CLAUSE WISE SUMMARY OF FORM 3CD

S.NO

Particulars

Comments

1.

Name of the assessee

These are the basic details included for identification of the assessee. It may be noted that if the audit is in respect of a branch, name and address of such would need to be mentioned.

2.

Address

3.

Permanent Account Number (PAN) branch should be mentioned along with the name of the assessee.

4.

Whether the assessee is liable to pay indirect taxes like excise duty, service tax, goods ans service tax, custom duty etc. if yes please furnish the registration number, Gst number or any other identification number allotted for the same

The registration number with the respective tax authorities need to be entered in this clause.

5.

Status

This refers to the different classes of assesses included in the Act- individual, Hindu Undivided Family, company, firm (including LLP), Association of Person (AOP), Body of Individual (BOI), local authority and artificial juridical person.

6.

Previous year from ----- to ------

This related to the financial year pertaining to audit. The period is typically from 1^st April to 31^st March of the next year but care has to be taken in case of closure of business, new business, amalgamations, demerger etc.

7.

Assessment Year

This related to the relevant assessment year pertaining to the audit.

8.

Indicate the relevant clause of section 44AB under which the tax audit has been conducted

The applicable clause ((a) to (e)) of section 44AB under which tax audit is being conducted should be selected.

9.

(a)

If Firm or association of persons, indicate name of partners/ members and their profit sharing ratio.

The name of the partners or members of firm or AOP will be covered here. In case of a person is in a representative capacity, then the name of the beneficial partner/ member should be mentioned. Further, profit sharing ration includes the ratio at which losses should be shared.

(b)

If there is any change in the partners or members or in their profit sharing ratio since the last date of the preceding year, the particulars of such change.

All changes that occur during the year, no matter how often, must be mentioned

10.

(a)

Nature of business or profession (if more than one business or profession is carried on during the previous year, nature of every business or profession)

The assessee will have to select the business code applicable to him from the list provided. If there are any changes in the nature of business or profession to be carried out, the same needs to be mentioned. Temporary discontinuance of business need not to be mentioned.

(b)

If there is a change in the nature of business or profession, the particulars of such change

11

(a)

Whether books of accounts maintained and the address at which the books of accounts are kept

Every person, upon crossing a specified limit of turnover, needs to compulsorily maintain certain books of accounts as prescribed like cash book, journal, ledger etc. Further, certain specified professionals have additional records prescribed that they must maintain. The tax auditor list the books and records that were checked by him.

(b)

List of books of accounts maintained and the address at which the books of account are kept

(c)

List of books of accounts and nature of relevant documents examined

12.

Whether the profit or loss account includes any profit and gains assessable om presumptive basis, indicate the amount and the relevant section

The amount of profit that related to a business subject to presumptive basis of taxation must be reported in this clause. In case of multiple businesses, only the amount of profit that relates to the businesses subject to presumptive scheme of taxation will be reported section wise.

13.

(a)

Method of accounting employed in the previous year

The method of accounting, whether cash or mercantile must be mentioned. Companies however are compulsorily required to maintain their accounts on accrual or mercantile basis as per the companies act.

(b)

Whether there had been any change in the method of accounting vis-à-vis the method employed in the previous year

(c)

If the answer to (b) is yes give details of such changes, and the effect thereof on the profit or loss account.

(d)

Whether any adjustment is required to be made to the profit or loss for complying with the provisions of income computation and disclosure standards notified under section 145(2)

The income tax act has prescribed certain Income computation and disclosure standard (ICDS) ranging from ICDS I to ICDS X. The effect of these ICDS must be taken into computation of tax to arrive at the net tax liability- the increase in profit, decrease in profit and net effect is to be mentioned for each ICDS.

(e)

If answer to (d) is in affirmative, give details of such adjustments

(f)

Disclosures as per ICDS

The ICDS also contain certain disclosure requirements and this is the clause under which such disclosure are ultimately made.

14.

(a)

Method of valuation of closing stock employed in the previous year

This method of accounting would be on the basis of the method of accounting regularly employed by the assessee subject to certain prescribed adjustments on account of tax, duty, cess etc. incurred in procuring the inventory.

(b)

In case of deviation from the method of valuation as prescribed under section 145A, and the effect thereof on the profit and loss account.

15.

Give the following particular of assets converted into stock-in-trade

Generally, an asset held as capital asset would attract income under the head capital gains at time of sale and an asset held as stock-in-trade would attract income under the head PGBP. When assessee decides to treat a capital asset as stock in trade, it is treated as a transfer and will attract capital gains.

(a)

Description of Capital Asset

(b)

Date of acquisition

(c)

Cost of acquisition

(d)

Amount at which the asset is converted into stock-in-trade

16.

Amount not credited to the profit and loss account, being-

Section 28 is the charging section for the income under the head “profits and gains of business or profession”. This clause intends to capture and report those incomes which ordinarily wouldn’t be a business income but is deemed to be business income by virtue of income tax act.

(a)

The items falling within the scope of section 28

(b)

The proforma credits, drawbacks, refund of duty or excise or sales tax where such credits, drawbacks, or refunds are admitted as due by the authorities concerned

(c)

Escalation claims accepted during the previous year

(d)

Any other item of income

(e)

Capital receipt, if any

17.

Where any land or building or both is transferred during the previous year for a consideration less than the value adopted or assessable by any authority of the State Government referred to in section 43CA or 50C, please furnish details of property, consideration received or accrued and value adopted or assessed or assessable

If the sales consideration of an immoveable property is less than the stamp duty value of such property, the stamp duty value shall be deemed to be the sale consideration for the purpose of computing  capital gains thereon where such property is held as capital gain and where such property is held as stock-in-trade, the stamp duty value shall be taken as income/ sales value to be considered under the business head of income. This clause aims to check compliance in this regard.

18.

Particulars of depreciation allowable as per Income Tax Act, 1961 in respect of each asset or block of asset, as the case maybe, in the following form

The Income Tax Act prescribes depreciation to be charged as per “block of assets system” subject to certain conditions. This clause checks that the depreciation has been arrived at correctly

(a)

Depreciation of asset/ block of assets

(b)

Rate of depreciation

(c)

Actual cost of written down value, as the case may be

(d)

Additions/ deductions during the year with dates, in case of additions of any asset, date of put to use including adjustments

(e)

Depreciation allowable

(f)

Written down value at the year end

19.

Amounts admissible under section 32AC, 32AD, 33AB, 33ABA, 35(1)(i), 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABB, 35AC, 35AD, 35CCA, 35CCB, 35CCC, 35CCB, 35D, 35DD, 35DDA, 35E

These section allows for special deductions for prescribed businesses. The tax auditor checks whether the assessee has compiled with all the necessary conditions to claim a deduction under these sections. Some of these sections may require a certificate by a Chartered Accountant certifying the eligibility.

20.

(a)

Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividends

The assessee would be allowed a deduction in respect of payment made to an employee in the nature of a bonus of commission only if such bonus or commission was available exclusively to such employee in relation to services rendered by him.

(b)

Details of contribution received from employees for various funds as referred to in Section 36(1)(va)

These funds include superannuation funds created for the benefits of the employee. The contributions made by the employer to such funds shall be allowed as a deduction only if they are made within the due date as specified in the applicable law.

21

(a)

Please furnish the details of amounts debited to profit and loss account, being in the nature of capital, personal, advertisement, expenditure etc.

The nature of these expenses are such that they may either be fully disallowed or only allowed subject to certain conditions. If they form a part of the profit and loss account, they have to be disclosed here.

(b)

Amounts inadmissible under Section 40(a)(i), 40(a)(ia), 40(a)(ic), 40(a)(iia), 40(a)(iib), 40(a)(iii), 40(a)(iv), 40(a)(v)

These sections broadly relate to disallowance made in respect of an expenditure or a part of an expenditure where tax was required to be deducted at source but the assessee failed to do so

(c)

Amount debited to profit and loss account being, interest, salary, bonus, commission or remuneration inadmissible under section 40(b)/ 40(ba) and computation thereof

This is applicable to firm, AOP or BOI assesses where payments are made to partners/ members in the nature of salary, remuneration, interest etc. The act has prescribed certain limits upto which such expenditure can be allowed in the hands of Firm/ AOP/ BOI and if the expenditure exceeds the limit, the same is not allowed as deduction.

(d)

Disallowance/ deemed income under Section 40A(3)

This section places a disallowance on any expenditure incurred by any mode other than an account payee cheque/ bank draft or through a bank account using ECS if they exceeds Rs. 10,000 in a day subject to certain exceptions

(e)

Provision for payment of gratuity not allowable under Section 40A(7)

The deduction under this section is allowed in relation to a provision created for payment of contribution to an approved gratuity fund only if such sum is actually payable during the year.

(f)

Any sum paid by the assessee as an employer not allowable under Section 40A(9)

Any payment incurred by an employer towards setting up of any fund, trust, company, AOP, BOI, Society etc. will not be allowed as a deduction subject to certain exceptions.

(g)

Particulars of any liability of a contingent nature

Such a liability usually relates to ongoing legal disputes where it is not certain that there will be a liability for the assessee.

(h)

Amount of deduction inadmissible in terms of section 14A in respect of the expenditure incurred in relation to income which does not form part of total income

This section prescribes a method of calculation of an amount of expenditure which will be disallowed as it is deemed to be incurred towards earning exempt income.

(i)

Amount inadmissible under the provision to section 36(1)(iii)

Where the assessee borrows a loan for business purposes, the interest thereon would normally be allowed as a deduction. However, if such loan was used to acquire an asset, the interest shall not be allowed for the period between the date of borrowing of the loan to the date on which the asset was put to use.

22.

Amount of interest inadmissible under section 23 of Micro, Small and Medium Enterprises Development Act, 2006

The MSME act prescribes an amount of interest that would not be allowed as a deduction in the computation of taxable income of the assessee.

23.

Particulars of payments made to persons specified under Section 40A(2)(b)

This Section basically disallow expenditure incurred by way of payment to specified persons if the assessing officer finds them to be excessive in nature.

24.

Amounts deemed to be profits and gains under section 32AC or 32AD or 33AB or 33ABA or 33AC.

These sections allow for a special deduction to certain assesses subject to certain conditions. In case of breach of these conditions , the whole or the part which is allowed as deduction earlier will form part of the income.

25.

Any amount of profit chargeable to tax under section 41 and computation thereof

This section relates to deemed profits arising out of:

Where a deduction has been allowed in an earlier year in respect of an expenditure but the assessee has received some benefit whether by cash or by reduction in actual liability in the current year, such benefit will be chargeable to tax under this section.

Where an asset has been sold by an assessee engaged in the power generation and distribution of such sale consideration exceeds the written down value

Where an asset used in scientific research has been sold for a consideration greater than its original cost.

Where a bad debt that has been allowed earlier is subsequently recovered.

Where an amount has been withdrawn from a special reserve created by a financial company on which deduction was allowed earlier

26.

In respect of any sum referred to in clauses (a), (b), (c), (d), (e), (f), (g) of Section 43B, the liability for which: -

This section allows certain expenditure like cess, taxes, duties, interest to banks, etc. to be claimed only on actual payment of the same is made before the due date of filing the return for the respective assessment year.

(a)

Pre-existed on the first day of the previous year but was not allowed in the assessment of any preceding previous year and was (a) paid during the previous year; (b) not paid during the previous year

(b)

Was incurred during the previous year (a) paid on or before the due date of furnishing the return of income of the previous year under Section 139(1); (b) not paid on or before the aforesaid date

27.

(a)

Amount of Central Value Added Tax credits availed of or utilized during the previous year and its treatment in the profit and loss account and treatment of outstanding Central Value Added Tax credits in the accounts.

The details of the CENVAT credit carried forward from the previous year, its utilization and the balance left needs to be provided along with the treatment of the same in the accounts of the assessee.

(b)

Particulars of income or expenditure of prior credited or debited to the profit and loss account.

This clause would be relevant only for the persons following the mercantile system of accounting.

28.

Whether during the previous year the assessee has received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia), if yes, please furnish details of the same

Where the assessee receives certain shares of a Private Limited Company where the Fair Market value of such shares minus the amount paid to acquire such shares exceeds Rs. 50,000, such excess shall be chargeable to tax under the head “Income from other sources”. 

29.

Whether during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if yes please furnish details of the same

29A

(a)

Whether any amount is to be including in income chargeable under the head “income from other sources” as referred to in clause (ix) of sub section (2) of section 56? (Yes/ No)

Advances received in relation to transfer of a capital asset are shown as income from other sources where the advances are forfeited and capital asset is not ultimately transferred.

(b)

If Yes, please furnish the following: (i) Nature of Income (ii) Amount thereof

30.

Details of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque (section 69(D))

Hundi are financial instruments not recognized by formal law.

30A

(a)

Whether primary adjustment to transfer price, as referred to in sub-section (1) of 92CE, has been made during the previous year? (Yes/ No)

The Transfer Pricing provisions under the Income Tax Act in general aim to value transactions with associated enterprises at an arm’s length price. This clause aim to capture such relevant information within the tax audit report.

(b)

If yes, please furnish the following: (i) Under which clause of sub section (1) of 92CE primary adjustment is made? (ii) Amount (in Rs.) of primary adjustment (iii) Whether the excess money available with the associated enterprises is to be repatriated to India as per the provision of sub-section (2) of section 92CE? (Yes/ No) (iv) If yes, whether the excess money has been repatriated or not within the prescribed time (Yes/ No) (v) If no, the amount (in Rs.) of imputed interest income on such excess money which has not been repatriated within the prescribed time

30B.

(a)

Whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding one crore rupees as referred to in sub section (1) of section 94B? (Yes/ No)

Where an Indian company borrows money from its associated enterprise, the deduction in respect of interest on such money borrowed shall be limited to 30% of EBITDA. The remaining interest will be allowed to be carried forward and set off in subsequent years by complying with certain conditions.

(b)

If yes, please furnish the following: - (i) Amount of expenditure by way of interest or of similar nature incurred; (ii) Earnings before tax, interest, depreciation and amortization (EBITDA) during the previous year; (iii) Amount of expenditure by way if interest or of similar nature as per (i) above which exceeds 30% of EBITDA as per (ii) above; (iv) Details of interest expenditure brought forward as per sub section (4) of Section 94B; (v)Details of interest expenditure carried forward as per sub-section (4) of section 94B

30C

(a)

Whether the assessee has entered into an impermissible avoidance agreement, as referred to in Section 96, during the previous year? (Yes/ No)

An impermissible avoidance agreement would be an arrangement where the main purpose is to obtain a tax benefit and is not at arm’s length price, results in tax evasion, lacks commercial substance or is carried in a manner that does not otherwise occur if the arrangements was for bona fide purposes.

(b)

If yes, please specify: - (i) Nature of the impermissible avoidance agreement; (ii) Amount of tax benefit in the previous year arising, in aggregate to all parties to the arrangement

31

(a)

Particulars of each loan or deposit in an amount exceeding the limit specified in Section 269SS taken or accepted during the previous year: Name, address and PAN of the lender or depositor, Amount of loan or deposit taken or accepted, whether the same was taken or accepted by cheque or bank draft or use of ECS through a bank account.

Taking a loan or any amount in relation to an immoveable property (specified sums) exceeding Rs. 20,000 otherwise than by way of an account payee cheque or bank draft or use of a bank account through ECS would attract a penalty equal to the amount borrowed. Details of all loans or specified sums taken exceeding Rs. 20,000 are provided herein.

(b)

Particulars of each sum specified in an amount exceeding the limits specified in Section 269SS taken or accepted during the previous year: Name, address and PAN of the lender or depositor, Amount of loan or deposit taken or accepted, whether the same was taken or accepted by cheque or bank draft or use of ECS through a bank account.

(ba)

Particulars of each sum specified in an amount exceeding the limits specified in Section 269ST taken or accepted during the previous year: Name, address and PAN of the lender or depositor, Amount of loan or deposit taken or accepted, whether the same was taken or accepted by cheque or bank draft or use of ECS through a bank account.

Section 269ST says that a person is not allowed to receive more than Rs. 2 Lakhs from either: (i) from a person in a single day; (ii) in respect of transaction relating to a single event/ occasion; if such amount is paid through any mode other than account payee cheque or bank draft or use of a bank account through ECS.

(bb)

Particulars of each receipt in an amount exceeding the limits, in aggregate from a person in a day or in respect of a single transaction relating to one event or occasion from a person, received by a cheque or bank draft, not being an account payee cheque or an account payee demand draft, during the previous year: - (i) Name, address and Permanent Account Number of the payer; (ii) Amount of receipt

(bc)

Particulars of each payment made in an amount exceeding the limit specified in section 269ST, in aggregate to a person in a day or in respect of a single transaction to one event or occasion to a person otherwise than by a cheque or bank or demand draft or use of ECS through a bank account during the previous year:- (i) Name and address of the payee; (ii) Nature of transaction; (iii) Amount of payment; (iv) Date of payment

(bd)

Particulars of each payment made in an amount exceeding the limit specified in section 269ST, in aggregate to a person in a day or in respect of a single transaction to one event or occasion to a person made by a cheque or bank draft, not being an account payee cheque or an account payee demand draft, during the previous year: - (i) Name, address and Permanent Account Number of the payee; (ii) Amount of receipt

(c)

Particulars of each repayment of loan or deposit or any specified advance in an amount exceeding the limit specified in section 269T made during the previous year: Name, address, PAN(if available) of the payee, amount of repayment, maximum amount outstanding at any time during the previous year, whether the repayment was made by cheque or bank draft or use if ECS through a bank account.

Repayment of loan or any amount in relation to purchase of an immovable property (specified sums) exceeding Rs. 20,000 otherwise than by account payee cheque or bank draft or use of bank account through ECS would attract a penalty equal to the amount borrowed. Details of loan or specified sums paid exceeding Rs. 20,000 during the year are provided herein.

(d)

Particulars of repayment of loan or deposit or any specified advance in an amount exceeding the limit specified in section 269T received otherwise than by a cheque or bank draft or use of ECS through a bank: Name, address, PAN(if available) of the payer, amount of loan or deposit or any specified advance received otherwise than by a cheque or bank draft or use of ECS through a bank

(e)

Particulars of repayment of loan or deposit or any specified advance in an amount exceeding the limit specified in section 269T received by a cheque or bank draft which is not an account payee cheque or account payee demand draft during the previous year: Name, address, PAN(if available) of the payer, amount of loan or deposit or any specified advance received by a cheque or bank draft which is not an account payee cheque or account payee demand draft during the previous year

32.

(a)

Details of brought forward loss or depreciation allowance to the extent available

Such amounts need to be revised for any change arising out of a rectification order, assessment order, etc.

(b)

Whether a change in the shareholding of the company has taken place during the previous year due to which the losses incurred prior to previous year cannot be allowed to be carried forward in terms of Section 79

This provision is applicable to a Private Limited Company with the following exception:

Less than 51% of the voting power only has changed hands.

Change in shareholding is due to death of a shareholder.

Change in shareholding is due to shares gifted by a shareholder to a relative.

Where the holding company is a foreign company and the change in shareholding is due to amalgamation/ demerger where less than 51% of the shareholding has changed.

(c)

Whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, if yes, please furnish details of the same

A speculative loss cannot be set off against any income other than a speculative gain. Further, a loss in speculative business will be allowed to be carried forward for only 4 years.

(d)

Whether the assessee has incurred any loss referred to in section 73A in respect of any specified business during the previous year, if yes, please furnish details of the same

(e)

In case of company, please state that whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, provide details of speculation loss if any incurred during the previous year.

33.

Section wise details of deduction, if any, admissible under Chapter VIA or Chapter III (Section 10A, 10AA).

The tax auditor will have to verify whether the assessee has fulfilled the conditions necessary to claim the Section wise deductions

34.

(a)

Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB if yes, please furnish details

These sections broadly relate to compliances in respect of TDS payable on certain expenses. The tax auditor reports the expenditure on which tax was required to be deducted, whether such tax was actually deducted and paid to government on time and in case of failure the penalty and interest therein also.

(b)

Whether the assessee is required to furnish the statement of tax deducted or tax collected. If yes, please furnish the details

(c)

Whether the assessee is liable to pay interest under Section 201(1A) or Section 206C(7). If yes, please furnish the details

35.

(a)

In case of a trading concern, give quantitative details of principal items of goods traded: (i) Opening stock; (ii) Purchase during the year; (iii) Sales during the year; (iv) Closing Stock; (v) Shortage/ excess if any

The name of stock item and its unit of measurement would need to be provided.

(b)

In the case of a manufacturing company, give quantitative details of the principal items of raw materials, finished products and by products:

36.

In case of a domestic company, details of tax on distributed profits under Section 115-O in the following form:- (a) total amount of distributed profits; (b) Amount of reduction as referred to in Section 115-O(1A)(i); (c) Amount of reduction as referred to in Section 115-O(1A)(ii); (e) dates of payments with amounts

Where a domestic company has paid dividend to its shareholders, it is liable to pay dividend distribution tax thereon. The dividend also includes deemed dividend subject to certain conditions.

36A

Whether the assessee has received any amount in the nature of dividend as referred to in sub clause (e) of clause (22) of Section 2? (Yes/ No) (b) if yes, please furnish details: - (i) Amount received, (ii) Date of receipt

The provision of deemed dividend is applicable when a private limited company advances an amount to a shareholder having more than 10% voting power in the company subject to certain conditions.

37.

Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/ identified by cost auditor.

38.

Whether any audit was conducted under the Central Exise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/ identified by the auditor.

39.

Whether any audit was conducted under Section 72A of the Finance Act, 1944 in relation to valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/ identified by the auditor.

40.

Details regarding turnover, gross profits etc. for the previous year. 1. Total turnover 2. Gross profits/ turnover 3. Net Profit/ turnover 4. Stock in trade/ turnover 5. Material consumed/ finished goods produced

Calculation of such will be applicable in case of trading or manufacturing and not applicable in case of profession or service industry.

41.

Please furnish the details of demand raised or refund issued during the previous year under any tax laws other than Income Tax Act and Wealth Tax, 1957 along with details of the proceedings.

There are various taxes that assessee may be subject to and such acts have their own authority to pass an order for demand or refund. The details of such has to be provided under this.

42.

(a)

Whether the assessee is required to furnish statement in Form 61 or Form 61A or Form 61B? (Yes/ No)

The form mentioned in this clause relates to Specified Financial Transaction where reporting needs to be done in respect of certain prescribed transactions when they are entered into by such assessee as are prescribed in Section 285BA.

(b)

If yes, please furnish Income Tax Department Reporting Entity Identification Number, Type of form, Due date of furnishing (if furnished), whether the form contains information about all details/ transactions/ which are required to be reported. If not, please furnish list of the details/ transactions which are not reported. If not please furnish list of details/ transactions which are not reported

43

(a)

Whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub section (2) of Section 286 (Yes/ No)

The report mentioned in this clause relates to providing information in respect of the international group of entities of which the assessee is a part and where the parent entity of such international group is not resident in India.

(b)

If yes, please furnish the following details: (i) Whether report has been furnished by the assessee or its parent entity or an alternate reporting entity (ii) Name of parent entity (iii) Name of alternate reporting entity (if any) (iv) Date of furnishing of report

44.

Break up of total expenditure of entities registered or not registered under the GST

This Clause attempts to provide a break up of total expenditure into various points that are relevant from GST point of view like expenditure related to gst/ exempt/ composition etc.