Friday, August 1, 2014

New Form No. 3CD - Important changes

The CBDT has notified new Form No. 3CD prescribing some new clauses and substituting some existing clauses  requiring the  tax auditors to furnish more and detailed information . The new Form 3CD requires reporting of all disallowable payments even if they are not debited to profit and loss account. The additional/amended reporting as prescribed in the new Form No. 3CD are as under:

Registration number in case of indirect tax liability [clause 4]:

To  furnish the registration No(s). if Assessee is liable to pay indirect taxes (like excise duty, service tax, sales tax, customs duty, etc.) or any other identification number allotted .

Relevant clauses of section 44AB , under which audit has been conducted to be reported. [clause 8]

Address at which books of account are kept  to be reported. [clause 11(b)]

Nature of documents examined by the tax auditor,to be specified. [clause 11(c) ]

Change in method of accounting/stock valuation [clause 13 and  14]:

 The impact on financial statements to be reported for the changes in method of accounting and method of stock valuation.

Transfer of land/building for less than stamp duty value [clause 17]:

The details of land or building transferred by assessee for less than stamp duty value (under section 43CA or under section 50C) to be reported .

To Report deduction under Sections 32AC/35AD/35CCC/35D[clause 19].

Disallowances even if they are not debited to profit and loss account [clause 21 ] to be reported for  the following disallowable payments:


Disallowance for TDS default under Section 40(a)


Disallowance for cash payments above Rs. 20000 under section 40A(3)


Disallowance for provision for gratuity under section 40A(7)


Disallowance under Section 40A(9)


Particulars of any liability of a contingent nature


Amount of deduction inadmissible under section 14A wrt expenses on exempt incomes.


Interest inadmissible under the proviso to section 36(1)(iii)


Deemed income under Section 32AC Investment Allowance [clause 24 ]:

To report  deemed income which results from sale or transfer of new asset, (if asset was acquired and installed by the assessee for the purpose of claiming deductions under Section 32AC) within a period of five years from the date of its installation.

Receipt of unlisted shares [clause 28]:

To report all unlisted shares received by assessee either for inadequate consideration or without consideration in view of section 56(2)(viia).

Issue of shares above fair market value [clause 29]:

To report  all transactions of issue of shares where consideration received by assessee exceeds its fair market value in view of section 56(2)(viib).

Speculation business losses as referred to in Section 73 [clause 32(c)]

Losses incurred as referred to in Section 73A from business specified under section 35AD to be reported. [clause 32(d)]

To Reporting deductions claimed under Sections 10A/10AA [clause 33]:

Compliance with TCS (Tax collected at source) provisions in addition to TDS provisions. [clause 34(a)]

To report on the Timely Filing of TDS and TCS Returns. [clause 34(b)]

TAN no. of Assessee-in-default if  liable to pay interest, the interest payable and interest actually paid under Section 201(1A) or 206C(7) to be reported [clause 34(c) ].

Dividend Distribution Tax [clause 36 ]:

To report the following reductions as referred to in Section 115-O(1A):


Dividend received by domestic company from its subsidiary, and

The amount of dividend paid to any person for or on behalf of the New Pension System Trust referred to in Section 10(44).


Cost Audits Service Tax Audit Qualification [clause 37,38 and 39]:


Cost audit:  The attachment of copy of cost audit report along with Form has been substituted with reporting only the qualifications in cost audit report BUT even when audit cost was carried out voluntarily..

Cost Audit under Central Excise Act : The attachment of copy of cost audit report along with Form has been substituted with reporting of qualifications in cost audit report .

Special Audit under Service Tax(If any service-tax audit is carried out in relation to valuation of taxable services): To report any qualifications made in relation to valuation of taxable services.


Comparative Ratios [clause 40].:

To report total turnover and ratios of preceding financial year as well in addition to  current year figures ,

Demand raised or refund issued under any other tax laws (other than Income Tax Act, 1961 and Wealth Tax Act, 1957): [clause 41] to be reported along with details of relevant proceedings.

Contributed by CA Sarthak Ahuja