form 3CD

Latest Changes in Tax Audit Report (Form 3CD)

October 9, 2014

Revised Tax Audit Report Form 3CD

Central Board of Direct Taxes vide notification no. 33/2014 dated 25.07.2014 has made amendments in Form 3CD which is further made applicable from the assessment year 2014-15. Revised Form 3CD has new some clauses as well as some old clauses being substituted by new clauses.

Central Board of Direct Taxes has withdrawn E filing utility for Form 3CA and Form 3CD based on old format with immediate effect.
The Revised Form 3CD requires auditors to provide more detailed information, thus making Tax Audit Report more time consuming. Here is the list of additional reporting requirements as prescribed in the new Form 3CD:

  • Assessee who is liable to pay indirect taxes such as excise duty, service tax, custom duty, sales tax etc is require to furnish his registration number or any other identification number allotted to them by competent authority [clause 4 of Part A].
  • Clauses of Section 44AB under which audit has been conducted shall be specified [clause 8 of Part A].
  • Location (address) where the Books of Account of Assessee is maintained shall be reported. In case books of account are maintained at more than one location, than detail of each of such location along with the details of books of account maintained at each location shall be reported [clause 11(b) of Part B].
  • The auditor has to specify the Nature of Documents examined apart from the books of account in the course of tax audit [clause 11(c) of Part B].
  • Financial Impact on the assessee from the change in the method of stock valuation as well as method of accounting shall be reported in specified tabular form [clause 13 and clause 14 of Part B].
  • Particular of land or building transferred/sold by assessee for less than stamp duty value (under section 43CA or under section 50C) along with the details of consideration received is to be mentioned in the revised form 3CD [clause 17 of Part B].
  • Deductions allowable under sections 32AC, 35AD, 35CCC and 35DDD are also required to be reported [clause 19 of Part B].
  • Earlier Auditor required reporting only the inadmissible expenses which were debited in the P&L Account but now all the following disallowed expenses even if they are not debited to P&L Account are required to be reported [clause 21 of Part B]
    • Disallowance  under Section 40(a) for TDS default
    • Disallowance  under section 40A(3) for cash payments
    • Disallowance  under section 40A(7) for provision for gratuity
    • Disallowance under Section 40A(9)
    • Particulars of any liability of a contingent nature
    • Amount of deduction inadmissible under section 14A
    • Interest inadmissible under the proviso to section 36(1)(iii)
  • Deemed Income earned by the sale/transfer of the investment made in plant and machinery u/s 32AC within 5 years of installation, is required to be reported. Section 32AC provides 15% investment allowance for investment in plant and machinery [clause 24 of Part B].
  • New Clause for Reporting of unlisted shares received either for inadequate consideration or without consideration in view of section 56(2)(viia) is added in form 3CD [clause 28 of Part B].
  • New Clause for Reporting of issuance of shares where the consideration received by assessee is more than the fair market price in view of section 56(2)(viib) is added in form 3CD [clause 29 of Part B].
  • Details of losses under section 73 i.e. speculation business or deemed speculation business have to be given in assertive manner [clause 32(c) of Part B].
  • Losses incurred from the business specified under section 35AD are to be reported[clause 32(d) of Part B].
  • Reporting of deductions claimed under Sections 10A and 10AA is to be made in form 3CD, if claimed any [clause 33 of Part B].
  • New Form 3CD requires reporting on compliance of TCS and TDS both [clause 34(a) of Part B].
  • Detailed information regarding TDS /TCS, return thereof and interest under Section 201(1A) or 206C(7), if any in that aspect and violation in that and disallowance due to non-deduction/delayed deduction has to be given [clause 34(c) of Part B].
  • Auditor shall report on the compliance by the assessee with the provision of furnishing of TDS or TCS statement within prescribed time [clause 34(b) of Part B].
  • Detailed information regarding Dividend Distribution tax as referred to in clause (i) and clause (ii) of Section 115-O(1A) has to be given [clause 36 of Part B]
  • New Form 3CD requires reporting of ratios and total turnover figures pertaining to current year as well as of preceding financial year also [clause 40 of Part B].
  • Details of demand raised or refund issued under any tax laws (other than Income Tax Act, 1961 and Wealth Tax Act, 1957) along with details of relevant proceedings have to be reported in new form 3CD [clause 41 of Part B].

Apart from that assertive particulars are required to be furnished regarding the person signing this tax audit report.

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