This article serves as a guide for Chartered Accountants and new trainees to understand the clauses of Form 3CD, the tax audit report. The form applicable for an audit depends on the taxpayer’s situation: Form 3CA is used when an audit is required under another law, while Form 3CB is for all other cases, with Form 3CD as an annexure for both. The article provides a clause-by-clause breakdown, covering essential details like the assessee’s name and PAN, business nature, and the applicable section of Section 44AB under which the audit is conducted. It also explains reporting requirements for various transactions, including indirect taxes, methods of accounting, and valuation of closing stock. Other key clauses address reporting on profits from presumptive taxation, depreciation, specific business expenditures, and compliance with sections like 43B and 40A. The article also highlights reporting obligations for high-value transactions, such as loans and deposits, and provides a structured format for reporting details on TDS/TCS, quantitative details of goods, and expenditures related to GST-registered and non-registered entities. This comprehensive overview is designed to clarify the reporting process and prevent common errors.
Which tax audit form is applicable for which category of assessee?
| Category of Taxpayer | Form for Audit Report | Annexure to Audit Report |
| If the books of account of the assessee are required to be audited under any other law | Form 3CA |
Form 3CD |
| In any other case | Form 3CB |
This article highlights the clause for every kind of transaction followed by the tabular format of clause by clause reporting of all major clauses.
| No. | Description |
| 1 | Requires the tax auditor to state the name of the assessee. |
| 2 | Requires the tax auditor to state the address of the assessee. |
| 3 | Requires the tax auditor to state the PAN or Aadhaar Number of the assessee. |
| 4 | Requires the tax auditor to state
a) Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, goods and services tax, customs duty, etc. b) If yes, please furnish the registration number or GST number, or any other identification number allotted for the same. Refer table in next chart for reporting format |
| 5 | The tax auditor is to state the status of the assesse as the definition of person [Individual / HUF / Firm / LLP / Company / Trust / AOP/BOI / Local Authority / Artificial Juridical Person / Co-operative Society / Co-operative Bank] |
| 6 | The tax auditor is to state the Previous year. |
| 7 | The tax auditor is to state the Assessment Year. |
| 8 | Requires the tax auditor to indicate the relevant clause of section 44AB under which the audit has been conducted. |
| 8A | Requires the tax auditor to indicate whether the assessee has opted for taxation under new regimes of taxation. |
| 9 | Applies only to firms, LLPs, Association of Persons (AOPs), and Body of Individuals (BOIs). The requirements are as under:
9(a) – Names of partners/members of firm/LLP/AOP/BOI and their Profit Sharing Ratio 9(b) – Changes in partners/members or their Profit Sharing Ratio |
| 10 | 10 is applicable to all assessees covered under tax audit. The requirement is as under:
10(a) – Nature of business or profession 10(b) – Clause 10(b) is applicable and question in clause 10(b) is to be answered as “Yes” only if- i) There is an addition of a new line of business/profession during the previous year; or ii) There is discontinuance of any business/profession during the previous year; |
| 11 | 11(a) – Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed.
11(b) – List of books of account maintained and the address at which the books of account are kept. [In case of e- books, mention the books generated by such system. If the books of account are not kept at one location, please furnish the addresses of locations along with the details of books of account at each location] 11(c) – List of books of account and nature of relevant documents examined. [11(a) will apply only in respect of the assessees for whom books of account have been prescribed under 44AA. However, 11(b) and 11(c) shall apply to all assesses] Refer table in next chart for reporting format |
| 12 | Requirements are as hereunder:
Whether the profit and loss account includes any profits and gains assessable on presumptive basis [under 44AD(Eligible business), 44ADA, 44AE(Transport business), 44B(Shipping business of Non-resident), 44BB(Renting of Plant and Machinery for extraction of mineral oils etc), 44BBA(Operation of aircraft by Non-resident), 44BBB(Civil construction i.e. turnkey projects by Non-residents), 44BBC(Business of operation of cruise ships by Non-resident, Chapter XII-G(Tonnage taxation), First Schedule(Insurance business), any other relevant section(Other presumptive incomes)] If yes, the following information should be indicated: i) The amount; and ii) The relevant section of the Income-tax Act, 1961. Refer table in next chart for reporting format |
| 13 | Method of Accounting
13(a) – Method of accounting employed in the previous year. 13(b) – Whether there had been any change in the method of accounting employed vis-a-vis the method employed in the immediately preceding previous year. 13(c) – If the answer to (b) above is in the affirmative, give details of such change, and the effect thereof on the profit or loss. Refer table in next chart for reporting format Disclosure as per Income Computation and Disclosure Standards (ICDS) – Applies only in case of assesse following mercantile system of accounting 13(d) – Whether any adjustment is required to be made to the profits or loss for complying with the provisions of ICDS notified under section 145(2). 13(e) – If the answer to (d) above is in the affirmative, give details of such adjustments. 13(f) – Disclosure as per ICDS. Refer table in next chart for reporting format |
| 14 | 14(a) – requires the tax auditor to state the method of valuation of closing stock in the previous year.
14(b) – is applicable in case of deviation from the method of valuation prescribed under Section 145A and the effect thereof on the profit or loss. Refer table in next chart for reporting format |
| 15 | Requires the tax auditor to report the particulars of capital asset converted into stock-in-trade. [i.e. Description of capital asset, Date of acquisition, Cost of acquisition, and Amount] |
| 16 | Requires the tax auditor to report the items covered by sub-clauses (a) to (e) which have not been credited to the profit and loss account. The tax auditor is required to report under this clause only those items that can be found from a scrutiny of the books and other information made available for a tax audit.
16(a) – requires the tax auditor to report items falling within the scope of section 28 which have not been credited to the profit and loss account. 16(b) – refers to refunds, proforma credits, and drawbacks of excise duty, customs duty, sales tax, VAT, service tax, GST, and other indirect taxes. [only for mercantile basis of accounting] 16(c) – requires the tax auditor to report escalation claims not credited to the profit and loss account. [only for mercantile basis of accounting] 16(d) – requires the tax auditor to report any other income not credited to the profit and loss account. 16(e) – requires the tax auditor to report capital receipts not credited to the profit and loss account. |
| 17 | Reporting obligations apply when the following conditions are satisfied:
There is a transfer by the assessee. Transfer is of land or building or both. It does not matter whether such land or building or both is held as a capital asset or stock in trade. Transfer is for consideration. Such consideration is less than the stamp duty value. Transfer is during the previous year. Refer table in next chart for reporting format |
| 18 | Requires particulars of depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets, as the case may be, in the following form:-
a) Description of asset/block of assets. b) Rate of depreciation. c) Actual cost or WDV, as the case may be. ca) Adjustment made to the written down value under – i) under the proviso to section 115BAA(3) [for AY 2020-21 only] ii) under the first proviso to section 115BAC(3) or the proviso to section 115BAD(3) [for AY 2021-22 only] iii) under the second proviso to section 115BAC(3) [for AY 2024-25 only]. cb) Adjustment made to the written down value of Intangible asset due to excluding the value of goodwill of a business or profession. cc) Adjusted WDV. d) Additions / deductions during the year with dates; in the case of any addition of an asset, date put to use including adjustments on account of – i) CENVAT credits claimed and allowed in respect of assets acquired on or after 1st March, 1994, ii) change in the rate of exchange of currency, and iii) subsidy or grant or reimbursement, by whatever name called. e) Depreciation allowable. f) WDV at the end of the year. |
| 19 | Required particulars of the amount debited to the profit and loss account and the amount admissible under 33AB, 33ABA, 35(1)(i), 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABA, 35ABB, 35AD, 35CCA, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E & any other relevant section.
Refer table in next chart for reporting format. |
| 20 | 20(a) – Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend. [Section 36(1)(ii)]
20(b) – Details of contributions received from employees for various funds. [Section 36(1)(va)] Refer table in next chart for reporting format |
| 21 | 21(a) – Requires details of the amount debited to the profit and loss account, being in the nature of capital expenditure, personal expenditure, advertisement expenditure, settlement expenditure etc.
21(b) – Sets out a format to present information of inadmissible expenses under 40(a). 21(c) – Amounts debited to profit and loss account being, interest, salary bonus, commission, or remuneration inadmissible under section 40(b)/40(ba) and computation thereof. 21(d) – 21(d)(A) – Requires the tax auditor to state whether the expenditure covered under section 40A(3) read with rule 6DD were made by account payee cheque drawn on a bank or account payee bank draft. 21(d)(B) – Requires the tax auditor to state whether the payment referred to in section 40A(3A) read with rule 6DD were made by account payee cheque drawn on a bank or account payee bank draft. 21(e) – This clause requires reporting of provision for payment of gratuity not allowable under section 40A(7). Applies on This clause is relevant only in the context of assessees following mercantile system of accounting. 21(f) – Requires reporting of amounts covered by section 40A(9). 21(g) – This clause requires reporting particulars of contingent liabilities. 21(h) – Requires reporting of amount of deduction inadmissible in terms of section 14A on respect of expenditure incurred in relation to exempt income. 21(i) – Requires reporting of amounts inadmissible in terms of proviso to section 36(1)(iii). Refer table in next chart for reporting format |
| 22 | a) Requires particulars of the amount of interest inadmissible under Section 23 of the MSMED Act, 2006 or any other amount not allowable under section 43B(h) of the Income-tax Act, 1961. Interest shall be reported even if it is not paid up to due date under sec 15 of MSMED Act. |
| 23 | Requires particulars of payments made to persons specified under 40A(2)(b) [i.e. Name, PAN, Relation, Nature of transaction, and Amount] |
| 24 | Requires details of amounts deemed to be profits and gains under 32AC, 32AD, 33AB, 33ABA, or 33AC. |
| 25 | Requires particulars of amounts deemed to be profits and gains under Section 41 and computation thereof. [i.e. Name of person, Amount of income, Section, Description of transaction, and Computation if any] |
| 26 | Requires disclosures of sums incurred and paid. [Relevant only for assessees following the mercantile system of accounting.]
26(i)(A) – Information required in respect of any sum referred to in clauses (a) to (g) of section 43B, the liability for which pre-existed on the first day of the previous year but was not allowable in the assessment of any preceding previous year and was paid during the year, or not paid during the year. 26(i)(B) – Information required in respect of any sum referred to in clauses (a) to (g) of section 43B, the liability for which was incurred in the previous year and (other than 43B(h) was paid on or before the due date for furnishing the return of income of the previous year under section 139(1), or not paid on or before the aforesaid date. |
| 27 | 27(a) – Amount of CENVAT Credits/ITC availed of or utilized during the PY and its treatment in profit and loss account and treatment of outstanding CENVAT/ITC in accounts. Apply to all registered under GST/Central Excise.
27(b) – Particulars of income or expenditure of the prior period credited or debited to the profit and loss account. 27(b) dealing with prior period items applies only to assessees following the mercantile system of accounting. |
| 29A | Clause 29A pertains to the amount received and forfeited which is taxable u/s 56(2)(ix). |
| 29B | Pertains to gifts/deemed gifts received which are taxable u/s 56(2)(x). Therefore, reporting required only to the extent entries in relation to such income are made in books of business or profession. Tax auditor is not liable to report in respect of income covered here if no entries in relation to that are made in books of business or profession.
The reporting requirement is whether any amount is to be included as income chargeable under the head ‘Income from other sources’. If the answer is ‘yes’, then Nature of income and amount shall be reported. |
| 30 | Requires particulars of any amount borrowed on hundi or any amount due thereon [including interest on the amount borrowed] repaid as per section 69D, otherwise than through an account payee cheque. |
| 30A | Requires particulars about whether the primary adjustment to transfer price, as referred to in 92CE(1), has been made during the previous year. |
| 30B | Requires particulars about whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding Rs.1,00,00,000 as referred to in 94B(1). |
| 30C | Requires the tax auditor to report any impermissible avoidance arrangement (IAA) entered into by the assessee. Tax Auditor is required to report only if the following 4 ingredients are cumulatively satisfied:
a) There exists an ‘arrangement‘ b) ‘Main purpose‘ or sole purpose of ‘arrangement’ is to obtain a ‘tax benefit‘ c) Such ‘Avoidance Arrangement’ is ‘Impermissible‘ d) Such arrangement for tax avoidance which is impermissible [Impermissible Avoidance Arrangement or IAA] has been ‘entered into‘ or ‘carried out‘ by the assessee |
| 31 | 31(a) – Acceptance of loan or deposit in an amount exceeding the limit of Rs.20,000 specified in section 269SS. This is not applicable in respect of the following assessees:
a) any banking company b) any corporation established by a Central, State, or Provincial Act c) any Government company as defined in section 2(45) of the Companies Act, 2013. 31(b) – Deals with the receipt of a specified sum i.e. money receivable as advance or otherwise in relation to the transfer of immovable property whether or not the transfer takes place. 31(ba) – Requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggregate from a person in a day or in respect of a single transaction or on respect of transactions relating to one event or occasion from a person, during the previous year, where such receipt is otherwise than by a cheque or a bank draft or use of ECS through a bank account. 31(bb) – Requires reporting of particulars of each receipt in an amount exceeding the limit specified in section 269ST as above received by a cheque or bank draft not being an account payee cheque or an account payee bank draft. 31(bc) – Requires reporting of particulars of each payment made in an amount exceeding the limit in section 269ST, otherwise than by an account payee cheque or account payee bank draft or use of ECS, during PY. 31(bd) – Requires particulars of each payment exceeding the limit specified in section 269ST, made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year. 31(c) – Pertains to the repayment of loans/deposits/specified advances in an amount exceeding the specified limit of Section 269T. 31(d) – Pertains to the repayment of loans/deposits/specified advances which satisfies the following conditions: i. Repayment is made during the previous year ii. Repayment is made in an amount exceeding the limit of Rs.20,000 in section 269T iii. Mode of repayment is immaterial. iv. Such loans/deposits/advances repaid were received in contravention of section 269SS in the previous year [received otherwise than by specified non-cash modes]. 31(e) – Pertains to the repayment of loans/deposits/specified advances by cheque or bank draft not crossed at all or crossed without the addition of words “account payee” and which satisfy conditions (i) to (iii) above. [Particulars at (c), (d), and (e) is not required to be followed in the case of repayment taken or accepted from the Government, Government company, banking company, or a corporation of the Central, State or Provincial Act] |
| 32 | 32(a) – Requires particulars of brought forward loss or depreciation allowance.
32(b) – Requires to state whether a change in shareholding of the company has taken place in the previous year due to which the losses incurred prior to the PY cannot be allowed to be carried forward in terms of section 79. 32(c) – Requires the tax auditor to state whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, if yes, then the tax auditor is required to furnish the details of the same. 32(d) – Requires the tax auditor to report whether the assessee has incurred any loss referred to in section 73A in respect of any specified business in the previous year. If so, the tax auditor shall furnish details of the same. 32(e) – Requires the tax auditor to state whether the company is deemed to be carrying on a speculation business as referred to in Explanation to Section 73. If yes, the tax auditor should furnish the details of the same. Refer table in next chart for reporting format |
| 33 | Prescribes a tabular format for reporting admissible deductions section-wise. It casts a duty on the tax auditor to verify whether the assessee fulfils the conditions if any specified under the relevant provisions of the Income-tax Act, 1961 or Income-tax Rules, 1962, or any other guidelines, circular, etc., issued in this behalf. |
| 34 | 34(a) – Requires the tax auditor to state whether the assessee is required to deduct or collect tax at source, if yes, then the tax auditor is required to furnish the details of the same.
34(b) – Requires the tax auditor to state whether the assessee is required to furnish the statement of tax deducted or tax collected, if yes, then the tax auditor is required to furnish the details of the same. 34(c) – Requires the tax auditor to state Whether the assessee is liable to pay interest under 201(1A) or 206C(7), if yes, then the tax auditor is required to furnish the details of the same. Refer table in next chart for reporting format |
| 35 | 35(a) – Requires the quantitative details of principal items of goods traded, in case of trading concern.
35(b) – Requires the quantitative details of the principal items of raw materials, finished products, and by-products, in case of manufacturing concern. |
| 36 | DDT has been abolished. This clause is redundant. |
| 36A | Requires the tax auditor to state whether the assessee has received any amount on the nature of dividend as referred to in section 2(22)(e), if yes, then the tax auditor is required to furnish the details of the same. |
| 36B | Give details whether assessee has received any amount on buy-back of shares as covered by sec 2(22)(f).
If yes, give details of amount received and cost of acquisition of such shares. |
| 37 | Requires the tax auditor to state whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor. |
| 38 | Requires the tax auditor to state whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/identified by the auditor. |
| 39 | Requires the tax auditor to state whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to the valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor. |
| 40 | Requires the details regarding total turnover, gross profit/turnover, net profit/turnover, stock-in-trade/turnover, and material consumed/finished goods produced for the PY and the preceding PY. The details required to be furnished for principal items of goods traded or manufactured or services rendered. |
| 41 | Requires the details of demand raised or refund issued during the previous year under any tax laws other than the Income-tax Act, 1961 and Wealth-tax Act, 1957 along with details of relevant proceedings. |
| 42 | Requires the tax auditor to state whether the assessee is required to furnish a statement in Form No. 61 or 61A or 61B. If yes, then the status of furnishing the forms by the due date, whether forms contain all details required to be reported, list of required details not included in forms are to be reported. |
| 43 | Requires the tax auditor to state whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in 286(2), if yes, then the tax auditor is required to furnish the details of the same. |
| 44 | Requires details of the total expenditure incurred during the year. The break-up needs to be given for the expenditure in respect of entities registered under GST and relating to entities not registered under GST. |
Clause by Clause reporting format
Clause 4 –
| Sl | Relevant Indirect tax Law which requires registration | Place of Business/ profession/service unit for which registration is in place/ or has been applied for | Registration/ Identification number |
Clause 11 –
| Sl | Principal place of maintenance of books of account | Details of books maintained |
Clause 12 – For section 44AE
| Sl | Nature of vehicle | Number of Vehicles | Month of acquisition in case of vehicle purchased during the relevant PY | Presumptive income per month | Number of months Owned during the PY (rounded off) | Nature of Vehicle/ Gross Vehicle weight | Presumptive income for the PY |
Clause 12 – For Chapter XII-G
| Sl | Name of the Ship | Net tonnage capacity as per DGS certificate | Net tonnage capacity rounded off to nearest 100 | Tonnage income per day | No of days operated during the previous year as per DGS Certificate | Net tonnage income for the year |
Clause 13 – Method of accounting
| Sl | Particulars | Increase in profit | Decrease in profit |
Clause 13(e) – ICDS
| ICDS No. | ICDS Name | Increase in profit | Decrease in profit | Net effect |
Clause 13(f) – ICDS
| Sl | ICDS number and name | Disclosure |
Clause 14 – Valuation of Closing stock
| Sl | Particulars | Increase in profit | Decrease in profit |
Clause 17 – Transfer of Land or building
| Details of property | Consideration received or accrued | Value adopted or assessed or assessable | Whether provisions of 2nd proviso to section 43CA(1) or 4th proviso to section 56(2)(x) applicable? [Yes/No] |
Clause 19 –
| Section | Amount debited to Profit and Loss Account | Amounts admissible as per the provisions of the Income-tax Act, 1961 and also fulfills the conditions. If any specified under the relevant provisions of Income-tax Act, 1961 or Income tax Rules, 1962 or any other guidelines, circular, etc., issued in this behalf. |
Clause 20 –
| Sl | Nature of fund | Sum received from employees | Due date for payment | The actual amount paid | The actual date of payment to the concerned authorities |
Clause 21(a) –
| Nature | Sl | Particulars | Amount |
| Capital Expenditure | |||
| Personal Expenditure | |||
| Advertisement expenditure in any souvenir, brochure, tract, pamphlet or the like published by a political party | |||
| Expenditure incurred at clubs being entrance fees and subscriptions | |||
| Expenditure incurred at clubs being cost for club services and facilities used. | |||
| Expenditure by way of penalty or fine for violation of any law for the time being force | |||
| Expenditure by way of any other penalty or fine not covered above | |||
| Expenditure incurred for any purpose which is an offence or which is prohibited by law |
Clause 21(d)(A) –
| Sl | Date of payment | Nature of payment | Amount | Name and PAN or Aadhaar No. of the payee, if available |
Clause 21(d)(B) –
| Sl | Date of payment | Nature of payment | Amount | Name and PAN or Aadhaar No. of the payee, if available |
Clause 32 –
| Sl | AY | Nature of Loss/ Allowance | Amount as returned | All losses/ allowances not allowed under 115BAA/ 115BAC/ 115BAD | Amount as adjusted by withdrawal of additional depreciation on account of opting for new regimes | Amount as assessed (Relevant order) | Remarks |
Clause 34(a) –
TAN |
Section |
Nature of payment |
Payment or receipt of nature given in column 3 |
Amount on which tax was required to be deducted or collected out of 4 |
Amount on which tax was deducted or collected at specified rate out of 5 |
Amount of TDS or TCS out of 6 |
Amount on which tax was deducted or collected at less than specified rate out of 7 |
Amount of tax deducted or collected out of 8 |
Amount of TDS TCS not deposited to credit of Govt out of 6 and 8 |
Clause 34(b) –
| TAN | Type of form | Due date for furnishing | Date of furnishing, if furnished | Whether the statement of tax deducted or collected contains information about all transactions which are required to be reported. If not, please furnish list of details/transactions which are not reported |
Clause 34(c) –
| TAN | Amount of interest under section 201(1A)/206C(7) is payable | Amount paid out of column (2) along with date of payment. |
Clause 40 –
| Sl | Particulars | Previous year | Preceding previous year |
| 1 | Total turnover of the assessee | ||
| 2 | Gross profit/ Turnover | ||
| 3 | Net profit/ Turnover | ||
| 4 | Stock-in-trade/ Turnover | ||
| 5 | Material consumed/ finished goods produced |
Clause 42 –
| Sl | Income tax department reporting entity identification number | Type of form | Due date for furnishing | Date of furnishing, if furnished | Whether the Form contains information about all details/ transaction s which are required to be reported. | If not, please furnish list of the details/ transactions which are not reported |
Clause 44 –
| Sl | Total amount of Expenditure incurred during the year | Expenditure in respect of entities registered under GST | Expenditure relating to entities not registered under GST | |||
| Relating to goods or services exempt from GST | Relating to entities falling under composition scheme | Relating to other registered entities | Total payment to registered entities | |||
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