Income Tax Form 32: Audit Report – Section 46, 138, 139, 140(8), 141, 142, 143 & 144

Form 32 is a mandatory audit report under the Income-tax Act, 2025, required for claiming deductions under multiple sections such as 46, 138, 139, 140, 141, 142, 143, and 144. It must be furnished by eligible assessees, including businesses, infrastructure undertakings, SEZ developers, start-ups, housing projects, and specified industries, and verified by a Chartered Accountant before the due date of audit report filing. The form captures detailed information on capital expenditure, profits, project approvals, and compliance with prescribed conditions. It ensures that deductions are granted only when statutory requirements are satisfied, such as exclusive use of assets, eligibility certifications, and adherence to specified timelines. Failure to file or incorrect filing may result in denial of deductions. The structured and section-specific reporting framework enhances transparency, enables verification by tax authorities, and reduces ambiguity in claiming deductions, thereby promoting accurate tax compliance and minimizing disputes.

Income Tax Department
Ministry of Finance, Government of India

FAQs on Income Tax Form 32 – Audit report under section 46, 138, 139, 140(8), 141, 142, 143 and 144 of Income Tax Act, 2025

Furnishing of audit report for claiming deduction under section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144 of the Act

Q1. What is Form 32?

Ans. Form 32 is required to be furnished by an assessee availing deduction under Section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144 of the Income-tax Act, 2025. The form is to be verified by a Chartered accountant.

Q2. Who should file Form 32?

Ans. The following assessees should file Form 32:

1. An assessee claiming deduction on capital expenditure incurred in specified business as specified in Section 46 of the Income-tax Act, 2025.

2. An assessee claiming deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development as per the provisions of Section 138 of the Income-tax Act, 2025.

3. An assessee claiming deduction in respect of profits and gains by an undertaking or enterprise engaged in development of SEZs as per the provisions of Section 139 of the Income-tax Act, 2025.

4. An eligible start-up earning profits and gains derived from eligible business as specified in Section 140 of the Income-tax Act, 2025.

5. An assessee claiming deduction on profits and gains derived by certain industrial undertakings other than infrastructure development undertakings such as commercial production of gas, oil refining etc. as per the provisions of Section 141 of the Income-tax Act, 2025.

6. An assessee claiming deduction on profits and gains from housing projects as per the provisions of Section 142 of the Income-tax Act, 2025.

7. An assessee claiming deduction on profits and gains derived by an undertaking in North-Eastern states from a business as specified in Section 143 of the Income-tax Act, 2025.

8. An assessee claiming deduction on profits and gains derived by newly established Units in SEZs as per the provisions of Section 144 of the Income-tax Act, 2025.

Q3. What is the Due Date to file Form 32?

Ans. Form 32 is required to be filed before the due date specified in Section 63 of the Income-tax Act, 2025, which is the due date for filing audit report.

Q4. With respect to deduction under section 46, what is the nature of capital expenditure allowed as deduction?

Ans. With respect to deduction under section 46, a deduction of the whole of the capital expenditure incurred, wholly and exclusively, for the purposes of any specified business (as mentioned in Section 46) shall be allowed if it is incurred in the tax year. However, expenditure incurred on acquisition of any land or goodwill or financial instrument is not allowed as deduction. Further, if expenditure is incurred via cash exceeding Rs.10000/- in a day, the same is not allowed as deduction.

Q5. With respect to deduction under section 46, is capital expenditure incurred prior to commencement of operations allowable as deduction?

Ans. Capital expenditure incurred prior to commencement of operations is allowed as deduction during the tax year in which the business is commenced, if it is capitalize in the books of accounts as on the date of commencement of operations.

Q6. With respect to deduction under section 46, can the assets for which deduction is claimed be used for other purposes?

Ans. The assets for which deduction is claimed shall be used only for the specified business (as per Section 46) for a minimum period of 8 years, beginning with the tax year in which the asset is acquired or constructed. If the asset is used for other purposes during the abovementioned period, the expenditure for the same (reduced by depreciation allowable) will be treated as income for the tax year in which it is so used.

Q7. With respect to deduction under section 140, which are the start-ups eligible for deduction?

Ans. With respect to deduction u/s 140, the eligible start-up should satisfy the following conditions:

– It should be a company or LLP incorporated on or after 01.04.2016 but before 01.04.2030.

– The turnover should not exceed Rs. 100 crore for the tax year in which deduction is claimed.

– It should hold a certificate of eligible business from the Inter-Ministerial Board of Certification.

– It should be engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation.

Q8. With respect to deduction under section 140, for how many years can the deduction be claimed by start-ups?

Ans. The deduction can be claimed by the assessee for any three consecutive tax years out of ten years beginning from the year in which the eligible start-up is incorporated.

Q9. With respect to deduction under section 143, which are the eligible businesses to claim deduction?

Ans. The following businesses are eligible for deduction under section 143 :

– hotel (two-star category or above)

– adventure and leisure sports including ropeways.

– providing medical and health services in the nature of nursing home with a minimum capacity of 25 beds.

– running an old-age home.

– operating vocational training institute for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion designing and industrial training.

– running information technology related training centre.

– manufacturing of information technology hardware.

– bio-technology.

Further, the business should be located in any of the North Eastern states namely Arunachal Pradesh, Assam, Nagaland, Manipur, Mizoram, Tripura, Meghalaya or Sikkim.

Q10. Why is Form 32 important?

Ans. The deduction under sections 46,138,139,140, 141,142,143 or Section 144 of the Income-tax Act, 2025 is allowed based on details filed in the Form.

Guidance Note on Income Tax Form 32 – Audit report under section 46, 138, 139, 140(8), 141, 142, 143 and 144 of Income Tax Act, 2025

Furnishing of audit report for claiming deduction under section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144 of the Act

 Purpose:

This form is required to be furnished by an assessee availing deduction under Section 46 or 138 or 139 or 140 or 141 or 142 or 143 or 144 of the Income-tax Act, 2025. The form is to be verified by a Chartered accountant.

Who should file:

The following assessees should file this form:

1. An assessee claiming deduction on capital expenditure incurred in specified business as specified in Section 46 of the Income-tax Act, 2025.

2. An assessee claiming deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development as per the provisions of Section 138 of the Income-tax Act, 2025.

3. An assessee claiming deduction in respect of profits and gains by an undertaking or enterprise engaged in development of SEZs as per the provisions of Section 139 of the Income-tax Act, 2025.

4. An eligible start-up earning profits and gains derived from eligible business as specified in section 140 of the Income-tax Act, 2025.

5. An assessee claiming deduction on profits and gains derived by certain industrial undertakings other than infrastructure development undertakings such as commercial production of gas, oil refining etc. as per the provisions of Section 141 of the Income-tax Act, 2025.

6. An assessee claiming deduction on profits and gains from housing projects as per the provisions of Section 142 of the Income-tax Act, 2025.

7. An assessee claiming deduction on profits and gains derived by an undertaking in North-Eastern states from a business as specified in Section 143 of the Income-tax Act, 2025.

8. An assessee claiming deduction on profits and gains derived by newly established Units in SEZs as per the provisions of Section 144 of the Income-tax Act, 2025.

Due Date:

The form is required to be filed before the due date specified in Section 63 of the Income-tax Act, 2025, which is the due date for filing audit report.

Structure of the Form:

– Basic details – Name, PAN, Tax Year, Address, Section under which deduction claimed

– Based on the section under which deduction is claimed, the rest of the form will be displayed.

– Details of deduction u/s 46 – Details of specified business, Copy of agreement with central/state government or local authority, Details of capital expenditure such as amount, mode of payment and payment date, Amount of deduction claimed.

– Details of deduction u/s 138 –

• • Date of incorporation, Date of commencement of operations
  • For infrastructure facility – Nature of infrastructure facility, first year of deduction claim
  • For generation, transmission or distribution of power – Year in which undertaking has started generating power, Year in which new transmission and distribution lines were laid, Year of renovation (if applicable)
  • Initial tax year of deduction claim
  • Total sales of the undertaking, profits and gains from eligible business
  • Amount of deduction claimed

– Details of deduction u/s 139 – Details of SEZ, Date of notification of SEZ, Copy of notification, Date of start of development of SEZ, Initial tax year of deduction claim, Total sales of undertaking, profits and gains from eligible business, Amount of deduction claimed.

– Details of deduction u/s 140 – Details of start-up such as name, Department for Promotion of Industry and Internal Trade Number, date of incorporation, Date of

start-up approval, Details of business, Copy of certificate from Inter-Ministerial Board of Certification, Details of sales & profits, Amount of deduction claimed.

– Details of deduction u/s 141 – Name of the housing project, Nature of business, Approval and Completion details, Project details, Initial tax year of deduction claim, Total sales of undertaking, profits and gains from eligible business, Amount of deduction claimed.

– Details of deduction u/s 142- Name of the housing project, Nature of business, Approval and Completion details, Project details, Initial tax year of deduction claim, Total sales of undertaking, profits and gains from eligible business, Amount of deduction claimed.

– Details of deduction u/s 143 – Details of entity claiming deduction such as name, state where located, nature of activity, Copy of agreement with central/state government or local authority, Details of sales & profits, Amount of deduction claimed.

– Details of deduction u/s 144 –

• • Details of the Unit
  • Export turnover, Export proceeds received in convertible foreign exchange of the Unit in respect of articles/things or provision of services
  • Amount brought into India in convertible foreign exchange (within 6 months from end of the tax year, within such further period as allowed by the Competent Authority)
  • Details of sale proceeds credited to separate foreign account after permission from RBI (Amount & Reference no. of permission, Qualifications if any)
  • Initial tax year from which deduction is claimed
  • Total sales of Unit and Business
  • Total profits derived by the Unit and Business
  • Amount of deduction claimed

What are the documents/information required to file the Form?

The following documents/information are required to file the form:

1. Copy of agreement with central/state government or local authority

2. Copy of notification of SEZ in case of SEZ.

3. Copy of certificate from Inter-Ministerial Board of Certification in case of a start-up

4. Turnover and profit details of the eligible entity

5. Details of capital expenditure in case of deduction u/s 46.

What is the process flow of filing the Form?

The process flow includes the following steps:

1. Enter basic details of assessee

2. Choose section under which deduction is claimed from the drop-down

3. Based on the same, the next part of the form is displayed

4. Enter the entity and deduction details as per section

5. Enter verification details

6. E-verify the Form using DSC of the Chartered Accountant

Outcome of processed Form:

The deduction under sections 46,138,139,140, 141,142,143 or Section 144 of the Income-tax Act, 2025 is allowed based on details filed in the Form.

Common changes made across forms:

1. Pre-filling of basic details such as Name, PAN and Tax Year etc. with option for the assessee to edit the same.

2. Assessment / Financial / Previous year or years have been replaced with Tax year or years, wherever appearing in the Form/Annexure.

3. Sections, Clauses and Schedules changed as per the Income-tax Act, 2025.

4. Currency symbol “Rs.” has been replaced with “₹”.