MSME Reporting in 3CB-CD

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PROFESSIONAL ADEPT (Querist)
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22 April 2025 Would like to know how to report in 3CB where we have not obtained the details of MSME disallowance as the client has not provided us the details of whom are MSME traders /manufactures as a result of which no disallowance is made

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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12 August 2025 In Form 3CB-3CD reporting, disclosure of MSME payments and disallowances under Section 23 of the MSMED Act is mandatory if applicable. But if the client has not provided MSME details (like names, amounts, etc.), you can follow this approach:

How to Report MSME in 3CB-CD When No Details Are Available
State the Situation Clearly in the Auditor’s Report / Annexure (Form 3CD)
In the relevant clause about MSME disclosures (Clause 24(vii) of Form 3CD), mention explicitly:

"The client has not provided the details of payments made to Micro, Small, and Medium Enterprises (MSME) as required under the MSMED Act. Consequently, no disallowance under Section 23 of the MSMED Act has been made."

Ensure Management Representation
Obtain a written representation or declaration from the management stating:

They have not maintained or provided MSME-related details,

No such MSME payments information is available,

They are aware of the legal requirements but unable to furnish data.

Impact on Audit Opinion
Usually, this qualifies as a scope limitation.

If material, consider adding an emphasis of matter or qualification paragraph in your audit report explaining the limitation.

If immaterial, you can disclose in Form 3CD only.

No Disallowance
Since disallowance depends on MSME details (which are not provided), no disallowance can be made. Mention this explicitly.

Sample Disclosure in Form 3CD (Clause 24(vii))
"Details regarding dues to Micro, Small, and Medium Enterprises (MSMEs) under the MSMED Act have not been provided by the client. Therefore, no disallowance under Section 23 has been made."

Summary
Report truthfully about missing info.

Get management’s written confirmation.

Disclose limitation in your audit report (if material).

No disallowance can be done without data.

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