Announcement



          Revision in the criteria for classifying Level II non-corporate entities


       1. The Council of the Institute with a view to harmonise the differences between the
          Accounting Standards issued by the ICAI and the Accounting Standards notified by the
          Central Government under the Companies (Accounting Standards) Rules, 2006, in
          February, 2008 issued the announcement titled as `Harmonisation of various
          differences between the Accounting Standards issued by the ICAI and the
          Accounting Standards notified by the Central Government'1 wherein the Council
          prescribed the criteria for classifying the non-corporate entities in to Level I, Level II
          and Level III. As per the announcement Level II entities are:-






       2. Non-corporate entities which are not Level I entities but fall in any one or more of the
          following categories are classified as Level II entities:


              (i)             All commercial, industrial and business reporting entities, whose turnover
                             (excluding other income) exceeds rupees forty lakh but does not exceed rupees
                             fifty crore in the immediately preceding accounting year.

              (ii)           All commercial, industrial and business reporting entities having borrowings
                             (including public deposits) in excess of rupees one crore but not in excess of
                             rupees ten crore at any time during the immediately preceding accounting year.

              (iii)          Holding and subsidiary entities of any one of the above.



       3. The Council of the Institute at its 321st meeting held on January 10-12, 2013 at New
          Delhi, considering recent changes in the enhancement of tax audit limit, decided to
          change the applicability of Accounting Standards for Level II entities from Rs. 40 lakhs
          to Rs. 1 Crore with effect from the accounting year commencing on or after April
          01, 2012.


       4. Accordingly, from the accounting year commencing on or after April 1st, 2012, criteria
          for classification of Level II entities is as follows:-


              Level II Entities (SMEs)

              Non-corporate entities which are not Level I entities but fall in any one or more of the
              following categories are classified as Level II entities:
                                                            
1
     Published in `The Chartered Accountant', February 2008 (pp. 1340) 
(i)     All commercial, industrial and business reporting entities, whose turnover
        (excluding other income) exceeds rupees one crore but does not exceed rupees
        fifty crore in the immediately preceding accounting year.






(ii)    All commercial, industrial and business reporting entities having borrowings
        (including public deposits) in excess of rupees one crore but not in excess of
        rupees ten crore at any time during the immediately preceding accounting year.

(iii)   Holding and subsidiary entities of any one of the above.