Clause 27 of tax audit

good afternoon

good afternoon I just wanted to know if we are filling the figures in clause 44 regarding GST expenditure.

is it mandatory to fill clause 27.

please help.
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Quick Summary
This discussion clarifies the mandatory nature of Clause 27 in tax audit reports, particularly in relation to Clause 44 for the assessment year 2023-24. According to ICAI guidance, Clause 27, which details Modified Value Added Tax (MVAT) credits and GST payments, is applicable from AY 2018-19 onwards. Clause 44 requires a breakdown of expenditure based on GST registration status, aiming to reconcile accounts with GST returns. Reporting under Clause 27 is specifically relevant for entities dealing with products like petroleum and tobacco, as central excise duty has been subsumed into GST for most goods and services.

According to the guidance note issued by the Institute of Chartered Accountants of India (ICAI) on tax audit under section 44AB of the Income Tax Act, 1961, clause 27 of Form 3CD is applicable only for the assessment year 2018-19 and onwards. Therefore, if you are filing the tax audit report for the assessment year 2023-24, you are required to fill clause 27 along with clause 44.

Clause 27 requires the reporting of the amount of modified value added tax credits (MVAT) availed of or utilised during the previous year and its treatment in the profit and loss account. MVAT refers to the input tax credit of central excise duty, service tax, value added tax, entry tax, etc. that is available for set-off against the output GST liability. Clause 27 also requires the reporting of the amount of GST paid/payable in cash and through input tax credit as per the GST returns filed during the previous year.

Clause 44 requires the reporting of the break-up of the total expenditure of entities registered or not registered under the GST. It also requires the reporting of the expenditure relating to goods or services exempt from GST, expenditure relating to entities falling under the composition scheme, and expenditure relating to other registered entities. The purpose of this clause is to ensure the reconciliation of the expenditure reported in the books of accounts and the GST returns.

According to the guidance note issued by the Institute of Chartered Accountants of India (ICAI) on tax audit under section 44AB of the Income Tax Act, 1961, It is pertinent to note that since implementation of GST from July 1, 2017, central excise duty has been subsumed in GST and is leviable only on six products viz. petroleum crude, diesel, petrol, aviation turbine fuel, natural
gas and tobacco. Hence, reporting under this clause is restricted for only those assessees who deal in these products. 

~CA Deepak Jaisinghani

Twitter-iamdeepak_js

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