Tax audit clause 43 b

This query is : Resolved

POOJA BILAKHIA (Querist)
Follow

23 February 2013 Please guide me....one of my clients has not applied for Service Tax No only though his gross receipts are far more....he is a labour contractor supplying labour for painting work n all on contract basis....do i need to report in his Tax audit report that he has not applied for service tax registration ? In clause 43 B ? or in any other clause ? please tell me....

@VaibhavJ

@VaibhavJ (Expert)
Follow

23 February 2013 Hi,

You can not report u/s 43B, since it is mainly for allowability of deduction for tax & other statutory payment made.

Thanks!!

POOJA BILAKHIA

POOJA BILAKHIA (Querist)
Follow

25 February 2013 Thank u so much ....but yes then wer do we need to report in tax audit ? under which clause then ? or not to report at all ? please guide me

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

26 July 2025 Regarding your query on **reporting non-registration under Service Tax in Tax Audit report**:

---

### 1. **Clause 43B of Form 3CD:**

* Clause 43B deals with **deductions allowed only on actual payment of certain expenses** like tax, duty, cess, provident fund, etc., if not paid by due date.
* It is **not for reporting non-registration** or non-compliance related to indirect taxes like Service Tax.

---

### 2. **Where to report non-registration under Service Tax in Tax Audit?**

* **There is no specific clause in Form 3CD** that requires reporting about Service Tax registration status or compliance.
* Tax Audit under Income Tax Act primarily focuses on income tax-related matters.
* Non-registration under Service Tax is a matter of indirect tax compliance and usually dealt with under Service Tax laws, not Income Tax audit.

---

### 3. **What should you do?**

* You **may note this non-compliance as an observation or qualification** in the **audit report** (the CA’s tax audit report, not in Form 3CD).
* Alternatively, you can **advise your client to get registered for Service Tax** as per Service Tax rules, to avoid penalties.
* It is good professional practice to **mention material non-compliance** affecting the business in the audit report under “**Other Remarks**” or similar section.

---

### **Summary:**

| Issue | Reporting in Tax Audit |
| ---------------------------------- | ------------------------------------------------------------------- |
| Non-registration under Service Tax | **Not reported under Clause 43B or Form 3CD** |
| Reporting under Income Tax Audit | Mention as observation or qualification in audit report if material |

---

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now