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Changes in Tax Audit Report in Form 3CD from AY 2021-22 in a Tabular Form

CA Sapna Ghelani 
on 15 April 2021

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CBDT has amended the Tax Audit Report in Form 3CD vide Notification No. 28/2021 in G.S.R. 246(E) dated 1.4.2021 by Income-tax (eighth Amendment) Rules, 2021 in order to incorporate the changes brought in the Income Tax Act, 1961 ('Act') by the Finance Act, 2021.

These changes in Form 3CD are effective from the 1st day of April 2021.

The changes introduced in the Tax Audit Form in Form 3CD from the AY 2021-22 are shown as below in a tabular form -

Changes in Tax Audit Report in Form 3CD from AY 2021-22 in a Tabular Form

Rule/Clause

Old Reporting/Meaning

Amendment

Amended Words

Rule 6G

Tax Audit Report is required to be filed one month prior to the due date of filing of return of income u/s 139(1).

Also, Section 43B allows certain expenses as deduction in the previous year in which it is incurred (actual payment basis) provided the same is paid on or before the due date of filing of return u/s 139(1).

The inconsistency was that the expenditure incurred in a previous year may be paid before the due date of return but after the filing of the tax audit report which is one month prior to the due date of furnishing the return of income under section 139(1).

Therefore, for removing this inconsistency, it is now allowed to revise the Audit Report to claim the deduction of expenses under section 43B if the same was disallowed in the original tax audit report.

Time limit to revise Tax Audit Report: A Tax Audit Report is allowed to be revised before the end of the relevant assessment year.

Rule 6G (3):

The report of audit furnished under this rule may be revised by the person by getting revised report of audit from an accountant, duly signed and verified by such accountant, and furnish it before the end of the relevant assessment year for which the report pertains, if there is payment by such person after furnishing of report under sub- rule (1) and (2) which necessitates recalculation of disallowance under section 40 or section 43B.

Clause 8a

The existing clause 8a under Form 3CD required reporting of exercise of an option by the assessee under section 115BA/115BAA/115BAB.

As we know that the new tax regime under section 115BAC and section 115BAD is applicable from AY 2021-22.

In order to incorporate the same in the Tax Audit Report, Clause 8a of Form 3CD is changed to include these two sections.

8A-

Whether the assessee has opted for taxation under section 115BA/115BAA/115BAB/ 115BAC/115BAD?

Clause 17

Clause 17 of Form 3CD mentions the reporting of the transfer of land or building or both during the previous year for a consideration of less than the value adopted or assessed or assessable by any authority of a State Government as per section 43CA or 50C of the Act.

Amendment in provisions of section 43CA and Section 56(2)(x) as per Finance Act,2021 was that- it is provided to increase the safe harbour from 10% to 20% under section 43CA for the period from 12th November 2020 to 30th June 2021 in respect of the only primary sale of residential units of value up to Rs. 2 crores. Also, relief by increasing the safe harbour from 10% to 20% was allowed to buyers of these residential unit’s u/s 56(2)(x) for the same period.

Changes for the same thing are incorporated in Form 3CD from AY 2021-22.

17 –

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 43CAor 50C, please

Details of property

Consideration received or accrued

Value adopted or assessed or assessable

Whether provisions of second proviso to sub- section (1) of section 43CA or fourth proviso to clause (x) of sub-section (2) of section 56 applicable?

[Yes/No]

Clause 18(ca)

Clause 18(ca) has been introduced in the Form 3CD for the AY 2020-21 and was valid for AY 2021-22 only. Clause had been inserted for reporting any adjustments made in WDV of the block of assets if lower tax regime under section 115BAA is exercised by the assessee.

The new regime of section 115BAC and section 115BAD are applicable from AY 2021-22.

The same needs to be incorporated in the Tax Audit Report as in these cases also additional depreciation is not allowed and hence requires adjustment in WDV of the block of assets.

18(ca) –

Adjustment made to the written down value under section 115BAC/115BAD (for assessment year 2021-2022 only)

Clause 18

Amendment of section 32 provides refusal of depreciation on goodwill. The block which has goodwill as an asset has to be modified and depreciation on such goodwill as appearing in that block at Opening WDV (1.4.2020) shall not be claimed from AY 2021-22. Such value of goodwill will be excluded from the block.

Such adjustment is to be made to WDV of Intangible asset due to excluding value of goodwill of a business or profession.

(cb) –

Adjustment made to written down value of Intangible asset due to excluding value of goodwill of a business or profession

Clause 32

The new tax regime under section 115BAA, section 115BAC and section 115BAD does not allow some specific deductions. If the option under these provisions is used then the brought forward losses need to be modified to the extent they are related to such restricted disallowed deductions.

Clause 32 of the Form 3CD is also amended to include section 115BAC and section 115BAD in the reporting requirement.

(a)Details of brought forward loss or depreciation allowance, in the following manner, to the extent available:

Serial Number

Assessment Year

Nature of loss/allowance (in Rs.)

Amount as returned* (in rupees)

All losses/allowances not allowed under section 115BAA/ 115BAC/115BAD

Amount as adjusted by withdrawal of additional depreciation on account of opting for taxation under section 115BAC/115BAD^

Amount as assessed

Remarks

*If the assessed depreciation is less and no appeal pending then take assessed.

^To be filled in for assessment year 2021-2022 only.

Clause 36

Amendment as per Finance Act 2020 – Abolishing of Dividend Distribution Tax (DDT). Everything goes back to the original system of taxation of dividend income in the hands of the shareholders. Therefore, the companies are now not required to pay any dividend distribution tax from FY 2020-21.

These changes are now incorporated in Form 3CD by omitting the Clause 36 in the Form 3CD.

From now onwards no reporting is required in Form 3CD for DDT.

(v) clause 36 shall be omitted.

 
 

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