LATEST AMENDMENTS N INCOME TAX CT -...

LATEST AMENDMENTS IN

INCOME TAX ACT[WITH SPECIAL REFERENCE TO TAX AUDIT REPORTS]

Dhinal Shah

Chartered Accountant

CONTENTS

� Budget 2014

� Key Amendments – Direct Tax

� Tax Audit Reports

� History and Brief Background

� Notification No. 33/2014 dated 25.7.2014� Notification No. 33/2014 dated 25.7.2014

� News on e-filing portal dated 29.7.2014 - validity

� Important changes in Tax Audit Report Forms:

� 3CA

� 3CB

� 3CD

� Important points for Tax Auditors2

BUDGET 2014 – KEY AMENDMENTS

3

► Domestic companies and mutual funds currently liable for payment

of dividend distribution tax

► This tax rate is applied on the ‘net’ amount, i.e., amount paid after

reduction of distribution tax

► On or after 1 October 2014, for the purposes of determining tax on

distributed profits/ income, the net distributed profits/ income

DIVIDEND AND INCOME DISTRIBUTION TAX

proposed to be increased to such amount as would, after reduction of

tax on such increased amount, be equal to the net distributed profits/

income

► In other words, for dividends/ income to be distributed on or after 1

October 2014, the ‘distribution tax’ to be payable on a ‘grossed up’

basis

4

Proposed changes to investment linked deduction under Section

35AD

► Investment linked deduction under Section 35AD extended to the following

businesses, commencing operations on or after 1 April 2014

► Laying and operating slurry pipeline for transportation of iron ore

► Setting up and operating a semiconductor wafer fabrication manufacturing unit

► Capital asset for which the deduction has been claimed is required to be used

EXEMPTIONS, DEDUCTIONS AND INCENTIVES

Budget Connect +

for the specified business for a period of 8 years

► If this condition is not satisfied in any subsequent year after claiming the

deduction, the deduction already claimed as reduced by depreciation claimed on

the asset to be taxed as business income

► Units claiming benefit under Section 35AD will not be eligible to claim tax

holiday under Section 10AA

► Investment linked deduction claimed under section 35AD to be added for the

purpose of computing the Adjusted Total Income (ATI) for AMT

► However, depreciation claimed under section 32 to be reduced while computing

such ATI

5

Particulars INR

Dividend to be

distributed

85

DDT @ 15% 12.75

DIVIDEND AND INCOME DISTRIBUTION TAX –

EXAMPLE*

Particulars INR

Dividend amount 85

Increase by Rs 15

[(85*0.15)/ (1-0.15)]

15

Increased amount 100

Existing Proposed

*As given in the Memorandum explaining the provisions of the Finance (No 2) Bill, 2014

DDT @ 15% 15

Dividend distributed 85

6

► Enhanced compensation on compulsory acquisition of capital assets

will be taxable in the year when final order of the court, tribunal or

other authority is passed

► Deduction from capital gains by investment in residential house

under section 54 and 54F is restricted to investment in ‘one

residential house in India’

CAPITAL GAINS RELATED PROVISIONS

► Deduction from capital gains by investment in specified bonds under

section 54EC restricted to INR 5 million, even if investment is made

in more than one financial year

► Transfer of Government Securities, carrying a periodic payment of

interest, from one non-resident to another non-resident to not be

considered as ‘transfer’ for the purpose of charging of capital gains

7

► Section 2(42A) has been amended to provide that securities (other

than a listed security) and units of mutual funds (other than equity

oriented) funds shall be regarded as short term capital asset where the

same are held for a period of less than 36 months.

► However as per the Finance (No. 2) Act, 2014 passed in Loksabha

CAPITAL GAINS RELATED PROVISIONS

► However as per the Finance (No. 2) Act, 2014 passed in Loksabha

has provided that if the unlisted shares and units of a non equity-

oriented mutual fund are transferred during the period from April 1,

2014 to July 10, 2014, then such shares/units would continue to be

characterised as long-term capital assets, provided they have been

held for a period of more than 12 months (instead of more than 36

months).

8

► Investment allowance – impetus to manufacturing company

► Additional deduction @ 15% allowable to a company

► For investments exceeding INR 250 million in new assets

► New assets to be acquired and installed between 1 April 2014 to 31 March 2017

► If assets sold or transferred (other than by way amalgamation or demerger) within 5

years, additional deduction claimed in earlier taxable as business profits in the year of

such sale or transfer


such sale or transfer

► Foreign dividend

► Sunset date for beneficial tax rate of 15% on dividend declared, distributed or

paid by a specified foreign company removed

► Characterisation of income earned by FII /FPI

► Definition of capital asset under section 2(14) amended to provide that any

security held by a FII/ FPI would be treated as a capital asset and income arising

from transfer of such security to be in the nature of capital gains

► Amendment to take effect from FY 2014-15

9

► Tax incentive for funding of long-term bonds

► Concessional tax rate of 5% on interest paid by an Indian Company to non-

residents on borrowings made in foreign currency extended up to 1 July

2017

► Beneficial rate of 5% also extended to interest on borrowings made by way

of issuance of any long-term bond (including long term infrastructure

bond)


bond)

► Amendment to take effect from 1 October 2014

► Sunset date for tax holiday for units engaged in generation and

distribution of power and laying network of new transmission or

distribution lines extended from 31 March 2014 to 31 March 2017

10

► Effective 1 October 2014, specific tax regime introduced for REITs

and InvITs (business trusts)

► Business trusts to raise capital by issue of listed units and/ or debts

► Income bearing assets to be held by acquiring control/ other specific

interest in an Indian SPV from ‘sponsor’

► Capital gains of sponsor at the time of exchange of shares in SPV

TAXATION OF REITS AND INVITS

► Capital gains of sponsor at the time of exchange of shares in SPV

with units of business trust to be deferred ; taxable only at the time of

disposal of units by sponsor

► Listed units (other than units acquired by the sponsor in exchange of

SPV’s shares) to attract same levy of STT and capital gains tax

benefits as equity shares of a company ie exemption from LTCGs;

STCGs taxable @15%

11

► Advance for transfer of a capital asset could be taxed

► Amount received as advance or otherwise in course of negotiations for

transfer of capital asset, proposed to be taxed as ‘Income from Other

Sources, if amount is forfeited and negotiations do not result in transfer

of such asset

► Amendment proposed to include such sum in the definition of ‘income’

INCOME FROM OTHER SOURCES

► Amendment proposed to include such sum in the definition of ‘income’

► Consequential proposal that such sum should not be reduced from the cost of

acquisition in computing capital gains on future transfer of the asset

Budget Connect +

12

► Interest income of business trusts accorded pass through status – not

taxable for the trust; no withholding tax at SPV level

► Interest component of income distributed to unit holders to attract 5% withholding

tax in the hands of non resident and 10% in the hands of resident unit holders

► Dividend received by business trusts subject to DDT at the SPV level

– exempt in the hands of the trusts. Dividend component of income

distributed to unit holders also exempt

TAXATION OF REITS AND INVITS

distributed to unit holders also exempt

► Capital gains on disposal of assets by business trusts taxable.

Distribution of such gains exempt for the unit holders

► Any other income of the business trust taxable at the maximum

marginal rate

► Interest on ECBs availed by business trusts taxable @ 5% in the

hands of the non resident lender

► Business trusts required to a file a return of income

13

► The time limits for deeming an assessee to be an ‘assessee in default’

for failing to deduct or deposit taxes has been revised as under:

TAX DEDUCTION AT SOURCE (TDS)

Prescribed

time limit

Assessee having filed a

TDS return

Assessee who has not filed a

TDS return

Current 2 years from the end of the 6 years from the end of financial Current 2 years from the end of the

financial year in which the TDS

statement is filed

6 years from the end of financial

year in which the payment/credit

is made

Proposed 7 years from the end of financial year in which the payment/credit is

made

14

DISALLOWANCE OF EXPENDITURE FOR NON-

DEDUCTION OF TAX AT SOURCE (TDS)

► Restricted disallowance

► In case of non-deduction or non-payment of TDS on payments made to

residents as per Section 40(a)(ia), disallowance restricted to 30% of amount of

expenditure claimed

► Enhanced coverage of Section 40(a)(ia)

► Disallowance under Section 40(a)(ia) extended to all expenditure on which tax ► Disallowance under Section 40(a)(ia) extended to all expenditure on which tax

is deductible under Chapter XVII-B of the Act

► Certain payments like salary and director’s fee now covered within the ambit of

Section 40(a)(ia)

► Extension of time limit for payment of TDS under Section 40(a)(i)

► Section 40(a)(i) will now allow the deductor to claim deduction on payment

made to non-residents, if tax is deducted and is paid on or before due date of

filing of return15

INTEREST PAYABLE ON DELAYED PAYMENT OF

DEMAND

► In case where any demand is raised against a taxpayer and an appeal

has been filed contesting the same, then such demand shall be valid

till the disposal of the appeal by the last appellate authority.

► Further where as a result of a rectification or an appellate order the

interest payable by the taxpayer is reduced but subsequently on interest payable by the taxpayer is reduced but subsequently on

account of a revision order such interest is increased, then the

taxpayer shall be liable to pay interest as a result of such revision

order from the due date as per the original notice of demand till the

date of payment.

► These amendments will be applicable from 1 October 201416

KEY POLICY ANNOUNCEMENTS

► GST

► Intent to find a solution for implementation of GST in the course of this year followed by approval of legislative scheme

► Foreign Direct Investment

► FDI in Defence manufacturing and Insurance proposed to be increased to 49% from 26% with full Indian management and increased to 49% from 26% with full Indian management and control, through the FIPB route

► Relaxation in threshold conditions for FDI in construction development – Built up area requirement from 50,000 sq. mtrs to 20,000 sq. mtrs and capital conditions from USD 10 Mn to USD 5 Mn with a 3 year post completion lock-in

► Tourism

► Facility of Electronic Travel Authorisation (e-Visa) to be introduced in a phased manner at 9 airports

Budget Connect +

17

TAX AUDIT REPORTS

18

TAX AUDITS – HISTORY AND BRIEF BACKGROUND

19

TAX AUDITS – HISTORY

► 1984 – Tax Audit provisions introduced

► Memorandum explaining the provisions of the Finance Bill, 1984:

“the compulsory audit is intended to ensure proper maintenance of

books of account and other records, in order to reflect the true income

of the tax payer and to facilitate the administration of tax laws by a

proper presentation of the accounts before the tax authorities. Thisproper presentation of the accounts before the tax authorities. This

would also save the time of the Assessing Officers considerably in

carrying out the verification”

20

TAX AUDITS – HISTORY

► 1984 – Tax Audit provisions introduced

► 1997 – Tax Audit provisions applicable to 44AD

► 1999 – All Forms and Rule 6G revised. Form 3CC and 3CE done

away with

► 2003 - Tax Audit provisions applicable to 44BB and 44BBB

► 2004 – All Forms revised► 2004 – All Forms revised

► 2006 – Form 3CD revised

► 2008 – requirement to furnish report with return done away with

► 2011 – cases of fake membership numbers

► 2013 – e-filing of tax audit reports made mandatory

21

TAX AUDITS – BRIEF BACKGROUND

Sr. No. Assessment Year *Limits – Business *Limits – Profession

1. 1985-86 to 2010-11 40,00,000 10,00,000

2. 2011-12 & 2012-13 60,00,000 15,00,000

► Specified Limits u/s 44AB read with Rule 6G:

2. 2011-12 & 2012-13 60,00,000 15,00,000

3. 2013-14 1,00,00,000 25,00,000

* Limits = sales/turnover/gross receipts exceeds

22

TAX AUDITS – BRIEF BACKGROUND

Tax Audit Applicability

(Broadly)

Businesses u/s 44AD, AE, BB, BBB

Limits exceeded

(1 crore/25 lakhs):

Tax Audit

Limits not exceeded:

Minimum Deemed Income or Tax Audit

Limits exceeded (Broadly)

Profession or Other businesses

Limits exceeded

(1 crore/25 lakhs):

Tax Audit

Limits not exceeded:

No Tax Audit

23

NOTIFICATION NO. 33/2014 DATED 25.7.2014

24

NOTIFICATION NO. 33/2014 DATED 25.7.2014

► Notification published on website on 28.7.2014

► Comes into force on the date of publication in the Official Gazette

► Whether this is applicable to tax audit reports of any previous AYs

not filed till 25.7.2014?

► Order under section 119 dated 20.8.2014 extending date for► Order under section 119 dated 20.8.2014 extending date for

obtaining & furnishing Tax Audit Report upto 30.11.2014 and

clarifying that reports filed upto 24.07.2014 in old format will be

valid.

► Does this order also extend date for filing tax return under section

139(1)

25

IMPORTANT CHANGES IN

TAX AUDIT REPORT FORMSTAX AUDIT REPORT FORMS

26

FORM 3CA

► Applicable in the case of a person who carries on business or

profession and who is required by or under any other law to

get his accounts audited

27

FORM 3CA

► Open Period:

“1(a) the audited *profit and loss account / income and expenditure

account for the period beginning from ----------------------to ending on -------

----------------------.

1(b) the audited balance sheet as at, _____; and”

► Amendments

► Period instead of year

► 31st March removed.

► Intended to cover new or discontinued business during the year

28

FORM 3CA

► Space for Observations - Qualifications:

3. In *my / our opinion and to the best of *my / our information and

according to examination of books of account including other relevant

documents and explanations given to *me / us, the particulars given in

the said Form No.3 CD are true and correct subject to the following

observations/qualifications, if any:

a.a.

b.

c.

► Amendment

► Space provided to mention observations/qualifications

29

FORM 3CB

► Applicable in the case of a person who carries on business or

profession, but not being a person who is required by or under any

other law to get his accounts audited

30

FORM 3CB

► Open Period:

*I / we have examined the balance sheet as on, ____, and the *profit and

loss account / income and expenditure account for the period beginning

from ----------------------to ending on -----------------., attached herewith,

► Amendments

► Period instead of year

31st March removed.► 31st March removed.

► Intended to cover new or discontinued business during the year

“3(c)(i) in the case of the balance sheet, of the state of the affairs of the

assessee as at 31st March, ;and”

► 31st March not removed in (c)(i) - Typing error?

31

FORM 3CB

► Space for qualifications/observations:

5. In *my/our opinion and to the best of *my / our information and

according to explanations given to *me / us, the particulars given in the

said Form No.3 CD are true and correct subject to following

observations/qualifications, if any:

a.

b.b.

c.

► Amendment

► Space provided to mention observations/qualifications

32

FORM 3CD

► Particulars which are required to be furnished under section 44AB

shall be in Form No. 3CD

33

FORM 3CD - CLAUSE 4 – REGISTRATION NOS.

► Clause

“Whether the assessee is liable to pay indirect tax like excise duty, service

tax, sales tax, customs duty,etc. if yes, please furnish the registration

number or any other identification number allotted for the same”

► Requirement► Requirement

► Any Registration number or identification number under indirect tax laws like

Excise, Service Tax, Customs, Sales Tax etc. to be given

34

FORM 3CD – CLAUSE 8 – RELEVANT CLAUSE OF

44AB

► Clause

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

conducted”

► Requirement

► To mention the relevant clause of 44AB:► To mention the relevant clause of 44AB:

(a) business

(b) profession

(c) 44AE, 44BB, 44BBB

(d) 44AD

35

FORM 3CD – CLAUSE 11(B) – ADDRESS – BOOKS

► Clause

“List of books of account maintained and the address at which the

books of accounts are kept.

(If the books of accounts are not kept at one location, please furnish

the addresses of locations along with the details of books of

accounts maintained at each location. )”accounts maintained at each location. )”

36

FORM 3CD – CLAUSE 11(B) – ADDRESS – BOOKS

► Books defined u/s 2(12A) – includes ledgers, day-books, cash

books, account-books and other books whether kept in written form

or …..

► When books are maintained in Cloud based software

► Location of data entry and location of storage are different. – e.g. cloud

based softwarebased software

► To provide name and address of cloud service provider

37

FORM 3CD – CLAUSE 11(C) – RELEVANT

DOCUMENTS

► Clause

“List of books of account and nature of relevant documents

examined.”

► Documents – 2(22AA) read with 2(1)(t) of the IT Act, 2000

(amended in 2008) – scope very wide – electronic records covers

even sound, digital media, film etc.even sound, digital media, film etc.

► Will include all Deeds, Agreements, Registrations, Returns,

Challans, Invoices, BRS, Bank Statements, Salary Register,

CENVAT Register etc. examined

► Report requires to provide list of all documents relied upon in giving

the report38

FORM 3CD – CLAUSE 13(C) – CHANGE IN METHOD

► Clause

“Whether there had been any change in the method of accounting

employed vis-a-vis the method employed in the immediately

preceding previous year.

If answer to (b) above is in the affirmative, give details of such

change, and the effect thereof on the profit or loss.”

► Requirement

► Data to be given in Tabular Format now – Sr. No., Particulars, Increase

in profit, Decrease in profit

► E.g. Change in method of depreciation, stock valuation etc.

39

FORM 3CD – CLAUSE 17 – SALE OF IMM. PROPERTY

► Clause

“Where any land or building or both is transferred during the

previous year for a consideration less than value adopted or

assessed or assessable by any authority of a State Government

referred to in section 43CA or 50C, please furnish:

1. Details of property

2. Consideration received or accrued2. Consideration received or accrued

3. Value adopted or assessed or assessable”

40

FORM 3CD – CLAUSE 17 – SALE OF IMMOVABLE

PROPERTY

► Section 43CA:

► Transfer - Ashaland Corporation 133 ITR 55 (Guj) – Income accrues in

the year in which title passes i.e. execution of registered sale deed –

even though advance may be received earlier

► Date of agreement is relevant (43CA(3))

► Leasehold Rights – Not a subject matter of Section 43CA since it is

not a ‘land’ or ‘building’ in terms of Section 43CA.

41

FORM 3CD – CLAUSE 17 – SALE OF IMMOVABLE

PROPERTY

► Section 50C:

► Section 2(47)(v) – transfer – deemed accrual on possession in part

performance

► Leasehold right – Not covered under section 50C since it is not ‘land’

or ‘building’

► Taxability of FSI and TDR

“Though FSI and TDR is “immovable property” as held in Chedda

Housing Development vs. Babijan Shekh Farid 2007 (3) MLJ 402

(Bom), it is not “land or building” and so cannot be the subject

matter of s. 50C.” - ITO .v. Prem Rattan Gupta (Mum.) (Trib.)

42

FORM 3CD – CLAUSE 19 – DEDUCTIONS

► Deductions allowable under sections 32AC, 35AD, 35CCC etc. are

required to be reported

► Conditions have been fulfilled or not to be checked – To provide the

details of amounts debited vis-à-vis amounts admissible as per the

provisions of the Income-tax Act, 1961 and also fulfils the conditions,

if any specifiedif any specified

► Requirement:

► Section wise chart to be given

43

FORM 3CD – CLAUSE 21 – INADMISSIBLE AMOUNTS

► Clause 21(a)

“Please furnish the details of amounts debited to the profit andloss account, being in the nature of capital, personal,advertisement expenditure etc”

►Expenses that are debited to Profit & Loss Account in thenature of capital, personal, advertisement expenditure etc.nature of capital, personal, advertisement expenditure etc.

► Sections covered by Clause 21(a):

► Section 37(1) covers Personal or Capital Expenditure

► Section 37(2B) - advertisement in any souvenir, brochure, tract,pamphlet or the like published by a political party

44


► Clause 21(b):

“Amounts inadmissible under section 40(a):-

as payment to non-resident referred to in sub-clause (i)

(A) Details of payment on which tax is not deducted:

(B) Details of payment on which tax has been deducted but has not

been paid during the previous year or in the subsequent yearbeen paid during the previous year or in the subsequent year

before the expiry of time prescribed under section 200(1)”

► Required details:

► Date, amount, nature of payment, name & address of payee, amount of

tax deducted

45


► Clause 21(b):

“Amounts inadmissible under section 40(a):-

(ii) as payment referred to in sub-clause (ia)

(A) Details of payment on which tax is not deducted:

(B) Details of payment on which tax has been deducted but has not

been paid on or before the due date specified in sub-section (1)been paid on or before the due date specified in sub-section (1)

of section 139.”

► Required details:

► Date, amount, nature of payment, name & address of payee, amount of

tax deducted

46


► Clause 21(b):

Amounts inadmissible if tax not deducted on amounts paid under

following instances:

► Section 40(a)(i) read with 200(1) (139(1) from AY 2015-16) : Non-

resident

Section 40(a)(ia) read with 139(1) (Salary from AY 2015-16) :► Section 40(a)(ia) read with 139(1) (Salary from AY 2015-16) :

Resident

► Section 40(a)(iii) : Salary paid to Non-resident or outside India

47


► Clause 21(d):

“Disallowance/deemed income under section 40A(3):

Details:

Serial No.,

Date, Nature, Amount of paymentDate, Nature, Amount of payment

Name & PAN of the payee, if available”

► Additional detail to be disclosed:

Section 40A(3A) – Amounts allowed in past year and payment not

made by account payee cheque or account payee draft in Previous

Year – (deemed income of the Previous Year) 48


► Clause 21(g):

“particulars of any liability of a contingent nature;”

► Details of contingent liabilities not debited to profit and loss account

to be disclosed

► Contingent Liability disclosure as per AS 29 - Unless the possibilityContingent Liability disclosure as per AS 29 - Unless the possibility

of any outflow in settlement is remote, an enterprise should disclose

for each class of contingent liability at the balance sheet date a brief

description of the nature of the contingent liability and, where

practicable:

(a) an estimate of its financial effect, (b) an indication of the

uncertainties relating to any outflow; and (c) the possibility of any

reimbursement.49

FORM 3CD – CLAUSE 24 – SALE OF ASSET U/S 32AC

► Clause 24

“Amounts deemed to be profits and gains under section 32AC or

33AB or 33ABA or 33AC.”

► Disclosure requirements relating to Section “32AC” added

► As per Section 32AC, gains arising from sale or transfer of new

asset, (deduction claimed u/s 32AC) within a period of five yearsasset, (deduction claimed u/s 32AC) within a period of five years

from the date of its installation will be the deemed income of the

assessee.

► However transfer a result of amalgamation or demerger is not sale or

transfer for the purpose of Section 32AC.

50

FORM 3CD – CLAUSE 27(A) – CENVAT

► Clause:

“Amount of Central Value Added Tax credits availed of or utilised

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.”

► Amendments:

► MODVAT replaced by CENVAT

► Opening, Closing balance of CENVAT Credit

► Availed value and utilized value of CENVAT to be disclosed

51

FORM 3CD – CLAUSE 28 – 56(2)(VIIA)

► Clause:

“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 the details of the same.”please furnish the details of the same.”

52

FORM 3CD – CLAUSE 28 – 56(2)(VIIA)

► Section 56(2)(viia) Inserted by the Finance Act, 2010 w.e.f. 1-6-2010

► Receiver - Firm / company not being a company in which public are

substantially interested

► Property - shares of company in which public are substantially

interested

► If the shares are received without consideration – Entire FMV taxable

► If shares are received with consideration less than the FMV of the

property by an amount exceeding Rs 50,000 -

FMV - Consideration - 50000 = Taxable

► FMV to be determined as per Rule 11U and 11UA

► Section 56(2)(viia) shall not apply to transactions not regarded as

transfer under section 47(via) / (vic) / (vicb) / (vid) / (vii)

53

FORM 3CD – CLAUSE 29 – 56(2)(VIIB)

► Clause

“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 the details of the same.”

54

FORM 3CD – CLAUSE 29 – 56(2)(VIIB)

► 56(2)(viib) Inserted by the Finance Act, 2012 w.e.f. 1-4-2013

► Recevier - Company not being a company in which public are

substantially interested

► Consideration received - for issue of shares that exceeds face value

(from Resident person only)

55

► Consideration received – FMV = Taxable i.e. excess share premium

► FMV = As determined under Rule 11U/UA or as substantiated to the

satisfaction of the officer w.e. higher

► Shall not apply to – Venture Capital Undertaking from Venture

Capital Company/Venture Capital Fund or persons notified by

Central Government

FORM 3CD – CLAUSE 32(C) – SPECULATION LOSS

► Clause

“Whether the assessee has incurred any speculation loss referred toin section 73 during the previous year, If yes, please furnish thedetails of the same.”

► As per Explanation to Section 73 – Loss on Units not covered sinceunits are not shares

► Section 43(5) – Speculative transaction excludes trading incommodity derivatives if carried out in a recognised association –AY 2013-14

► As per Finance Act 2014 – AY 2014-15 – if CTT is paid and tradingin commodity derivatives is carried out thorugh recognisedassociation it cannot be considered as speculative transaction

56

FORM 3CD – CLAUSE 32(D) – LOSS IN SPECIFIED

BUSINESS

► Clause

“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.”

► 35AD – specified businesses – loss to be reported

57

FORM 3CD – CLAUSE 33 – CHAPER III DEDUCTIONS

► Clause

“Section-wise details of deductions, if any, admissible under Chapter

VIA or Chapter III (Section 10A, Section 10AA)”

► Details of amounts admissible as per the provisions of the Income-

tax Act, 1961 and fulfils the conditions, if any, specified under the

relevant provisions of Income-tax Act, 1961 to be providedrelevant provisions of Income-tax Act, 1961 to be provided

► Auditor to verify the conditions of Chap. III - 10A/10AA – whether

they are fulfilled or not?

58

FORM 3CD – CLAUSE 34(A) – TDS/TCS CHART

► Clause

“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:”

► Required Information:

Tabular information of TDS/TCS► Tabular information of TDS/TCS

► (i) TAN

► (ii) Sections under which TDS or TCS deducted or collected

► (iii) Nature of Payment

► (iv) Total Amount of payment (including non-tax deductible or collectible

portion)

► (v) Total amount on which tax was to be deducted or collected

► (vi) Total amount on which tax actually deducted or collected

► (vii) Total amount of tax actually deducted or collected on above59

FORM 3CD – CLAUSE 34(A) – TDS/TCS CHART

► Required Information:

► Tabular information of TDS/TCS

► (viii) Total amount on which tax actually deducted or collected at less than

specified rate

► (ix) Total amount of tax actually deducted or collected at less than specified

rate

► (x) Amount of tax deducted or collected but not deposited

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FORM 3CD – CLAUSE 34(B) – LATE FILING OF

RETURN

► Clause

“whether the assessee has furnished the statement of tax deducted ortax collected within the prescribed time. If not, please furnish thedetails”

► Requirements:

To provide details of whether TDS return has been filed on time or

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► To provide details of whether TDS return has been filed on time ornot

► If TDS/TCS return is filed late

► Entire late filed return will have to be verified since the clause requiresfollowing details: “Whether the statement of tax deducted or collectedcontains information about all transactions which are required to bereported”

FORM 3CD – CLAUSE 34(C) – INTEREST - TDS/TCS

► Clause

“whether the assessee is liable to pay interest under section 201(1A)

or section 206C(7). If yes, please furnish:

(i) TAN

(ii) Amount of interest payable

(iii) Amount paid out of (ii) mentioned above

(iv) Date of payment”

► Requirement

► Auditor will have to recheck calculation of the interest on default in

payments of TDS/TCS

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FORM 3CD – CLAUSE 36 – 115O – DDT

► Dividend Tax u/s 115O

“Amount of Reduction as referred to in section 115-O(1A)(i);”

► Section 115O(1A)(i) - Dividend received by domestic company or

foreign company from its subsidiary

► Domestic Subsidiary should have paid tax u/s 115O► Domestic Subsidiary should have paid tax u/s 115O

► Tax should be payable u/s 115BBD on foreign subsidiary’s dividend

received

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FORM 3CD – CLAUSE 37 – COST AUDIT

► Clause

“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

the cost auditor.”

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FORM 3CD – CLAUSE 38 – EXCISE AUDIT

► Clause

“Whether any audit was conducted under the Central Excise 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.”

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FORM 3CD – CLAUSE 39 – SERVICE TAX AUDIT

► Clause

“Whether any audit was conducted under section 72A of the Finance

Act, 1994 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.”

► Section 72A(i) deals with valuation aspect.► Section 72A(i) deals with valuation aspect.

► Section 72A(ii) & (iii) deal with credits and accounts.

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FORM 3CD – CLAUSE 40 – RATIOS

► Clause 40:

“Details regarding turnover, gross profit, etc., for the previous

year and preceding previous year:”

► Total turnover is to be reported for the previous year as well

as for preceding financial year

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FORM 3CD – CLAUSE 41 – DEMAND OR REFUND

UNDER ANY TAX LAWS

► Clause

“Please furnish the details of demand raised or refund issued during

the previous year under any tax laws other than Income tax Act,

1961 and Wealth tax Act, 1957 along with details of relevant

proceedings.”

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► VAT, Excise, Service Tax, Customs, Municipal Tax, Luxury Tax,

STT, CTT, Central Sales Tax, Octroi, Stamp Duty, Toll Tax,

RTO/Road Tax, Electricity Duty, Professional Tax.

► Can you think of more taxes?

► Details of proceedings to be given

FORM 3CD – REMOVAL OF ANNEXURE I

►Welcome change:

►Annexure I removed.

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QUESTIONS FROM THE AUDIENCE

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QUESTIONS FROM THE AUDIENCE

THANK YOU!THANK YOU!

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