Major Changes in New 3CD- Tax Audit Forms

Revision of TAR and New reporting requirements in Form 3CD- Notification No. 28/2021

The six changes in the tax audit form in Form 3CD

Budget for 2021: The ‘Tax Audit’ ceiling under Section 44AB has been enhanced from Rs.10 crores to Rs.5 crores in cases where % of business transactions are done digitally.

The reporting under clauses 30C and 44 of the Tax audit report (form 3CD) has been suspended until March 31, 2021.

The Department of Revenue established 2 types of tax audit forms:

• The audit report would be in either Form 3CA or Form 3CB format.
• Form 3CA is for people whose accounts have been audited under legislation other than the Internal Revenue Code. Form 3CB is for people who haven’t had their accounts audited under any other law. As a result, we can claim that this is for those who are being audited under the Income Tax Act.

Tax audit Report has to be filed in either of the below forms:

• Form 3CA – For a taxpayer who is already required to have his accounts audited under another law and is carrying on a business or profession (i.e. law other than income tax law). The Companies Act of 2013 makes it mandatory for a firm to have its accounts audited. As a result, it will provide Form 3CA.
• Form 3CB — For a taxpayer who owns a business or practices a profession but is not obligated by law to have his accounts audited. A proprietorship entity or partnership firm with a revenue of less than one crore and no preference for the presumptive income scheme is not required to have its books audited under any other law than income tax. As a result, it will submit Form 3CB.
• 3CD Form – Form 3CD would be used for the statement of particulars. This form contains a number of provisions that require the auditor to report on a variety of topics. These clauses are split into two sections – Part A offers basic factual information on the assessee, whereas Part B comprises information about different income tax compliances that must be provided.

Major changes in new 3CD

Changes to Form 3CD, Tax Audit Report

(i) Necessary amendments are made to Form No. 3CD, and a new serial 8a. is introduced to indicate whether the assessee has elected taxes under Sections 115BA/115BAA/115BAB.

(ii) For the adjustment made to the written down value under section 115BAA (for the assessment year 2020-21 only) and the Adjusted written down value, more information is necessary. Serial 18(ca) and 18(CB) are included in Part-B of Form No. 3CD for this purpose.

(iii) In serial no. 32(a) of Part-B of Form No. 3CD, the details of bringing forward loss or depreciation allowance are updated to include the adjustments for losses and allowances under section 115BAA.

Necessary amendments in ITR-6

(i) amendments in Schedule-DPM of Income-tax return -ITR-6 have been made to make the adjustments of depreciation amount under section 115BAA.

(ii) amendments in Schedule-CFL of Income-tax return -ITR-6 have been made to made adjustments for losses and allowances under section 115BAA.

(iii) amendments in Schedule-UD of Income-tax return -ITR-6 have been made to made adjustments for depreciation allowances for opting section 115BAA.

1. Location(s) (address(s)) of keeping books of accounts to be given
2. Particulars of sale of Land/Building less than Stamp value to be given
3. Comparison of amount debited vis a vis amount admissible on account of various deductions to be given
4. Detailed information to be given on amount debited to P & L a/c of Capital Exp, Personal Exp. ADVERTISEMENT
5. Details on TDS deducted not deposited or not deducted u/s 40(a) Nonresident
6. Name of payee whose TDS not deposited, deducted to be given u/s 40(a)(ia)
7. Amount to be profit u/s 40A(3A) to be given
8. Modvat=Cenvat
9. (28) Whether receiving shares below fair value u/s 56(2)(viia)- How it is possible for CA
10. Whether assessee receives security premium taxable u/s 56(2)(viib)
11. Detailed info on TDS/TCS deducted section-wise to be given
12. Late filing of TDS/TCS return
13. Interest Payable u/s 201(1A) and 206C(7)
14. Audit under Service tax to be reported
15. Demand/Refund raised under any other law during the PY to be reported

Timeline for obtaining the audit report

• Unless otherwise extended, a taxpayer must acquire the audit report by September 30th of the relevant assessment year.
• However, because of the pandemic scenario, the deadline for submitting the audit report for AY 2021-22 has been extended to January 15, 2022.

Penalty for failing to file Tax audit report

• If the taxpayer fails to have his accounts audited or file the audit report, the Assessing Officer may levy a penalty under section 271B. A minimum penalty of 0.5 percent of total sales, turnover, or gross revenues can be imposed, with a maximum penalty of Rs. 1,50,000. No penalty will be assessed if the taxpayer provides acceptable reasons for noncompliance.

Income tax Tax Audit Utility for Form 3CA-CD & 3CB-CD enabled by CBDT
(Common Offline Utilities for filing Statutory Income-tax forms (Enabled for Form 3CA-CD & 3CB-CD )

• Submission of Form 3CA-3CD,3CB-3CD for AY 2021-22, AY 2020-21 is enabled on e-Filing portal www.incometax.gov.in.
  Download and use only the latest Offline Utility available in the “Download” section under the “Income-tax Forms” page on the portal.
• This version of the offline utility can be used for Tax Audits in cases not involving a large number of records.
• The next version will have CSV import/upload to accommodate a large number of records in various schedules of the Form.
• The JSON generated from the new utility has to be uploaded on the efiling portal.

Please ensure that the taxpayer has authorized you to submit the form before uploading the form.

Call at 011-435 201 94 or mail at singh@carajput.com where a team of proficient and highly skilled attorneys will revert back while resolving your trademark query with the best solution.

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