CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018 It contains total 6 Amendments and 10 Insertions, bringing in total 16 changes.
CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018 Sl. 3CD Point No. Remarks 1 4 (amended) GSTIN to be mentioned. 2 19 (amended) Allowances under Section 32AD to be reported 3 24 (amended) Deemed gains u/s 32AD to be reported. 26 (amended) Reporting of any sum payable to Railways u/s 43B(g) which 4 is not allowable as deduction for non-payment. Reporting of amount chargeable u/s 56(2)(ix) as ‘income 5 29A (new) from other sources’ Reporting of amount chargeable u/s 56(2)(x) as ‘income from 6 29B (new) other sources’
CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018 Sl. 3CD Point No. Remarks Reporting details of Primary Adjustments to Transfer Price 7 30A (new) u/s 92CE(1) Reporting details of interest expenditure incurred 8 30B (new) exceeding one crore rupees as referred u/s 94B(1) Reporting details of impermissible avoidance 9 30C (new) arrangements, as referred to in section 96 31(ba), 31(bb), Reporting details of each cash receipt or payment in excess 10 31(bc), 31(bd) of the limit specified u/s 269ST (new) 31(c), 31(d), 11 31(e) (amended) Clauses amended.
CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018 3CD Point Sl. Remarks No. 34(b) Reporting details of transactions not disclosed in TDS/ TCS 12 (amended) Returns 13 36A (new) Reporting details of any dividend receipts u/s 2(22)(e) Reporting details of transactions not disclosed/ specified in 14 42 (new) Form No. 61/ 61A/ 61B Reporting whether assessee or its parent entity or alternate 15 43 (new) reporting entity is liable to furnish the report (CbCR) u/s 286(2) Reporting Break-up of total expenditure into expenditure with 16 44 (new) registered or not registered entities under the GST
Clau ause e 4 • Whether the assesse is liable to pay indirect tax like excise duty, service tax, sales tax, Goods & Service Tax, customs duty, etc. if yes, please furnish the registration number or GST number or any other identification number allotted for the same .
Clau ause e 4 • Since Goods and Services Tax has come into force from 1st July, 2017, the GST registration is also added to the list of indirect tax registrations to be disclosed. Thus, GSTIN needs to be mentioned in this field now. • This is a simple requirement and should not cause any problems while reporting.
Clau ause e 4 • Issue: • What if the assessee is required to pay GST, but not registered? • (The Clause begins with “whether the assessee is liable to pay indirect tax … ?) • Also, at present, The Tax audit report cannot be uploaded if “Yes” is selected but no regn number ( as not registered)
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given A new clause has been inserted which will affect all entities irrespective of whether they are registered under GST or not. The following information needs to be given: i. Total amount of Expenditure incurred during the year. ii. Expenditure in respect of entities registered under GST: a. Relating to goods or services exempt from GST. b. Relating to entities falling under composition scheme. c. Relating to other registered entities. d. Total payment to registered entities. iii. Expenditure relating to entities not registered under GST.
Clau ause e 44 Break-up of total expenditure of entities registered or not registered under the GST: Sl. Total Expenditure in respect of entities registered Expenditur No. amount under GST e of relating to Expenditur entities not e registered incurred under GST during the year Relating Relating to Relating Total to goods entities to payment or falling under other to services composition registered registered exempt scheme entities entitites from GST
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given With this clause, the government has clearly made its intention known as regards reliance on data analytics. There is a very visible thrust on matching the data available with the various tax wings of the Finance Ministry. The intent of the government in tracking and punishing tax evaders is obvious. One has to be extremely careful while submitting the information under this clause.
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given Issues: Information sought under clause 44 is already part of Annual return under GST which is to be filed along with the reconciliation statement. Due date for furnishing the Annual Return of GST is 31 st December and is later than the date of filing of Tax Audit Report. Reconciliation statement under GST is a much better tool to ensure the correctness of data to be reported under Clause 44. This is because such reconciliation statement starts with figures as per audited accounts and reaches the figures as per the GST annual return. It is advisable that such details are certified by GST Auditor as part of the reconciliation statement which is already provided under CGST Act, 2017.
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given Issues: Tax auditor may have limited time as well as knowledge of GST. What kind of data mining if at all, will be possible is not clear.
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given Issues: Every expenditure may not necessarily lead to a supply under GST. As an example, salary expense is treated as neither supply of goods nor supply of services as per Entry No. 1 of Schedule III to the CGST Act, 2017. Another instance can be of capital goods wherein only depreciation forms part of the expenditure whereas input tax credit is claimed on entire purchase. Hence it is very difficult to provide break- up for “total expenditure” into GST and non- GST expenditure without doing perfect reconciliation.
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given Issues: Accounting system at many small and medium enterprises is not geared for pulling out such information since the said requirement has been announced after the end of the year.
Clau ause e 44 Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given Issues: Seeking the quantum of total payments made to the registered entities may create confusion since the expenditure is recorded on accrual basis. Such information is also very difficult to obtain. [Payment includes “credit entries” or not? ] The data of import of goods/services is to be shown in the field “Expenditure relating to entities not registered under GST. This may create illogical picture.
Clau ause e 29b Whether any amount is to be included as income chargeable under the head income from other sources’ as referred to in clause(x) of sub section (2) of section 56? (b) If yes, furnish the following details: (i) Nature of income
Section – 56(2)(x): where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017, — ( a ) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; ( b ) any immovable property, — ( A ) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; ( B ) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:
Section – 56(2)(x): ( c ) any property, other than immovable property, — ( A ) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; ( B ) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration.
Section – 56(2)(x): Exceptions: any sum of money or any property received; 1. from any Relative 2. on the occasion of the marriage of the individual 3. at contemplation of death of the payer 4. under a Will / inheritance 5. from local authority w/o consideration 6. from fund/university 7. from trust recognized u/s 12AA
Clau ause e 29b Relevant Issues This clause refers to report, if any, amount to be included as taxable. So exempt gift need not required to be reported. However, as per Income Tax Return e-filing schema, the details of exempt gift received is also required to be disclosed.
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