Major changes in new Form 3CD (Tax Audit report Format )

on Tuesday, July 29, 2014

The CBDT has notied Income-tax (7th
amendment) Rules, 2014 which
substitutes the existing Form No. 3CD
with a new form. The new Form 3CD
prescribes certain new reporting
clauses and substitutes some existing
clauses with new ones. The new form
requires tax auditor to furnish more
and detailed information in the new
form for tax audit report.
Unlike old form 3CD which required
auditor to report only those
inadmissible payments which were
debited to Prot and loss account, the
new Form 3CD requires reporting of all
disallowable payments even if they are not debited to prot and loss account.
CBDT has withdrawn E ling utility for form 3CA 3CD based on old format with immediate eect.
With the substitution of Form No. 3CD, reporting in the new form would be a time taking job for
the Chartered Accountants. Here is the list of additional reporting requirements as prescribed in
the new Form No. 3CD:
(1) Registration number in case of indirect tax liability:
Assessees liable to pay indirect taxes (like excise duty, service tax, sales tax, customs
duty, etc.) shall furnish their registration number or any other identification number
allotted to them[clause 4 of Part A].
(2) Relevant clauses of section 44AB:
The relevant clauses of section 44AB shall be reported under which audit has been
conducted[clause 8 of Part A].
(3) Location at which books of account are kept:
New Form seeks details of the address at which books of account of assessee have
been kept[clause 11(b) of Part B].
(4) Nature of documents examined by the auditor:
The auditor is required to specify the nature of documents examined by him in the
course of tax audit[clause 11(c) of Part B].
(5) Change in method of accounting/stock valuation:
A tabular format is specified for reporting of financial impact of changes in method
of accounting and method of stock valuation[clause 13 and clause 14 of Part B].
(6) Transfer of land/building for less than stamp duty value:
Details of land or building transferred by assessee for less than stamp duty value
(under section 43CA or under section 50C) shall be reported in new Form
3CD [clause 17 of Part B].
(7) Deduction allowable under Sections 32AC/35AD/35CCC/35D:
Deductions allowable under sections 32AC, 35AD, 35CCC and 35DDD are also
required to be reported in revised Form No. 3CD[clause 19 of Part B].
(8) Disallowances:
Old Form3CD required reporting of inadmissible payments only when they were
debited to Profit and loss account. However, the new Form 3CD requires reporting of
following disallowable payments, even if they are not debited to profit and loss
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(ii) Disallowance for cash payments under section 40A(3)
(iii) Disallowance for provision for gratuity under section 40A(7)
(iv) Disallowance under Section 40A(9)
(v) Particulars of any liability of a contingent nature
(vi) Amount of deduction inadmissible under section 14A
(vii) Interest inadmissible under the proviso to section 36(1)(iii)
(9) Deemed income under Section 32AC:
Section 32AC of the Act provides for investment allowance of 15% for investment in
plant and machinery. New form provides for reporting of deemed income which
results from sale or transfer of new asset, (if asset was acquired and installed by the
assessee for the purpose of claiming deductions under Section 32AC) within a period
of five years from the date of its installation[clause 24 of Part B].
(10) Receipt of unlisted shares:
A new clause is inserted in the Form 3CD which requires reporting of all unlisted
shares which were received by assessee either for inadequate consideration or
without consideration in view of section 56(2)(viia)[clause 28 of Part B].
(11) Issue of shares above fair market value:
A new clause is inserted in the Form 3CD which requires reporting of all
transactions of issue of shares where consideration received by assessee exceeds its
fair market value in view of section 56(2)(viib)[clause 29 of Part B].
(12) Speculation losses:
New Form No. 3CD provides for reporting of losses from speculation business as
referred to in Section 73[clause 32(c) of Part B].
(13) Losses from business specified under section 35AD:
Assessee shall furnish details of losses incurred as referred to in Section 73A in
respect of specified businesses mentioned in Section 35AD[clause 32(d) of Part B].
(14) Reporting of deductions claimed under Sections 10A and 10AA:
If any deduction has been claimed by assessee under Sections 10A and 10AA then it
shall be reported in new Form No. 3CD[clause 33 of Part B].
(15) Compliance with TCS provisions:
Old Form 3CD required reporting on compliance with TDS provisions only. However,
New Form No. 3CD requires reporting on compliance with TCS provisions as
well[clause 34(a) of Part B].
(16) Filing of TDS/TCS statements:
The tax 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].
(17) Assessee-in-default:
If assessee is deemed as an assessee-in-default and he is liable to pay interest under
Section 201(1A) or 206C(7), the tax auditor shall furnish the TAN of assessee,
interest payable and interest actually paid[clause 34(c) of Part B].
(18) Dividend Distribution Tax:
Revised Form No. 3CD requires reporting of following reductions as referred to in
clause (i) and clause (ii) of Section 115-O(1A)[clause 36 of Part B]:
i) Dividend received by domestic company from its subsidiary, and
ii) The amount of dividend paid to any person for or on behalf of the New Pension
System Trust referred to in Section 10(44).
(19) Audits:
(i) Cost audit: Old Form No. 3CD required reporting only when statutory cost audit
was carried out under Section 233A of the Companies Act, 1956. However, the
revised Form No. 3CD specifies reporting requirement even when cost audit has been
carried out voluntarily. The requirement of attachment of copy of cost audit report
along with Form has been substituted with reporting of qualifications in cost audit
report[clause 37 of Part B].
(ii) Cost Audit under Central Excise Act: The requirement of attachment of copy of
cost audit report along with Form has been substituted with reporting of
qualifications in cost audit report [clause 38 of Part B].
(iii) Special Audit under Service Tax: If any service-tax audit is carried out in
relation to valuation of taxable services, the tax auditor shall report any
qualifications made in relation to valuation of taxable services[clause 39 of Part B]
(20) Ratios:
Unlike old form which required reporting of certain ratios pertaining to current year
only, the new Form requires reporting of ratios of preceding financial year as well.
Further, total turnover is to be reported for the previous year as well as for preceding
financial year[clause 40 of Part B].
87A RS 2000 ADDITIONAL REBATE 87A RS 2000 ADDITIONAL REBATE
KNOW YOUR PAN,VERIFY PAN,NAME BY KNOW YOUR PAN,VERIFY PAN,NAME BY
PAN,PAN CARD STATUS ONLINE PAN,PAN CARD STATUS ONLINE
KNOW DEALERS DETAIL BY TIN (VAT) KNOW DEALERS DETAIL BY TIN (VAT)
NUMBER OR BY NAME NUMBER OR BY NAME
Due Date To File Income Tax Return Assessment Due Date To File Income Tax Return Assessment
Year 2014-15 Year 2014-15
ITR -3 ITR-4 ITR-5 ITR-6 ITR-7 NOTIFIED FOR ITR -3 ITR-4 ITR-5 ITR-6 ITR-7 NOTIFIED FOR
ASSESSMENT YEAR 2014-15 ASSESSMENT YEAR 2014-15
Relief U/s 89(1) On Gratuity Received In FY Relief U/s 89(1) On Gratuity Received In FY
2010-11 2010-11
Employer Can Limit EPF Continuation Up To Employer Can Limit EPF Continuation Up To
12% On 6,500 Per Month : EPFO Clarification 12% On 6,500 Per Month : EPFO Clarification
New 3CA 3CB 3CD (Audit Report Format) New 3CA 3CB 3CD (Audit Report Format)
Notified Applicable Wef 25.07.2014 Notified Applicable Wef 25.07.2014
PENALTY ON LATE FILING OF INCOME TAX PENALTY ON LATE FILING OF INCOME TAX
RETURN AY 2014-15 FY 2013-14 RETURN AY 2014-15 FY 2013-14
CBDT Withdraw Form 3CD-3CB-3CA (Audit CBDT Withdraw Form 3CD-3CB-3CA (Audit
Report) Old Utility With Immediate Effect Report) Old Utility With Immediate Effect
KNOW YOUR AO CODE ,INCOME TAX KNOW YOUR AO CODE ,INCOME TAX
WARD/CIRCLE PAN NAME WITH PAN WARD/CIRCLE PAN NAME WITH PAN
NUMBER NUMBER
August August (40) (40)
2014 2014 (332) (332)
2013 2013 (422) (422) 2012 2012 (540) (540) 2011 2011 (462) (462)
2010 2010 (407) (407) 2009 2009 (127) (127) 2008 2008 (90) (90)
2007 2007 (53) (53)
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CBDT withdraw Form 3CD-3CB-3CA CBDT withdraw Form 3CD-3CB-3CA
(audit report) Old... (audit report) Old...
PENALTY ON LATE FILING OF PENALTY ON LATE FILING OF
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