CPT V24P7-Art1 (Content).pmd - Taxmann

RELEVANT GUIDANCE PROVIDED BY THE ICAI IN ITS GUIDANCE NOTE AND FAQs ON
REVISED SCHEDULE VI
4. The relevant guidance with respect to disclosure of information under “borrowings” issued
by the ICAI by way of its Guidance Note on Revised Schedule VI and Frequently Asked Questions
are provided in the following chart:—
Definition of term loan • Term loans normally have a fixed or predetermined maturity period
or a repayment schedule.
Deferred payment liabilities • Deferred payment liabilities would include any liability for which
payment is to be made on deferred credit terms, e.g., deferred sales
tax liability, deferred payment for acquisition of fixed assets, etc.
Security for loans • A blanket disclosure of different securities covering all loans classified
under the same head, such as “all term loans from banks” will not
suffice.
• Where one security is given for multiple loans, the same may be
clubbed together for disclosure purposes with adequate details or
cross-referencing.
Default on borrowings • The disclosures relating to default should be made for all items listed
under the category of borrowings, such as bonds, debentures, deposits,
deferred payment liabilities, finance lease obligations, etc., and not
only to items classified as “loans”, such as term-loans or loans and
advances, etc.
• Any default that had occurred during the year and was subsequently
made good before the year end need not be disclosed.
Repayment terms • Disclosure of repayment terms should include the followings:
n the period of maturity with respect to the balance sheet date,
n number and amount of instalments due,
n applicable rate of interest,
n other significant relevant terms, if any.
Deposits • Deposits classified under borrowings include:
n Deposits accepted from public, and
n Inter-corporate deposits which are in the nature of borrowings.
Default made good after • Revised Schedule VI requires disclosure of default in the repayment
reporting date of loan and interest existing on the balance sheet date. A company
needs to make this disclosure even if the default has been made good
after the reporting date. However, it may choose to also disclose the
fact that default has been made good after the reporting date.
5. CASE STUDIES - FROM PUBLISHED ACCOUNTS
5.1 Reliance Industries Limited – Extracts from Balance Sheet as at March 31, 2012 -
5.1.1 Long-term Borrowings
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 83
703