Applicability of Guidance Notes for Non-Corporate Entities – Phased Implementation
In a significant move, the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) has issued an important announcement on March 31, 2026, regarding the applicability of:
- Guidance Note on Financial Statements of Non-Corporate Entities, and
- Guidance Note on Financial Statements of Limited Liability Partnerships (LLPs)
These Guidance Notes, originally issued in August 2023, were supposed to be applied for all the financial statements drawn for the period starting from 01.04.2025 i.e. F.Y. 2025-26 onwards. However, as per the announcement, they will now be made applicable in a phased manner starting from the financial year 2025-26.
🧾 Background of the Guidance Notes
The Institute of Chartered Accountants of India (ICAI) introduced these Guidance Notes with the objective of:
- Standardising financial statement presentation for non-corporate entities
- Improving transparency and comparability
- Bridging gaps in existing accounting frameworks
- Providing structured formats and disclosures for LLPs and other entities
With increasing scrutiny and regulatory expectations, these Guidance Notes are set to play a crucial role in enhancing financial reporting quality.
📅 Applicability Timeline (Phased Implementation)
The ICAI Council, in its 451st meeting held on March 30–31, 2026, approved the phased implementation as follows:
🔹 Phase I – Early Applicability
- Applicable From: Accounting periods beginning on or after April 1, 2025
- Entities Covered:
- Non-Corporate Entities and LLPs with turnover exceeding ₹5 crores
👉 This phase targets relatively larger entities, ensuring early adoption among businesses with higher financial complexity.
🔹 Phase II – Universal Applicability
- Applicable From: Accounting periods beginning on or after April 1, 2026
- Entities Covered:
- All Non-Corporate Entities and LLPs, irrespective of turnover
👉 This phase extends the applicability across the board, making compliance mandatory for all relevant entities.
Exact Text of the Announcement
Announcement regarding applicability of ‘Guidance Note on Financial Statements of Non-Corporate Entities’ and ‘Guidance Note on Financial Statements of Limited Liability Partnerships’ for annual reporting periods 2025-26 onwards
The Institute of Chartered Accountants of India (ICAI), in August 2023, issued the Guidance Note on Financial Statements of Non-Corporate Entities and the Guidance Note on Financial Statements of Limited Liability Partnerships.
The Council at its 451st meeting held on 30th-31st March, 2026, has decided that these Guidance Note(s) shall be applicable to Non-Corporate Entities and Limited Liability Partnerships in a phased manner, as under:Phase I: Accounting periods beginning on or after April 1, 2025. Applicble to: Entities whose turnover exceeds Rs. 5 crores
Phase II: Accounting periods beginning on or after April 1, 2026. Applicable to all entities
📊 What This Means for Professionals & Businesses
This announcement carries significant implications for:
✅ Chartered Accountants & Professionals
- Need to update financial statement formats
- Ensure compliance with revised disclosure requirements
- Revise audit documentation and reporting practices
✅ Non-Corporate Entities
- Must align financial reporting with ICAI’s prescribed formats for Non Corporate Entities or LLPs as applicable.
- Increased focus on structured disclosures
- Better comparability across entities
✅ LLPs
- Introduction of standardised financial statement presentation
- Improved clarity for stakeholders, lenders, and regulators
⚠️ Action Points for FY 2025-26
As we step into the new financial year, professionals should:
- 🔍 Identify entities with turnover above ₹5 crores
- 📘 Study the Guidance Notes in detail
- 🛠️ Update accounting systems and templates
- 📑 Educate clients about the upcoming compliance requirements
📌 Conclusion
The ICAI’s phased implementation approach ensures a smooth transition while gradually elevating the quality of financial reporting across non-corporate entities and LLPs.
With Phase I already applicable from FY 2025-26, professionals must act swiftly to ensure compliance and avoid last-minute challenges.
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