▶️The Institute of Chartered Accountants of India (ICAI) has established a phased implementation roadmap for the revised balance sheet and financial statement presentation formats for non-corporate entities and Limited Liability Partnerships (LLPs).
ICAI Announcement & Phased Implementation Timeline
At its 451st meeting held on March 30–31, 2026, the Council of ICAI mandated the applicability of the Guidance Note on Financial Statements of Non-Corporate Entities and Guidance Note on Financial Statements of Limited Liability Partnerships in two distinct phases:
Phase Applicable Financial Period Turnover Criteria
Phase I Accounting periods beginning on or after April 1, 2025 (FY 2025–26) Entities whose turnover exceeds ₹5 crore
Phase II Accounting periods beginning on or after April 1, 2026 (FY 2026–27 onwards) All entities (irrespective of turnover)
Entities Covered
Non-Corporate Entities: Includes sole proprietorships, partnership firms, and other non-corporate entities covered under the Guidance Note.
Limited Liability Partnerships (LLPs): Governed by the dedicated Guidance Note on Financial Statements of Limited Liability Partnerships.
Applicability Rule: Implementation is governed strictly by the ICAI announcement and turnover limits, independent of tax-audit requirements under the Income Tax Act.
Relaxation Provided for FY 2024–25
ICAI previously provided a one-year relaxation for the annual reporting period 2024–25 (announcement dated September 19, 2025), making adoption voluntary for that financial year. However, this relaxation does not carry over to FY 2025–26 for entities meeting the Phase I threshold.
Practical Application Examples (FY 2025–26)
Example 1 (Turnover ₹6.10 Crore - Partnership Firm): Because turnover exceeds ₹5 crore, the firm falls under Phase I and must prepare its financial statements using the revised ICAI Guidance Note format.
Example 2 (Turnover ₹3.50 Crore - Sole Proprietorship): Because turnover does not exceed ₹5 crore, the mandatory Phase I requirement does not apply for FY 2025–26; the entity may choose to adopt the format voluntarily. Mandatory compliance will begin from FY 2026–27 under Phase II.
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