Wednesday, March 6, 2024

Simplifying the New Tax Audit Report Changes for AY 2024-25

The Central Board of Direct Taxes (CBDT) has rolled out significant updates to the Form 3CD, a crucial component of tax audits, for the Assessment Year (AY) 2024-25. These amendments, made via the Income-tax (Fourth Amendment) Rules, 2024 dated 5th March 2024, aim to enhance compliance and transparency in tax reporting. In this article, we'll dive into these changes with an easy-to-understand explanation, including tabular comparisons for clarity. Our goal is to help you grasp these updates effortlessly.

Key Changes Explained

The modifications to the Form 3CD encompass several areas, ranging from the introduction of new tax sections to adjustments in loss and depreciation allowances. Here's a breakdown of the major changes and their implications:

  1. Inclusion of Section 115BAE

    • What Changed? A new section, 115BAE, has been added to the list of taxation options.

    • Why It Matters: This change integrates the concessional tax rate of 15% for new manufacturing cooperative societies, encouraging their formation and growth.

  2. Explicit Mention of Section 44ADA

    • What Changed? Section 44ADA is now specifically listed among the sections related to presumptive taxation.

    • Why It Matters: This ensures clearer reporting for professionals earning under presumptive taxation, fostering better compliance.

  3. Adjustment for Written Down Value in AY 2024-25

    • What Changed? A provision for a one-time adjustment to the written down value of assets has been added for AY 2024-25 under section 115BAC.

    • Why It Matters: This facilitates a smoother transition for taxpayers opting into the new tax regime, ensuring they're not unfairly penalized.

  4. Inclusion of Section 35ABA

    • What Changed? Section 35ABA is now explicitly included in the form.

    • Why It Matters: Corrects a previous omission, ensuring expenditures for telecom spectrum use rights are accurately reported, promoting fairness.

  5. Expansion of Prohibited Expenditures Scope

    • What Changed? The scope now includes expenditures violating any law, compounding offences, and unlawful benefits or perquisites.

    • Why It Matters: Broadens the understanding and reporting of inadmissible expenditures, emphasizing the importance of lawful operations.

  6. Correction in Deductions Under Section 40(a)

    • What Changed? The form now correctly asks for the payee's name and address, correcting a previous error.

    • Why It Matters: This correction ensures the accuracy of information regarding transactions subject to disallowance.

  7. Addition of Clause (h) in Section 43B

    • What Changed? Clause (h), relating to the disallowance of delayed payments to micro and small suppliers, is now included.

    • Why It Matters: Encourages timely payments to these suppliers, supporting small businesses.

  8. Adjustments for Loss and Depreciation for New Tax Regimes

    • What Changed? Adjustments under the new sections, including 115BAE, are now clearly defined.

    • Why It Matters: Ensures that taxpayers can accurately report adjustments when opting for new or existing tax regimes, aiding in precise tax calculations.

Tabular Overview for Clarity

To help you visualize some of these changes, here's a simplified tabular comparison for two key amendments:

ChangeBefore AmendmentAfter AmendmentReasoning
Inclusion of Section 115BAESections 115BA to 115BAD listed for taxation options.Section 115BAE added to the list.Reflects the introduction of a concessional tax rate for new manufacturing co-operative societies, as per the Finance Act, 2023.
Explicit Mention of Section 44ADASection 44ADA grouped under "any other relevant section".Section 44ADA specifically listed.Ensures clear reporting for professions under presumptive taxation, improving transparency and compliance.


The recent amendments to the Form 3CD for AY 2024-25 are aimed at making tax reporting more comprehensive and aligned with the latest tax regulations. By understanding these changes, taxpayers and professionals can ensure compliance and take advantage of any new benefits offered by the updated tax regime. Whether it's taking advantage of new tax sections or accurately reporting expenditures and adjustments, staying informed on these updates is key to effective tax planning and reporting.