RECENT AMENDMENTS IN TAX AUDIT REPORT CBDT has revised Form 3CD with effect from notification No. 33/2014 by introducing Income Tax Rules 2014 to increase the disclosure requirements of the company. The new Form 3CD prescribes certain new reporting clauses and substitutes some existing clauses with new ones. The new form requires tax auditor to furnish more comprehensive and detailed information in the new form for tax audit report. Changes have been made to link direct taxes with indirect taxes which will result in the common audit report for both. Due date for filing audit report under Sec 44 AB for FY 2013-14 has been extended to 30/11/2014.E-filling for these forms based on old formats has been withdrawn. With the motive to increase the Government revenue, the new Form 3CD requires reporting of all disallowable payments even if they are not debited to profit and loss account unlike old form 3CD which required auditor to report only those inadmissible payments which were debited to Profit and loss account.Some new clauses have been introduced and existing clauses renumbered in new audit report. Following are glimpse of amendments made in tax audit report:- INFORMATION REGARDING INDIRECT TAXES: Assesses liable to pay indirect taxes such as excise duty, service tax, custom duty, sales tax etc. are required to furnish his registration number or any other identification number allotted to them by competent authority [clause 4 of Part A]. CLAUSE OF SECTION 44AB UNDER WHICH TAX AUDIT IS SPECIFIED:The relevant clauses of section 44AB shall be reported under which audit has been conducted[clause 8 of Part A]. LOCATION AT WHICH BOOKS OF ACCOUNT ARE MAINTAINED: Address where books of accounts are kept has to be stated. If books of accounts are kept at more than one location, all such addresses have to be mentioned alongwith details of books of accounts maintained at each such location [clause 11(b)of Part B]. DOCUMENTS TO BE EXAMINED: Nature of the documents examined apart from books of accounts during audit has to be stated.[clause 11(c) of Part B]. SALE OR TRANSFER OF LAND AND BUILDING: Particulars about sale or transfer of Land and building sold for less than stamp duty value as specified under section 43CA or section 50C. Details about consideration received and the stamp duty value thereof has to be furnished.[clause 17 of Part B]. DEEMED INCOME UNDER SECTION 32AC: New form 3CD requires reporting of deemed income under Section 32AC which provides for investment allowance of 15% for investment in plant and machinery which results from sale or transfer of new asset,if the same was acquired and installed by the assessee within a period of five years from the date of its installation.[clause 24 of Part B]. DEDUCTIONS UNDER SECTION 35AD,35CCC AND 35DDD: Deductions allowable under these sections are also required to be reported [clause 19 of Part B]. TDS /TCS DETAILS: Under old report it was required to report only the inadmissible expenses which were debited in the P&L Account but now all the disallowed expenses are required to be reported even if they are not debited in P&L account. Following items need to be reported: [Clause 21 of Part B] Disallowance under Section 40(a) for TDS default Disallowance under section 40A (3) for cash payments Disallowance under section 40A(7) for provision for gratuity Disallowance under Section 40A(9) Particulars of any liability of a contingent nature Amount of deduction inadmissible under section 14A Interest inadmissible under the proviso to section 36(1)(iii) TDS/TCS STATEMENTS FILLING. To track violations in TDS return filling and interest calculations, detailed information regarding TDS /TCS return and interest calculations under Section 201(1A) or 206C(7) are required.[clause 34(c) of Part B]. COMPLIANCE WITH TDS AND TCS PROVISIONS: Now it is required to report on compliance of TDS and TCS in form 3CD [clause 34(a) of Part B]. INFORMATION ABOUT EXPENDITURE: Information as to amounts of personal expenses, capital expenses, advertisement expenditure debited to P &L A/c are required to be reported. REPORTING DEEMED INCOME U/S 56(2)(VIIA)/(VIIB):.New Clauses introduced in form 3CD for reporting of unlisted shares received either for inadequate consideration or without consideration under section56(2)(viia) [clause 28 of Part B] and issuance of shares where the consideration received by assesse is more than the fair market price under section 56(2)(viib) [clause 29 of Part B]. REPORTING ON SPECULATIVE LOSSES: Details of losses under section 73 for speculation business have to be reported. [Clause 32(c) of Part B]. SECTION 35 AD: Losses incurred from the business specified under section 35AD need to be reported. SECTIONS 10A AND 10AA : Reporting for deductions claimed under Sections 10A and 10AA is required in form 3CD. [Clause 33 of Part B]. DIVIDEND DISTRIBUTION TAX UNDER SECTION 115-O(1A): Detailed information regarding Dividend Distribution tax received by domestic company from its subsidiary or paid to any person for or on behalf of the New Pension System Trust has to be given. RATIOS: New Form 3CD requires reporting of ratios for current year as well as of preceding financial year [clause 40 of Part B]. DEMAND RAISED OR REFUND ISSUED: Details of demand raised or refund issued under any tax laws (other than Income Tax Act, 1961 and Wealth Tax Act, 1957) along with details of relevant proceedings have to be reported in new form 3CD [clause 41 of Part B]. QUALIFICATION DISCLOSURE IN AUDIT REPORTS: Information about adverse comment or qualification in Cost audit report, Central excise audit report, service tax audit report,etc. has to be given. CONCLUSION: The objective behind introducing new tax audit report is to widen tax collection revenues by finding defaulters and imposing stringent penalties on them.Income tax department are processing data for non-compliances and TDS payment lapses by increasing reporting requirements and responsibilities of auditors.