India: Amendments To Form No. 3CD:

Last Updated: 13 August 2018
Article by Damania & Varaiya

The CBDT has by issue of a notification no. GST 666(E) dt. 20th July, 2018 included certain clauses to be reported in the tax audit report prescribed u/s 44AB in the Form No. 3CD. Following are the additional reporting requirements to be made in Form No. 3CD. The amendment is applicable w.e.f. 20th day of August, 2018.

Following are the additional reporting requirements in Form 3CD which has been discussed in brief clause-wise:

1. Clause 4 of 3CD:

Clause 4 has been amended to require reporting of GST registration number.

2. Clause 19 of 3CD:

Clause 19 has been amended to require reporting of particulars of amount of deduction claimed u/s 32AD.

Subsection 1 of Section 32AD talks about deduction available in case of investment in new plant and machinery in notified backward areas in certain States.

3. Clause 24 of 3CD:

Clause 24 has been amended to require reporting of particulars of amount deemed to be profits or gains u/s 32AD.

Sub-section 2 of section 32AD states that if any asset acquired and installed by an assessee is sold or other transferred, except in case of amalgamation or demerger etc., within 5 years then the amount of deduction allowed u/s 32AD (1) shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which such new asset is sold or otherwise transferred, in addition to taxability of gains, arising on account of transfer of such new asset.

4. Clause 26(g) of 3CD:

Clause g has been inserted in Section 43B which says that any payment to be done to the Indian Railways for the use of Railway assets shall be allowed as deduction only on payment basis. In clause 26 now such transactions also needs to be reported.

5. Clause 29A of 3CD:

New clause 29A has been inserted which requires reporting of any amount forfeited that was received as advance during negotiation for transfer of a capital asset prescribed u/s 56(2)(ix).

6. Clause 29B of 3CD:

New clause 29B has been inserted which requires reporting of any amount received u/s u/s 56(2)(x).

Section 56(2)(x) talks about amount received by a person without consideration or with inadequate consideration.

7. Clause 30A of 3CD:

New clause 30A has been inserted which requires reporting of any primary adjustment made u/s 92CE(1).

Section 92CE(1) gives 5 instances where a transfer pricing adjustment could be made.

Further the new clause 30A also requires that where a primary transfer pricing adjustment has been made u/s 92CE(1), whether the excess money available with the associated enterprise is required to be repatriated to India or not? If yes, then whether the money has been repatriated or not and if no, then the amount of imputed interest on such excess money needs to be reported.

8. Clause 30B of 3CD:

New clause 30B has been inserted which requires reporting of any interest expense or expenses of similar nature incurred by an assessee exceeding Rs 1 crore as prescribed u/s 94B(1) in respect of debt issued by a non-resident associated enterprise.

Further the new clause 30B also requires reporting of the excess interest paid that is calculated in the manner prescribed u/s 94B(2).

The calculation of excess interest u/s 94B(2) is:

  • any amount of interest paid by the assessee in excess of 30% of its EBIDTA of that previous year or;
  • the amount of interests actually paid, whichever is less.

Similarly the clause also requires reporting of brought forward / carried forward calculated in the manner prescribed u/s 94B(4).

9. Clause 30C of 3CD:

New clause 30C has been inserted which requires reporting of the nature of any impermissible avoidance arrangement as prescribed u/s 96 entered into by the assessee and also the amount of tax benefit arising, in aggregate, to all the parties covered by the arrangement.

Section 96(1) prescribes 4 situations which can give rise to an impermissible avoidance arrangement.

10.Clause 31(ba) to 31(bd) of 3CD:

New sub-clauses 31(ba) to 31(bd) has been inserted after clause 31(b).

Clause 31(ba):

Clause 31(ba) requires reporting of an amount received in cash in excess of Rs 2 lakhs as specified in Section 269ST from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person.

Clause 31(bb):

Clause 31(bb) requires reporting of an amount received by cheque or a bank draft not being an account payee cheque or a bank draft in excess of Rs 2 lakhs as specified in Section 269ST from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person.

Clause 31(bc):

Clause 31(bc) requires reporting of an amount paid in cash in excess of Rs 2 lakhs as specified in Section 269ST to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a person.

Clause 31(bd):

Clause 31(bd) requires reporting of an amount paid by cheque or a bank draft not being an account payee cheque or a bank draft in excess of Rs 2 lakhs as specified in Section 269ST to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a person.

11.Minor amendments of insertion of words such as "taken or accepted", "repayment of" in the existing subclauses of Clause 31.

12.Clause 34(b) of 3CD:

Existing clause 34(b) has been replaced with new reporting requirements. Earlier the information in respect of the statement of tax deducted (TDS) or tax collected (TCS) was required to be furnished only if a person has not filed the TDS/TCS return within the prescribed time limit. Now the amended clause 34(b) requires reporting of all the TDS/TCS return filed by the person.

13.Clause 36A of 3CD:

Clauses 36A has been inserted which requires reporting of the amount received by a person in the nature of deemed dividend as specified in Section 2(22)( e).

14.Clause 42 of 3CD:

Clauses 42 has been inserted which requires a person to report the details of Form No. 61 or Form No. 61A or Form No. 61 B filed, if applicable.

Form No. 61 is a form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income-tax in respect of transactions specified in Rule 114B

Form No. 61A is a form on Annual Information Return of Statement of Financial Transactions u/s 285 (Rule 114E).

Form No. 61B is a form on Statement of Reportable Account under sub-section (1) section 285BA (Rule 114G(8)).

15.Clause 43 of 3CD:

Clauses 43 has been inserted which requires reporting on whether a resident parent entity or an alternate reporting entity has furnished Country by Country Reporting (CbCR) as referred to in Section 286(2).

16.Clause 44 of 3CD:

Clauses 44 has been inserted which requires reporting on the bifurcation of total expenditure into:

  • expenses incurred in respect of GST registered entities and;
  • expenses incurred in respect of non-GST registered entities.

Further the clause requires reporting of the expenses incurred in respect of GST registered entities be segregated into:

  • expenses relating to GST exempt goods or services;
  • expenses relating to entities falling under composition scheme;
  • expenses relating to other registered entities and
  • total payment to registered entities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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