The Central Board of Direct Taxes (CBDT), via Notification No. 23/2025 dated 28th March 2025, has notified amendments to Form 3CD of the Income-tax Rules, 1962. These changes are applicable for tax audit reports signed on or after April 1, 2025 and thus relevant for the Assessment Year 2025–26 onwards.
The changes aim to enhance transparency, align reporting with updated provisions of the Income-tax Act and allied laws, and introduce new reporting obligations for presumptive taxation, MSME payments, buy-backs, and cross-border transactions.
Below is a clause-wise summary of the amendments:
Clause-wise Amendments in Form 3CD (Effective AY 2025–26)
Clause Particulars Nature of Amendment Key Impact / Remarks
Clause 12 Compliance with Presumptive Taxation u/s 44BBC New Clause inserted to report income computed under Section 44BBC (dealing with presumptive income of broadcasting entities). Enables reporting of income under the new presumptive scheme for specified professionals/entities.
Clause 19 Deductions under Chapter VI-A References to Sections 80IB, 80IC, and 80ID omitted. These deductions have reached their sunset period and are no longer applicable.
Clause 21 Disallowances under Section 43B Insertion of a row for “Settlement Expenses” not deductible unless actually paid. Additional clarity for expenses payable under settlement agreements.
Clause 22 Interest under MSMED Act, 2006 Revised to mandate disclosure of interest payable to Micro, Small, and Medium Enterprises (MSMEs), even if not paid. Brings MSME payment compliance to the forefront. Increases exposure for delayed payments.
Clause 23 Buy-back of Shares under Section 115QA A new reporting requirement introduced for buy-back of shares, covering amount received and cost of acquisition. Targets compliance with taxability of income arising from buy-backs by companies.
Clause 26 Disallowance under Section 40(a) Expanded to include specific details of payments made to non-residents without TDS. Reinforces cross-border tax deduction obligations.
Clause 28 & 29 Reporting under Section 56(2)(viia) & 56(2)(viib) These clauses omitted. These sections are either obsolete or merged into newer provisions.
Clause 31 Loans / Deposits Reporting Now requires a 12-category coding classification for acceptance or repayment of loans or deposits. Facilitates analytics and deep scrutiny of financial transactions.
Clause 36B (New) Buy-back of Shares Newly inserted clause to report buy-back transactions under Section 115QA. Enhances monitoring of capital transactions and their tax treatment.
Key Objectives of the Amendment
- Alignment with newly inserted tax provisions (e.g., 44BBC, 115QA).
- Sunsetting of obsolete deductions and provisions.
- Strengthening MSME compliance through mandatory interest disclosures.
- Enabling better cross-border compliance under TDS rules.
- Improving the audit trail for financial transactions and capital movements.
Effective Date
All the above changes shall be applicable to tax audit reports signed on or after 01.04.2025, i.e., from Assessment Year 2025–26 onwards.
Major Amendments in Form 3CD – Effective from AY 2025–26
As per CBDT Notification No. 23/2025 dated March 28, 2025
The Central Board of Direct Taxes (CBDT), via Notification No. 23/2025 dated 28th March 2025, has notified amendments to Form 3CD of the Income-tax Rules, 1962. These changes are applicable for tax audit reports signed on or after April 1, 2025 and thus relevant for the Assessment Year 2025–26 onwards.
The changes aim to enhance transparency, align reporting with updated provisions of the Income-tax Act and allied laws, and introduce new reporting obligations for presumptive taxation, MSME payments, buy-backs, and cross-border transactions.
Below is a clause-wise summary of the amendments:
Clause-wise Amendments in Form 3CD (Effective AY 2025–26)
| Clause | Particulars | Nature of Amendment | Key Impact / Remarks |
| Clause 12 | Compliance with Presumptive Taxation u/s 44BBC | New Clause inserted to report income computed under Section 44BBC (dealing with presumptive income of broadcasting entities). | Enables reporting of income under the new presumptive scheme for specified professionals/entities. |
| Clause 19 | Deductions under Chapter VI-A | References to Sections 80IB, 80IC, and 80ID omitted. | These deductions have reached their sunset period and are no longer applicable. |
| Clause 21 | Disallowances under Section 43B | Insertion of a row for “Settlement Expenses” not deductible unless actually paid. | Additional clarity for expenses payable under settlement agreements. |
| Clause 22 | Interest under MSMED Act, 2006 | Revised to mandate disclosure of interest payable to Micro, Small, and Medium Enterprises (MSMEs), even if not paid. | Brings MSME payment compliance to the forefront. Increases exposure for delayed payments. |
| Clause 23 | Buy-back of Shares under Section 115QA | A new reporting requirement introduced for buy-back of shares, covering amount received and cost of acquisition. | Targets compliance with taxability of income arising from buy-backs by companies. |
| Clause 26 | Disallowance under Section 40(a) | Expanded to include specific details of payments made to non-residents without TDS. | Reinforces cross-border tax deduction obligations. |
| Clause 28 & 29 | Reporting under Section 56(2)(viia) & 56(2)(viib) | These clauses omitted. | These sections are either obsolete or merged into newer provisions. |
| Clause 31 | Loans / Deposits Reporting | Now requires a 12-category coding classification for acceptance or repayment of loans or deposits. | Facilitates analytics and deep scrutiny of financial transactions. |
| Clause 36B (New) | Buy-back of Shares | Newly inserted clause to report buy-back transactions under Section 115QA. | Enhances monitoring of capital transactions and their tax treatment. |
Key Objectives of the Amendment
- Alignment with newly inserted tax provisions (e.g., 44BBC, 115QA).
- Sunsetting of obsolete deductions and provisions.
- Strengthening MSME compliance through mandatory interest disclosures.
- Enabling better cross-border compliance under TDS rules.
- Improving the audit trail for financial transactions and capital movements.
Effective Date
All the above changes shall be applicable to tax audit reports signed on or after 01.04.2025, i.e., from Assessment Year 2025–26 onwards.
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