and Medium Enterprise” and “SME” are read as MSME.

What an MSME is actually relieved of

The exemptions are the reason the classification matters — they change what a set of accounts must contain. In summary:

The relief comes with conditions, and these are frequently missed:

• an MSME that avails any exemption must disclose by way of a note that it is an MSME and has complied with the Accounting Standards so far as they apply to an MSME;
• if it avails the relief for some standards but not others, it must disclose which ones — and a partial exemption must not mislead the reader;
• an entity that was not an MSME and becomes one does not qualify for the relief until it has remained an MSME for two consecutive years;
• an entity that ceases to be an MSME applies the relevant standards from the current period; the comparatives need not be restated for that reason alone, but the fact that it was an MSME, that it availed the relief, and that the comparatives have not been restated must all be disclosed.

Related formats

Companies use the Schedule III balance sheet format; LLPs use the ICAI LLP format.