Webcast on recent changes in form 3CD AY th August CA. D K Bholusaria

Transcription

1 Webcast on recent changes in form 3CD AY th August 2018 CA. D K Bholusaria

2 Disclaimer This presentation has been prepared for academic use only for sharing knowledge on the subject. Though every effort has been made to avoid errors or omissions in this presentation yet any error or omission may creep in. It is suggested that to avoid any doubt the user should cross check the correctness of text, contents and the law with the original documents and to dispel confusion should seek professional help/opinion.

3 Agenda for webcast

4 Today s agenda Notification and legal provisions Changes in brief Detailed analysis of changes Queries of the viewers

5 Law

6 Notification and effective date Section 139

7 Notification CBDT Notification No. 33/2018 dated 20 th July 2018 Effective from 20 th August 2018

8 Effective date of notifications Till 19 th August 2018 Old Notification From 20 th August 2018 New Notification

9 New utility has been made available

10 Frequently asked questions on date of applicability Q1: Can I digitally upload tax audit in form 3CD in old format till 19 th August 2018? A: Yes, pre-revised forms shall remain valid till 19 th August Q2: Can department later on ask for revised form 3CD if I upload old form 3CD till 19 th August 2018? A: No. CBDT on previous occasion had clarified a position similar to this, in its order u/s 119 dated 26/09/2014, that audit report filed in pre-revised format, prior to new notification shall be treated as valid tax audit report.

11 F.No.153/53/2014-TPL (Pt.I) dated 26/09/2014 Relevant extracts from order u/s 119: 1. Vide Notification No. 33/2014 dated 25th July, 2014, the forms for filing tax audit report have been revised 2....It has been further clarified that the tax audit report filed during the period from to in the pre-revised forms shall be treated as valid tax audit report under section 44AB.

12 Frequently asked questions on date of applicability Q3: Can I upload audit report for AY in in old format after 19 th August 2018? A: No, audit report of any assessment year (including prior to AY ) needs to be uploaded in new format only. Q4: I signed physical 3CD on 1 st August, 2018, but due to some reasons could not upload it. Can I upload after 19 th in old format? A: In presenter s opinion, it can not be!

13 Detailed analysis of key changes

14 Registration details of indirect taxes Clause 4

15 Clause 4 Indirect tax registrations Now you are also required to disclose your all GSTINs in addition to other indirect tax registration / identification numbers. GSTINs obtained during FY are relevant. Even ISD registration is required to be disclosed. What about number obtained for TDS under GST?

16 Deduction for investment in new plant or machinery Clause 19 and 24

17 Clause 19 & 24 - Section 32AD Disclosure with regard to section 32AD has been added in these clauses to Form 3CD. Allowance or Deemed gains u/s 32AD to be disclosed in appropriate clause. This section allows deduction in respect of investment made in new plant or machinery in notified backward areas of Andhra Pradesh, Bihar, Telangana and West Bengal. This section was inserted by the Finance Act, 2015 w.e.f

18 Section 43B: Sum payable to Indian Railways for use of assets Clause 26

19 Clause 26 Section 43B(g) Section 43B(g) has been added by Finance Act, 2016 for reporting under this clause which pertains to allowing of liability outstanding towards Indian Railways for use of their assets, on actual payment basis. Corresponding changes already carried out in ITRs (Schedule OI) as well.

20 Section 56(2)(ix) & 56(2)(x) New clauses 29A and 29B

21 New clause 29A and 29B This clause is triggered if any income is chargeable: u/s 56(2)(ix) : Advance received on capital asset forfeited u/s 56(2)(x): Income of gifts exceeding INR 50,000 Following details to be disclosed: Nature of Income Amount (in Rs.)

22 FAQs on clause 29A & 29B Q1: Is auditor responsible for income in personal books of auditee (in case of individuals)? A: No, auditor s responsibility is restricted to examination of books of accounts (and connected material) of business audited by him. Q2: What precautions an auditor should take? A: Auditor must give proper disclosure, specify scope of audit, following SA 700. He must also specify reasons in his report if he is unable to report on a particular clause.

23 Section 269ST Clause 31(ba) to (bd)

24 269ST: Bare Provisions 269ST. Mode of undertaking transactions No person shall receive an amount of two lakh rupees or more a) in aggregate from a person in a day; or b)in respect of a single transaction; or c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:

25 269ST: Bare Provisions Provided that the provisions of this section shall not apply to i. any receipt by a) Government; b) any banking company, post office savings bank or co-operative bank; ii. iii. transactions of the nature referred to in section 269SS; such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify. Explanation. For the purposes of this section, a) "banking company" shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS; b) "co-operative bank" shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS.

26 Notification No. 57 /2017 Provision of section 269ST shall not apply to the following- a) receipt by a business correspondent on behalf of a banking company or cooperative bank, in accordance with the guidelines issued by the Reserve Bank of India; b) receipt by a white label automated teller machine operator from retail outlet sources on behalf of a banking company or co-operative bank, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007); c) receipt from an agent by an issuer of pre-paid payment instruments, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007); d) receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards; e) receipt which is not includible in the total income under clause (17A) of section 10 of the Income-tax Act, 1961.

27 Section 10(17A) Any payment made, whether in cash or in kind - i. in pursuance of any award instituted in the public interest by the Central Government or any State Government or instituted by any other body and approved by the Central Government in this behalf; or ii. as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest;

28 Clarification Circular 22/ It is clarified that in respect of receipt in the nature of repayment of loan by NBFCs or HFCs, the receipt of one instalment of loan repayment in respect of a loan shall constitute a single transaction as specified in clause (b) of section 269ST of the Act and all the instalments paid for a loan shall not be aggregated for the purposes of determining applicability of the provisions section 269ST.

29 Changes in respect of Sec. 269ST Particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggregate 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, during the previous year: sub-clause (ba): where such receipt is otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account Non Banking channel mode i.e. Cash or Wallets etc. sub-clause (bb): received by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year - Banking channel mode but non- account payee cheques etc.

30 Changes in respect of Sec. 269ST 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 or in respect of transactions relating to one event or occasion to a person, during the previous year: sub-clause (bc): otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account Non Banking channel mode i.e. Cash or Wallets etc. sub-clause (bd): made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year - Banking channel mode but non- account payee cheques etc.

31 Googlies in 269ST Even though section 269ST is applicable on receipt side, but auditor is obliged to report transactions from payment side as well. Reporting for payment u/s 269ST will not trigger any penalty u/s 269ST for payer but MAY trigger reporting for section 40A(3)/32 and consequences shall follow. This new reporting requirement is on the line of reporting required for section 269T to be reported by lender (Since last year).

32 Section 2(22)(e) Deemed Dividend New clause 36A

33 Section 2(22)(e) Under the provisions of this section - Where any company, in which public are not substantially interested - [basically closely held companies ] Makes any payment by way of loan or advance To any person who holds not less than 10 percent voting power or to any other person in which such shareholder has substantial interest, Then such payment to the extent of accumulated profits, will be treated as deemed dividend.

34 Clause 36A: Deemed dividend If the assessee has received any amount in the nature of dividend as referred to in section 2(22)(e), then following disclosures are required (i) Amount received (in Rs.): (ii) Date of receipt: ; Till AY , deemed dividend is taxable in the hands of shareholders at maximum marginal rate. W.e.f. AY , deemed dividend shall be taxable as DDT u/s 115-O in the hands of closely held companies.

35 Rule 114B~115E Form 61, 61A, 61B New clause 42

36 Rule 114B/114D 114B: Transactions in relation to which permanent account number is to be quoted in all documents for the purpose of Section 139A(5)(c) 114D: Time and manner in which persons (read auditee) shall furnish a statement containing particulars of Form No. 60 Basically persons who are required to get accounts audited. Form 61: To be filed electronically half yearly capturing details from Form 60.

37 Rule 114E: SFT Rule 114E - Statement of financial transactions (SFT) under section 285BA(1) Form 61A - To be filed annually by May 31 st every year. Different SFTs to be filed for different kinds of transactions. Heavy penalties for non-compliances

38 Clause 42-3CD reporting 42. (a) Whether the assessee is required to furnish statement in Form No.61 or Form No. 61A or Form No. 61B? (Yes/No) (b) If yes, please furnish: Income-tax Department Reporting Entity Identification Number Type of Form Due date for furnishing 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

39 TDS Compliance reporting Clause 34(b)

40 Changes in Clause 34(b) Old Clause New Clause Comments Whether the statement of tax deducted or collected contains information about all transactions which are required to be reported Whether the statement of tax deducted or collected contains information about all details /transactions which are required to be reported. Till now you could simply say yes or no. If not, please furnish list of details /transactions which are not reported. Now you are supposed to provide complete details of transactions which escaped reporting.

41 Expenditure with respect to GST New clause 44

42 Deferment of clause 44 This clause 44 along with clause 30C on GAAR has been deferred till March 31, 2019

43 Clause 44 - GST Details in respect of expenditure on or after 1st July, 2017 to be filled up by the assessee who is liable to get accounts audited u/s 44AB. Break-up of total expenditure with entities registered or not registered under the GST to be provided. Reporting entity is registered under GST or not is immaterial. Corresponding schedule GST in ITR 6 for companies who are not required to get audit u/s 44AB, but no such schedule in form 3 or 5.

44 Clause 44 Details required 1. Total amount of Expenditure incurred during the year 2. Expenditure in respect of entities registered under GST 1. Relating to goods or services exempt from GST 2. Relating to entities falling under composition scheme 3. Relating to other registered entities 4. Total payment to registered entities (should be sum total of 1, 2 and 3 3. Expenditure relating to entities not registered under GST

45 Clause 44 Total Expenditure incurred (e.g., INR 100) Expenditure in relation to Registered Suppliers (e.g. INR 70) Expenditure in relation to Unregistered Suppliers (e.g., INR 30) Exempt Supplies from registered suppliers (e.g. INR 10) Supplies from Composition Taxable Persons (e.g. INR 20) Taxable Supplies from Non-Composition Registered Taxable Person (e.g. INR 40)

46 Some food for thought Salaries: Exempt GST supply or supply by unregistered suppliers or not to disclose? Reimbursements To be treated as part of salary or to further dive deep? What if expenses have been netted off? Are clients ready for this level of disclosure? Are auditors ready/prepared to complete this mammoth exercise? Can/should auditors give disclaimer? Can auditor apply concepts of materiality and audit sampling? [Reputation of auditors already at all time low ]

47 Questions Slide No. 47

48 Thanks for your time!