CBDT Amends Tax Audit Report (Form 3CD) with Key Changes Effective 1st April 2025

The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Eighth Amendment) Rules, 2025 via Notification No. 23/2025, introducing significant modifications to Form 3CD, the tax audit report required under Section 44AB of the Income-tax Act, 1961. These changes will come into effect from April 1, 2025, impacting businesses and tax professionals.

Key Amendments to Form 3CD

1. Insertion of Clause 44BBC in Clause (12)

• The amendment adds "44BBC" in Part B, Clause (12) of Form 3CD, ensuring comprehensive reporting for taxpayers.

Omission of Specific Deductions in Clause (19)

The following deduction-related rows have been removed:

• Section 32AC (Investment in new plant & machinery)
• Section 32AD (Investment in backward areas)
• Section 35AC (Expenditure on eligible projects)
• Section 35CCB (Agro-based programs)

New Reporting Requirement in Clause (21)

• Taxpayers must now report expenditures related to settlements for contraventions of laws as notified by the Central Government.

Revised MSME Payment Reporting in Clause (22)

A detailed disclosure on payments to Micro and Small Enterprises under the MSMED Act, 2006, including:

• Interest inadmissible under Section 23
• Total amount payable to MSMEs under Section 15
• Breakup of timely and delayed payments

Modifications in Clause (26) - Deduction Under Section 43B

• Clarifications in language and adjustments in reference to different clauses under Section 43B.

Omission of Clauses (28) & (29)

• These clauses have been removed, simplifying the tax audit reporting structure.

Changes in Loan and Deposit Reporting in Clause (31)

• Introduction of a drop-down selection for reporting the nature of loan or deposit transactions.
• New coding system for different transaction types, including cash payments, receipts, asset transfers, journal entries, and more.

New Clause 36B: Reporting Buyback of Shares

A new clause (36B) requires taxpayers to disclose details of buyback of shares under Section 2(22)(f), including:

• Amount received from the buyback
• Cost of acquisition of shares

With these amendments taking effect from April 1, 2025, businesses and tax professionals should review their audit procedures and ensure compliance with the updated Form 3CD reporting norms.

Official copy of the notification has been attached