The CBDT has notified 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 Profit and loss account,
the new Form 3CD requires reporting of all disallowable payments even if
they are not debited to profit and loss account.
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:
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 account[clause 21 of Part B]:
(i)
Disallowance for TDS default under Section 40(a)
(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].
(21)
Demand raised or refund issued:
The
new Form seeks 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[clause 41 of Part B].
Source: www.taxmann.com
Related Posts :
Audited Accounts,
Income Tax Softwares,
ITR Forms
