Tuesday, August 19, 2014

Proposed changes in Form 3CD (For Tax Audit Conducted under Section 44AB)





S
No.
Clause
Clause No.
Requirements
1
Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, customs duty,etc. if yes, please furnish the registration number or any other identification number allotted for the same
New Clause -4
As per revised 3CD report, Assessee is required to furnish registration number allotted by the concern authority of other Indirect Tax law under which he is liable to pay tax.

2
Indicate the relevant clause of section 44AB under which the audit has been conducted
New Clause -8
As per revised 3CD report Assessee is required to give details of relevant clause (a),(b,)(c) or(d) of Section 44AB, under which the assessee is liable to cover under Tax Audit
·         clause(a) of Section 44AB every person, carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees* in any previous year; or

·         Clause (b) of Section 44AB every person, carrying on profession shall, if his gross receipts in profession exceed twenty-five lakh rupees* in any previous year; or

·         Clause (c)’ of section 44AB  every person, carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or
·         Clause (d) of section 44AB every person, carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.
3
List of books of account maintained and the address at which the books of accounts are kept.
Clause-11 (b)
As per revised 3CD report, if books of accounts are maintained more then one location assessee is required to furnish the address of location along with details of books of accounts are maintained at each location.
4
Whether the profit and loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant section (44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB, Chapter XII-G, First Schedule or any other relevant section.)
Clause-12
As per revised 3CD addition made to presumptive income, Assessee covered under Chapter XII-G i.e.  Special provision for presumptive income of Shipping Companies is required to be given if same is applicable to the Assesee.

5
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, please furnish:
New Clause-17
A new clause is inserted, under which Assessee is require to furnish details of 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 for the purpose of deriving sale consideration for computation of capital gain tax.
Details of Property
Consideration accrued & Received
Value adopted or assessed or assessable



6
Amounts inadmissible under section 40(a)
Clause-21(b)
As per revised 3CD discloser requirements are enhanced for amounts inadmissible under 40(a) details. For details refer below
7
Disallowance/deemed income under section 40A(3):
Clause-21(d)
Disallowance/ Deemed income under section 40A(3) is replaced with new clause.  For details refer  below.
8
Amount of Central Value Added Tax credits availed of or utilised during the previous year and its treatment in the profit and loss account and treatment of outstanding Central Value Added Tax credits in the accounts. (b) Particulars of income or expenditure of prior period credited or debited to the profit and loss account.
Clause-27(a)
As per revised clause, Modified Value Added Tax credits availed of or utilized during the previous year and its treatment in the profit and loss account and treatment of outstanding Modified Value Added Tax credits in the accounts. The word Modified Value Added Tax is replaced by Central Value Added Tax.

9
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), if yes, please furnish the details of the same.
New Clause-28
A new inserted clause, Assessee is required to furnish details of 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) received during the previous year.
·         As per  Section 56(2)(viia) of Income Tax Act,1961, where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, any property, being shares of a company not being a company in which the public are substantially interested,
    (i) without consideration, the aggregate fair      
         market value of which exceeds fifty  
         thousand rupees, the whole of the 
         aggregate fair market value of such 
         property;
     (ii) for a consideration which is less than the
          aggregate fair market value of the
          property by an amount exceeding fifty
          thousand rupees, the aggregate fair
          market value of such property as exceeds
          such consideration:
·         Therefore any receipt of shares of a closely-held company, without consideration or for inadequate consideration, is taxable in the hands of the recipient.
·         For the purpose of this section, consideration would be deemed to be inadequate, if the difference between the actual consideration and the FMV (to be determined as per prescribed Valuation Rules) of the property exceeds Rs.50,000.
The Assessee is required furnish details for any share received during the previous year by the company from the closely held company.
10
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.
New clause-29
As per new inserted clause, Assessee is required to furnish details of any consideration  received for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if any.
·         Section 56(2)(viib) { introduced by Finance Act 2012 w.e.f 01-04-2013 } r.w.s. 2(24)(xvi), of the Income tax Act ('the Act') provides that where a closely held company issues shares to a resident, for an amount received in excess of the fair market value of the shares, then the said excess portion will be regarded as income of the Company and charged to tax under the head ‘Income from other sources’. The said fair market value is defined as higher of the value arrived at on the basis of the method prescribed under Rule 11UA of the Income-tax Rules, 1962 (‘the Rules’) or the value as substantiated by the Company to the satisfaction of the Assessing Officer under Explanation to section 56(2)(viib), if assessee (closely held company ) has issued any share to a resident shall furnish the details for the same.
11
Whether the taking or accepting loan or deposit, or repayment of the same were made by account payee cheque drawn on a bank or account payee bank draft based on the examination of books of account and other relevant documents
Clause-31(c)’
As per earlier sub clause (c)  of clause 24 Whether a certificate has been obtained from the assessee regarding taking or accepting loan or deposit, or repayment of the same through an account payee cheque or an account payee bank draft. [Yes/No].
The statement has been replaced.
12
Details of brought forward loss or depreciation allowance, in the following manner, to the extent available :
Clause-32
Three additional points are added for discloser requirements relating to speculative loss details for the same are given below.
·     Whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, If yes, please furnish the details of the same.
·     Whether the assessee has incurred any loss referred to in section 73A in respect of any specified business during the previous year, if yes, please furnish details of the same.
·      In case of a company, please state that whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, please furnish the details of speculation loss if any incurred during the previous year.
13
Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA).
Clause-33
Discloser requirements for Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA) has been enhanced.
Section under which deduction is claimed
Amounts admissible as per the provision of the Income Tax Act, 1961 and fulfils 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.


The Assessee is required to furnish details of each claim availed under Chapter VIA or Chapter III of Income Tax Act,1961.
14
Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish:
Clause-34
The discloser requirement for Tax deducted & Collected as per the provisions of   Chapter XVII-B or Chapter XVII-BB has been enhanced for reporting purpose, details for the same are given below.
15
In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form :-
 Clause-36
Two Additional discloser requirements  have been inserted  in case of  a domestic company  received dividend from its subsidiary  company, details of tax on distributed profits under section 115-O (Dividend Distribution Tax)
·        amount of reduction as referred to in section 115-O(1A)(i);
·        amount of reduction as referred to in section 115-O(1A)(ii);

As per Section 115-O(1A)  as amended by Finance Act 2012, If any holding company receives dividend from its subsidiary on which the subsidiary company has paid the DDT payable on such dividend, then, the amount of dividend declared, distributed or paid by the holding company by way of dividends, whether interim or otherwise shall be reduced by the amount of dividend, if any, received from the subsidiary company during the financial year, Provided that the same amount of dividend shall not be taken into account for reduction more than once.
16
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.
Clause-37
Under this clause the statement is replaced from earlier statement of Whether any cost audit was carried out, if yes, enclose a copy of the report of such audit [see section 139(9)].
17
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.
Clause-38



Under this clause the statement is replaced from earlier statement of Whether any audit was conducted under the Central Excise Act, 1944, if yes, enclose a copy of the report of such audit.
18
Whether any audit was conducted under section 72A of the Finance Act,1994 in relation to valuation of taxable services, Finance Act,1994 in relation to 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
Clause-39
The Assessee is required to furnish details of  Special Audit conducted under section 72A of Finance Act,1994 ,if any during the previous year, for valuation of taxable services. If such audit was conducted by the department then such report is required to be furnish by assessee to the auditor.
19
Details regarding turnover, gross profit, etc., for the previous year and preceding previous year:
Clause-40
As per revised 3CD report Assessee is required to furnish accounting ratios for previous year as well as preceding previous year.
Sr.No.
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


20
Please 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 along with details of relevant proceedings.
New Clause-41
A new Clauses inserted in revised 3CD report in which assessee is required 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 such as Excise Law, Service Tax, Sales Tax, Customs Law and any other laws if any.

Clause -21(b) : Amounts inadmissible under section 40(a)
(1) as payment to non-resident referred to in sub-clause (i)
(A) Details of payment on which tax is not deducted:
(I)   date of payment
(II)  amount of payment
(III) nature of payment
(IV) name and address of the payee

(B) Details of payment on which tax has been deducted but has not been paid during the previous year or in the subsequent year before the expiry of time prescribed under section 200(1)
(I) date of payment
(II) amount of payment
(III) nature of payment
(IV) name and address of the payee
(V) amount of tax deducted

(2) as payment referred to in sub-clause (ia)

(A) Details of payment on which tax is not deducted:
(I) date of payment
(II) amount of payment
(III) nature of payment
(IV) name and address of the payee

(B) Details of payment on which tax has been deducted but has not been paid on or before the due date specified in sub- section (1) of section139.
(I) date of payment
(II) amount of payment
(III) nature of payment
(IV) name and address of the payer
(V) amount of tax deducted
(VI) amount out of
(V) deposited, if any

(iii) under sub-clause (ic) [Wherever applicable]: As per sub-clause(ic) of clause (a) of section 40 any Fringe Benefit Tax (FBT) is not deductible while calculating business income.

(iv) under sub-clause (iia) : Any sum paid on account of wealth tax, chargeable  under Wealth Tax Act, 1957 which is in the nature of personal expenses of company and shall be disallowed u/s 40(a)(iia)

(v) under sub-clause (iib) : insert a new sub-clause (iib) in clause (a) of the section 40 so as to provide that any amount paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called which is levied exclusively on or any amount which is appropriated, whether directly or indirectly, from a State Government undertaking, by the State Government, shall not be allowed as deduction in computing the income chargeable under
the head “Profits and gains of business or profession”. 

(vi) under sub-clause (iii) :  A new clause sub-clause(iii) of clause (a) of section 40 any payment which is chargeable under the head" Salaries", if it is payable outside India and if the tax has not been paid thereon nor deducted there from under Chapter XVII- B is required to disclose.
(A) date of payment
(B) amount of payment
(C) name and address of the payee

(vii) under sub-clause (iv) : As per sub-clause(iv) of clause (a) of section 40  any payment to a provident or other fund established for the benefit of employees of the assessee, unless the assessee has made effective arrangements to secure that tax shall be deducted at source from any payments made from the fund which are chargeable to tax under the head" Salaries".

(viiii) under sub-clause (v) : As per sub-clause(v) of clause (a) of section 40  any payment of tax on non-perquisite to employees are paid by the employer is not deductible while calculating business income.

Clause-21(d)- Disallowance/deemed income under section 40A(3)

Old Clause
A.whether a certificate has been obtained from the assessee regarding payments relating to any expenditure covered under section 40A(3) that the payments were made by account payee cheques drawn on a bank or account payee bank draft, as the case may be, [Yes/No]
B.amount inadmissible under section 40A(3), read with rule 6DD [with break-up of inadmissible amounts]

New Clause
A-On the basis of the examination of books of account and other relevant documents/evidence, 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. If not, please furnish the details:
Serial number
Date of payment
Nature of payment
Amount
Name and Permanent Account Number of the payee, if available






B-On the basis of the examination of books of account and other relevant documents/evidence, 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 If not, please furnish the details of amount deemed to be the profits and gains of business or profession under section 40A(3A);
Serial number
Date of payment
Nature of payment
Amount
Name and Permanent Account Number of the payee, if available






Clause -34- The discloser requirement for Tax deducted & Collected as per the provisions of   Chapter XVII-B or Chapter XVII-BB

•Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish
Tax deduction and collection Account Number (TAN)
Section
Nature of payment
Total amount of payment or receipt of the nature specified in column (3)
Total amount on which tax was required to be deducted or collected out of (4)
Total amount on which tax was deducted or collected at specified rate out of (5)
Amount of tax deducted or collected out of (6)
Total amount on which tax was deducted or collected at less than specified rate out of (7)
Amount of tax deducted or collected on (8)
Amount of tax deducted or collected not deposited to the credit of the Central Government out of (6) and (8)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)











•whether the assessee has furnished the statement of tax deducted or tax collected within the prescribed time. If not, please furnish the details:
Tax deduction and collection Account Number (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






•whether the assessee is liable to pay interest under section 201(1A) or section 206C(7). If yes, please furnish:
Tax deduction and collection Account Number (TAN)
Amount of interest under section 201(1A)/206C(7) is payable
Amount paid out of column (2) along with date of payment.



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