CARO Statutory Dues: Separate Undisputed and Disputed Balances

A company has an unpaid GST balance and a contested demand under appeal. The useful result is a working that explains the facts, the calculation or classification, and the evidence behind the conclusion. This guide shows how to prepare that working and where a reviewer should investigate before accepting the result.

Scope and applicable period

Indian company or LLP compliance, as identified in the article, with FY 2025–26 illustrative records. Use the current notified rules and relevant form for the actual reporting period.

Verification date: 11 October 2026. Figures and rates identified as assumptions are teaching examples; apply the stated conditions and the actual facts to a real assignment.

The key principle

Prepare statutory-dues reporting from the nature of the obligation and its legal status. Undisputed outstanding dues and amounts not deposited because of a dispute are different populations under CARO. Record the period, amount, due date and forum where relevant. A provision in the books is not by itself proof of either a legally due amount or a formally disputed demand.

Worked example

The ₹60,000 deposit should be traced to the demand and appeal evidence. Reporting cannot be settled simply by subtracting it from a ledger balance: check the order’s required disclosure basis and what remains unpaid. For undisputed amounts, determine whether the relevant six-month criterion at the financial year end is met, using the legally applicable payment date. Assess delays in regular deposit separately from the aged outstanding balance. Reconcile the final disclosure to tax records and the general ledger.

A practical sequence

Prepare tax-wise dues schedules with legal due dates and status. Identify undisputed delays and aged outstanding amounts separately from demands under dispute.

Obtain the demand, forum, appeal and deposit evidence for disputed items. Reconcile the required reporting particulars to the accounts without netting unrelated obligations.

Review subsequent payments as evidence while retaining the reporting-date position; an amount paid later may still have been overdue at year end.

Build one evidence file with separate legal conclusions

Corporate compliance often uses the same source records as the accounts, but each filing, approval and auditor-reporting requirement has its own purpose. Establish the entity type and applicable rules before selecting a form or threshold. Reconcile submitted figures to approved source records and retain the actual acknowledgement. Keep accounting recognition, statutory approval and filing status separate in the working. A completed form does not establish that the underlying transaction was properly authorised or correctly accounted for. Review changed ownership, contracts and business facts instead of carrying forward last year’s conclusion without support.

Evidence checklist

Keep the following records linked to the same entity, period and working version. Identify missing items explicitly; a checked box should mean the document was examined and supports the stated conclusion.

• Tax-wise ledger and returns
• Original due dates
• Demand orders
• Appeal acknowledgements and forum details
• Deposit challans

Common mistakes and how to avoid them

• Calling every unpaid amount disputed. Compare the conclusion with the tax-wise ledger and returns and resolve any conflicting facts.
• Ageing from the posting date instead of due date. Trace the affected item to the demand orders before finalising the working.
• Ignoring repeated delays because year-end balance is zero. Use the deposit challans to make the final position and remaining exceptions clear.

Before you finalise

Recheck the example’s assumptions against the actual assignment, resolve the identified exceptions and make the final figure or conclusion traceable to its source. Preserve the reviewed version and the reason for material changes. For this task, the deposit challans should agree with the conclusion presented to the client, reviewer or authority.

Frequently asked question

Does filing an appeal eliminate accounting exposure? No. Evaluate recognition and disclosure separately from the CARO classification.

Sources and further reading

• ICAI — CARO 2020 and commencement announcement
• ICAI Accounting Standard AS 29

Related guide: Tax audit clause26 statutory dues payment register.