Tax Audit - Insertion of Additional Depreciation in Form 3CD
This query is : Resolved
17 September 2025
Additional depreciation @20% for plant & machinery acquired during the year is allowed for a company engaged in manufacturing activity. Please help how to include such additional depreciation in Clause18 of Form 3CD?
17 September 2025
As per recent CBDT clarification, while reporting under Clause 18(e) in Form 3CD, additional depreciation admissible under Section 32(1)(iia) should be distinctly disclosed, or a note be made if not considered, depending on the assessment year and audit requirements.
Auditors are expected to check compliance, run eligibility checks and comment if any divergence from law or practical issues exist in the claim.
By itemizing both regular and additional depreciation in Clause 18, and including explanatory notes where necessary, tax audit requirements will be fully met for companies claiming additional depreciation on plant and machinery acquired and put to use during the reporting year.
Auditors are expected to check compliance, run eligibility checks and comment if any divergence from law or practical issues exist in the claim.
By itemizing both regular and additional depreciation in Clause 18, and including explanatory notes where necessary, tax audit requirements will be fully met for companies claiming additional depreciation on plant and machinery acquired and put to use during the reporting year.
17 September 2025
How to Include Additional Depreciation in Clause 18
Particulars to Be Reported: Clause 18 of Form 3CD requires reporting depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets. This includes both normal and additional depreciation for eligible assets such as new plant and machinery used in manufacturing activities.
Separate Disclosure: Additional depreciation under Section 32(1)(iia) should be computed and disclosed distinctly alongside regular depreciation for each relevant asset/block. The details provided should include the rate, amount, and the basis for eligibility (such as use in manufacturing and date of acquisition).
Reporting in Tabular Form: In the annexure to Form 3CD for Clause 18, provide a tabular summary that shows:
Description of asset/block
Rate of normal depreciation
Normal depreciation allowed
Additional depreciation allowed (mention rate, e.g., 20%)
Total depreciation claimed during the year
Audit Notes: If required, supplementary notes should be appended clarifying the eligibility basis for the additional depreciation claimed, particularly for assets used less than 180 days (where only 10% claimable in the first year and balance in the next).
Particulars to Be Reported: Clause 18 of Form 3CD requires reporting depreciation allowable as per the Income-tax Act, 1961 in respect of each asset or block of assets. This includes both normal and additional depreciation for eligible assets such as new plant and machinery used in manufacturing activities.
Separate Disclosure: Additional depreciation under Section 32(1)(iia) should be computed and disclosed distinctly alongside regular depreciation for each relevant asset/block. The details provided should include the rate, amount, and the basis for eligibility (such as use in manufacturing and date of acquisition).
Reporting in Tabular Form: In the annexure to Form 3CD for Clause 18, provide a tabular summary that shows:
Description of asset/block
Rate of normal depreciation
Normal depreciation allowed
Additional depreciation allowed (mention rate, e.g., 20%)
Total depreciation claimed during the year
Audit Notes: If required, supplementary notes should be appended clarifying the eligibility basis for the additional depreciation claimed, particularly for assets used less than 180 days (where only 10% claimable in the first year and balance in the next).
17 September 2025
Thank you Sir for your valuable guidance.
However Sir my query was how to include additional depreciation @20% against plant & machinery block (15%) in Clause 18 of Form 3CD through e-filing utility?
However Sir my query was how to include additional depreciation @20% against plant & machinery block (15%) in Clause 18 of Form 3CD through e-filing utility?
17 September 2025
Additional depreciation (20%) is only allowed in the year the new plant & machinery is first put to use.
Do not mix normal and additional depreciation in Clause 18; strictly follow e-filing utility’s fields and reporting conventions.
Add a note in the “Remarks” or upload section to clarify the breakup and basis for claiming the additional depreciation under Section 32(1)(iia).
Do not mix normal and additional depreciation in Clause 18; strictly follow e-filing utility’s fields and reporting conventions.
Add a note in the “Remarks” or upload section to clarify the breakup and basis for claiming the additional depreciation under Section 32(1)(iia).
17 September 2025
Enter the plant & machinery block under the prescribed 15% rate in the schedule for Clause 18 (Depreciation) in Form 3CD, as per the Income Tax Act.
Do not directly include the additional depreciation (20%) in the same field; the utility and audit guidelines specify only normal depreciation should be fielded here.
To claim the additional depreciation, upload a supporting working or provide a specific disclosure/note, referencing Section 32(1)(iia) and providing clear breakup and justification as an annexure in the e-filing utility.
Do not directly include the additional depreciation (20%) in the same field; the utility and audit guidelines specify only normal depreciation should be fielded here.
To claim the additional depreciation, upload a supporting working or provide a specific disclosure/note, referencing Section 32(1)(iia) and providing clear breakup and justification as an annexure in the e-filing utility.
17 September 2025
Refer:: https://lunawat.com/Uploaded_Files/Attachments/F_21327.pdf
https://www.taxmann.com/post/blog/analysis-cbdt-updates-the-tax-audit-report-in-form-no-3cd-effective-from-05-03-2024/
https://www.taxmann.com/post/blog/analysis-cbdt-updates-the-tax-audit-report-in-form-no-3cd-effective-from-05-03-2024/
17 September 2025
Thank you Sir for your valuable guidance.
17 September 2025
You are welcome.
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