Question ID :
44915
Under the new ICAI Guidance Note for Non-Corporate Entities, effective from FY 2024–25, the treatmen
Under the new ICAI Guidance Note for Non-Corporate Entities, effective from FY 2024–25, the treatment of personal assets and liabilities in a proprietor’s financial statements
Propreitor previously included personal assests and liabilities in his Balance sheet in T Format but now as per New format of Non Corporate entities how should the Propreitor report the personal assests and Liabilities ?
Should we Report Personal and Business, Assets and Liabilities separately ?? Or Include it in the Business Balance Sheet or there is any other method Kindly Share as guideance note has not clarified regarding this issue
Posted by
GOVIND MUNDADA
on
Aug 29, 2025
Filed Under
DIRECT TAXES
Entity Concept which is a Fundamental concept requires that the owner and business are treated separately. Hence, strictly speaking the FS should only be related to the business assets and liabilities.
However, for the purposes of income tax, the assessee is the proprietor and therefore the information of assets and liabilities to be included in the RoI should include all the assets and liabilities including personal assets. Hence, to reach a common ground, you can prepare a single balance sheet as per the ICAI GN format which will include the proprietor's personal assets and liabilities as well. Simply insert a note in the Financial statements under the heading 'Basis of Preparation' that the Balance sheet includes business as well as personal assets and liabilities to ensure that amounts included in RoI are matching with the financial statements.
Posted by
KUMAR RAISINGHANI on
Oct 15, 2025