CA Sandeep Kanoi
CBDT has vide notification no. 33/2014 dated 25.07.2014 revised the format of Tax Audit Report to be furnished under section 44AB of the Income tax Act with effect from 25.07.2014. We have compiled below the key amendments made to the old Form 3CD:-
1. Particulars of registration under excise duty, service tax, sales tax, and customs duty etc – Revised Form 3CD requires Auditors to report registration number or any other identification in respect of all other types of tax liabilities which Assessee is liable to pay. Although Tax Auditor have to report only the Registration details of taxes payable under other statues but he has to check under what other statues Assessee is liable to pay taxes and has to report accordingly. Auditor may also obtain such list from his client. (Clause 4)
2. Relevant clause of section 44AB under which the tax audit has been conducted – Now Auditor has to report under which clause of Tax Audit the Audit is been conducted. Now Auditor has to report if the Audit is of Business or Profession or under Presumptive taxation scheme. (Clause 8)
3. Location(s) (address(s)) of keeping books of accounts to be given – Revised Audit Report prescribes the requirement to report address of place where books of accounts Audited by the Tax Auditor are kept by the Assessee. If the books of accounts are not kept at one location, Auditor has to furnish the addresses of all such locations along with details of books of accounts maintained at each location. (Clause 11(b))
4. Particulars of sale of Land/Building less than Stamp value to be given – Now Auditor has to report where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government referred to in section 43CA or 50C. (Clause 17)
5. Reporting of Deduction allowable under Section 32AC, Section 35AD, Section 35CCC, Section 35D: Deductions allowable under sections 32AC, 35AD, 35CCC and 35DDD are also required to be reported in revised Form No. 3CD. (Clause -19)
6. Detailed information to be given on amount debited to P & L a/c of Capital Expenses, Personal Expenses, and Advertisement. (Clause 21(a))
7. Amounts inadmissible under section 40(a) – Revised report restricted the reporting only to sub-clause (i) and (ia). Sub-Clause (i) deals with allowability of payment made to non-resident of such sums on which TDS is deductible, while sub-clause (ia) deals with payment to resident dedcutees. It further requires Auditor to report the name and address of the payee in respect of whom default has been committed. (Clause 21(b))
8. Additional Reporting of disallowance U/s. 40A(3A) – Earlier Auditor had to report only the cash payment for expenses incurred during the year in excess of prescribed limit but now the CBDT has casted additional responsibility on auditor to report the cash payment made during the year in respect of expenses incurred in earlier years exceeding the prescribed limit U/s. 40A(3A). Now auditor has to verify all the cash payments in excess of prescribed limits to report under section 40A(3) and 40A(3A). In addition to this auditor also needs to report Cash payment under section 269T if the same relates to any loan or deposit exceeding the limit prescribed under section 269T.
Clause has further removed the reporting requirement of certificate if any been obtained by the Auditor from the Assessee U/s. 40A(3).
9. Reporting of 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. in Old form (Clause 24)
10. Word Modvat been replaced by the word Cenvat. (Clause 27(a)).
11. Reporting of shares acquired without consideration or inadequate consideration- Now Tax Auditor has to report Whether during the previous year the assessee has received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia). It is not clear how a Tax Auditor can determine the Value of shares of a company of which he is not the auditor. This clause applies only to Firms and Companies in which Public are not substantially interested. (Clause 28)
12.Reporting of Issue of share at Premium- Whether during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if yes, please furnish the details of the same. Clause applies to Companies in which Public are not substantially interested. (Clause 29).
13. Non reporting of Certificate Under section 269SS and 269T – Now Auditor not required to report whether or not he has obtained any certificate from Assessee Under section 269SS and 269T of the Income Tax Act,1961. (Clause 31)
14. Reporting of Deduction Claimed U/s. 10A and 10AA – In addition to deduction claimed under chapter VIA New form 3CD requires auditor to report deduction claimed under section 10A and 10AA. (Clause -33)
15. Additional Reporting of Losses in speculation business (Section 73) and of carry forward and set-off of losses by specified business (Section 73(A) – Auditor has to furnish the following details.
(1) details of speculation loss referred to in section 73 during the previous year
(2) details of loss referred to in section 73A in respect of any specified business
(3) Auditor has to state whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73 and details of speculation loss from such business.
(Clause 36(c’), 32(d) and 32(e)
16. Section wise details of TDS/TCS deducted/collected and paid- In addition to details of TDS/TCS auditor has to disclose amount short deducted, TAN of the Assessee, Amount on which TDS /TCS deducted or collected , amount paid and also details of amount of TDS/TCS not paid by the Assessee . Earlier reporting was only of TDS but now its been extended to TCS also. (Clause 34(a)).
17. Auditor has to give details of Late filing of TDS/TCS return – In old 3cd from Auditor was not required to report any late filing of TDS or TCS return. (Clause 34(b))
18. Auditor has to give details of Interest Payable u/s 201(1A) and 206C(7) – In old 3cd from Auditor was not required to report detail of Interest payable for delay in payment of TDS/TCS (Clause 34(c))
19. Separate reporting of tax on distributed profits under section 115-O(1A)(i) of Dividend received by domestic company from its subsidiary and under section 115-O(1A)(ii) of The amount of dividend paid to any person for or on behalf of the New Pension System Trust referred to in Section 10(44). . (Clause 36)
20. Reporting on Cost audit – Old Form No. 3CD required reporting of cost audit only when statutory cost audit was carried out U/s. 233A of the Companies Act, 1956 but 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).
21. Reporting on Audit under Central Excise Act – Revised 3CD report do not require the auditor to attach the copy of excise audit report with Tax Audit report and requires him to report on qualifications in cost audit report (clause 38).
22. Audit under Service tax to be reported – Report on Audit conducted under section 72A – Auditor has to report Whether any audit was conducted under section 72A of the Finance Act andf has to give details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor. (Clause 39)
23. Ratio Analysis of Two years – Up to last year Auditor was to disclose Ratio of current year only but now auditor needs to disclose ratio of preceding financial year also. In addition to this auditor has also to report total turnover for the previous year as well as for preceding financial year. (Clause 40)
24. Details of Demand and Refund- Auditor has to furnish the details of demand raised or refund issued during the previous year under any tax laws other than Income Tax Act, 1961 and Wealth tax Act, 1957 alongwith details of relevant proceedings. (Clause 41)