An overview of recent Amendments in Tax Audit Report

An overview of recent Amendments in Tax Audit Report

The Central Board of Direct Taxes (CBDT) has amended the tax audit form (Form 3CD & Form No. 3CEB) and the form for filing a tonnage tax application (Form 65) vide Notification No. 27/2024, dated 05-03-2024.

The following are the key changes introduced in the forms:

1. Disclosure of expenses for violation of law in India or Outside India:

Clause 21 of Form 3CD seeks details of amounts debited to the profit and loss account, including capital, personal, advertisement expenditure, etc. This includes reporting of ‘Expenditure by way of penalty or fine for violation of any law for the time being force’. The CBDT has amended the clause to include expenditure for any purpose which is an offence or is prohibited by law or expenditure by way of penalty or fine for violation of any law (enacted in India or outside India).

2. Disclosure of expenditure for Compounding of Offences

Clause 21 further seeks details for “Expenditure by way of any other penalty or fine not covered above”. This field has been amended to include the expenditure incurred to compound the offences under the law whether in India or outside India, i.e., “Expenditure incurred to compound an offence under any law for the time being in force, in India or outside India”.

3. Amendment in Clause 26 for disallowance of delayed payment to MSEs:

Clause (h) of section 43B has been inserted to seek details of the delayed payments to Micro and Small Enterprises in violation of section 43(b)(h).

4. New disclosure of specified domestic transaction under section 115BAE(4)

Form 3CEB has been amended seeking particulars with respect to specified domestic transactions in the nature of any business transacted between the persons referred to in sub-section (4) of section 115BAE, which has resulted in more than ordinary profits expected to arise in such business.

5. Amendments with respect to IFSC and deduction claimed under section 80LA

Form 65 has been amended to include a new filed under “Verification” seeking certification that the applicant-company is a unit of an International Financial Services Centre and has filed the application within three months from the date on which the deduction under section 80LA of the Income-tax Act, 1961 is no longer applicable. Further, the applicant is required to specify the date on which such deduction was no longer applicable if the company availed deduction under section 80LA and date of qualifying company status.