NEW TAX AUDIT REPORTS LUNAWAT & CO. Chartered Accountants 25 th August 2014 CA. PRAMOD JAIN FCA, FCS, FCMA, LL.B, MIMA, DISA
LEGISLATION ON TAR S. 44AB Rule 6G Form 3CA Form 3CB Business exceeds 1 Crore Profession exceeds 25 Lacs Business u/s 44AD; deemed profit < 8% and TI >ANCT Business u/s 44AE / 44BB / 44BBB; income is < deemed profits Prescribing the Forms for Report u/s 44AB Report in case of a person who is required to get his A/cs audited under any law Report in any other case Form 3CD Particulars as required u/f 3CA or 3CB
INTERNAL AUDITOR Earlier Not if he was an employee of the assessee. If he was working in a professional capacity (not being an employee of assessee) - could have conducted tax audit. Now - Internal auditor of the assessee cannot conduct tax audit if he is internal auditor whether he is an employee of the assessee or not. Effective from 12-12-2008.
TAR CEILING 30 45 60 ICAI clarified in 2011 that audit prescribed under any statute (like DVAT, 2004), not covered 44AD / 44AE audit not covered in limit
SUMMARY OF CHANGES Form 3CA & Form 3CB amended Form 3CD also amended No annexures in Form 3CD now Total 41 points as compared to 34 earlier Part A now 8 points earlier 6 Part B now 33 points earlier 28 7 New clauses More than 20 clauses amended / extended Applicable w.e.f. 25.07.2014 even if report is to be filed for earlier AYs
FORM 3CA Reporting period amended from 31 st March to. Examination of books by auditor included before giving opinion Opinion now to be given subject to observations / qualifications No opinion on Annexure Stamp / Seal of auditor required Name of signatory to be given To be signed by person eligible as per s. 44AB (earlier CA, auditor as per Companies Act, other person entitled to audit
FORM 3CB Same as Form 3CA except examination of books Reporting period amended from 31 st March to. Opinion now to be given subject to observations / qualifications No opinion on Annexure Stamp / Seal of auditor required Name of signatory to be given To be signed by person eligible as per s. 44AB (earlier CA, auditor as per Companies Act, other person entitled to audit
QUALIFICATIONS IN REPORT -1 Proper books of account, to enable reporting in form 3CD, have not been maintained by the assessee. All the information and explanations which to the best of my/our knowledge and belief were necessary for the purpose of my/our audit has been provided by the assessee. Documents necessary to verify the reportable transaction were not made available. Proper stock records are not maintained by the assessee.
QUALIFICATIONS IN REPORT - 2 Valuation of closing stock is not possible. Yield/percentage of wastage is not ascertainable. Records necessary to verify personal nature of expenses not maintained by the assessee TDS returns could not be verified by with the books of account. Records produced for verification of payments through account payee cheque were not sufficient Amount of expense related to exempted income u/s 14A of Income tax Act, 1961 could not be ascertained
QUALIFICATIONS IN REPORT - 3 Creditors under Micro, Small and Medium Enterprises Development Act, 2006 are not ascertainable Prior period expenses are not ascertainable from books of account Fair market value of shares u/s 56(2) (viia) / (viib) is not ascertainable. Reports of audits carried by Excise/Service tax Department were not made available GP ratio is not ascertainable from the financial statements prepared by the assessee.
QUALIFICATIONS IN REPORT - 4 Information regarding demand raised or refund issued during the previous year under any tax laws other than Income-tax act, 1961 and Wealth tax Act, 1957 were not made available Others Mandatory that observations in 3CD on which opinion cannot be given be reported in Form 3CA / Form 3CB
FORM 3CD NEW CLAUSES 4 Indirect Tax Registration Nos to be given if liable to pay i.e., Central Excise Duty, Central Customs Duty, Service Tax, Sales Tax /VAT State Wise, State Excise Duty State Wise Others Indirect tax. Is it indirect tax audit?
FORM 3CD NEW CLAUSES 8 relevant clause u/s 44AB under which audit is done to be given a) Business exceeds Rs. 1 Cr. b) Profession exceeds Rs. 25 Lacs c) Lower deemed profits u/s 1) 44AE, 2) 44BB, 3) 44BBB d) Lower deemed profits u/s 44AD and income exceeds maximum amount not chargeable to tax
APPLICABILITY OF 44AB ON MR. A Trading; Turnover 40L; NP 1L; TI-1.5L No Manufacturing; TO 80L; NP -3L; 80-IC-2L; TI-4L No Commission - 50L; NP- 3 L; TI 4 L No Trading; TO -60L; Commission - 2L; NP- 3L; TI 4L No
APPLICABILITY OF 44AB ON MR. A Manufacturing; Turnover 120L; NP -3L; TI-4L Yes Trading- Turnover 110L; NP -3L; Architect Fee 30 L NP- 5 L; TI-7L Dr. Trading; Turnover 80L -NP 3L; Fee 10 L NP 5 L TI- 8 L4 L Yes No
APPLICABILITY OF 44AB ON MR. A Tradin g 25 L ; NP- 3 L Manufa cturing 80L ; NP 8L Commi ssion 2 L; NP- 1L Profess ion 21 L ; NP 5 L
FORM 3CD NEW CLAUSES 17 land or building or both transferred at less that the circle rate u/s 43CA or 50C. Detail to be given: Detail of property with complete address Consideration received or accrued Value adopted or assessed / assessable 28 details of shares received without / inadequate consideration u/s 56(2)(viia) Is it for assesses? Only for firm & company
FORM 3CD NEW CLAUSES 28 Not stated in Form, but required in the schema Name of the person from whom shares are received PAN, if available Name of company whose shares are received CIN No. of Shares Amount of consideration paid FMV of shares
FORM 3CD NEW CLAUSES 29 Details of consideration received in excess of fair value for issue of shares u/s 56(2)(viib) only for co. 29 Details not given in Form, but in Schema: Name of the person from whom consideration received for issue of shares PAN, if available No. of Shares received Amount of consideration received FMV of shares
FORM 3CD NEW CLAUSES 39 - Details, if any, of disqualification or disagreement on any matter / item / value / quantity as may be reported / identified by the auditor in audit under s. 72A service tax 41 - Details of demand raised / refund issued under any tax laws other than IT & WT with relevant proceedings
FORM 3CD - AMENDMENTS 11(b) - Address of each location where books are kept to be given HO / Branch Different books different addresses Address along with state & PIN 11 (c) - Apart from list of books [s. 2(1) (12A)] examined, nature of relevant documents examined also to be given
FORM 3CD - AMENDMENTS 12 To mention if PL also includes presumptive income under: Chapter XII-G (shipping Business) First Schedule (Insurance Business) 13 (C) detail for change in method of accounting to be given: Particulars Increase in profit Decrease in profit
FORM 3CD - AMENDMENTS 14 (b) - detail for change in method of valuation of closing stock to be given: Particulars Increase in profit Decrease in profit 18 (d)(i) & 27(a) change of words from MODVAT to CENVAT 18 Depreciation schedule can be imported in the new schema CVS file
FORM 3CD - AMENDMENTS 19 Amounts admissible. Details to be given: Amounts debited to PL Amounts admissible under IT provisions and also fulfils conditions S. 32AC (investment in new Plant & Mach) added S. 35AD(specified business) added S. 35CCC (agricultural extension project) added S. 35CCD (skill development project) added
FORM 3CD - AMENDMENTS 19 amounts admissible. S. 33AC (reserve shipping business) deleted S. 35 (scientific research) bifurcated into 35(1)(i) revenue expenditure 35(1)(ii) 175% of amount paid to University, etc 35(1)(iia) 125% of amount paid to company 35(1)(iii) 125% of amount paid for research in social science or statistical research.. 35(1)(iv) Capital expenditure 35(2AA) 200% of sum paid to National Laboratory. 35(2AB) Company in bio technology or Mfg..200%
FORM 3CD - AMENDMENTS 20(b) [old 16(b)] - contributions received from employees for all funds as referred to in s. 36(1)(va) covered. Details to be given as: Nature of fund Sum received from employees Due date for payment Actual amount paid Actual date of payment to authorities
FORM 3CD - AMENDMENTS 21(a) [old 17] - amounts debited to PL. Details now in tabular form - Particulars and Amount Capital Expenses Advertisement of all kinds to be given?? Earlier political party only Personal Exp., etc. Club entrance fee & subscription not required. Only expenditure incurred at clubs being cost for club services and facilities used to be given
FORM 3CD - AMENDMENTS 21(b) 40(a) bifurcated into (i), (ia), (ic), (iia), (iib), (iii), (iv), (v). Other clause?? (ii) - tax 40(a)(i) (can be imported from CVS file) - details: Payment on which tax not deducted Payment on which tax has been deducted but has not been paid during P.Y. or in subsequent year before the expiry of time prescribed u/s 200(1) Apart from date, amount and nature of payment, name & address of payee also to be given Also amount of tax deducted (when deducted) also to be given
FORM 3CD - AMENDMENTS 21(b) 40(a)(ia) - Details of: Payment on which tax not deducted Payment on which tax has been deducted but has not been paid on or before the due date specified in s. 139(1). Apart from date, amount and nature of payment, name & address of payer also to be given Also amount of tax deducted (when deducted) also to be given Detail of amount deposited out of deducted also to be given
FORM 3CD - AMENDMENTS 21(b) 40(a)(ic) - FBT 21(b) 40(a)(iia) - WT 21(b) 40(a)(iib) Royalty etc. to SG 21(b) 40(a)(iii) Salaries paid outside India or to Non- residents if tax not paid on it or not deducted u/c XVIIB details to be given 21(b) 40(a)(iv) Payment to PF or other fund unless assessee has made effective arrangement for TDS if chargeable under head salaries
FORM 3CD - AMENDMENTS 21(b) 40(a)(v) Tax paid by employer u/s 10(10CC) 21(b) Disallowance u/s 40A(3) No certificate required now Detail to be given: Date of payment Nature of payment Amount Name of Payee PAN (if available) 40A(3A) also covered same details
FORM 3CD - AMENDMENTS 21(g) particulars of any liability of contingent nature 24 (Old 19) deemed profits 32AC included 25 (not in form but in schema) Profit chargeable u/s 41 details required: Name of person Amount of income Section Description of transaction Computation, if any
FORM 3CD - AMENDMENTS 30 Loan on Hundi no change in Form, but detail required in Schema 31(c) (old 24) 269 SS/T- certificate no longer required 32 (c) (old 25) carry forward losses - 3 sub clauses added c) Detail of speculation loss incurred - u/s 73 d) Detail of losses in specified business u/s 73A e) Deemed speculation loss under explanation to s. 73
FORM 3CD - AMENDMENTS 33 (Old 26) deductions u/c VIA Chapter III (S. 10A, 10AA) added Detail Section; Amounts admissible as per provision of IT Act and fulfils conditions, if any, specified under relevant provisions of IT Act and Rules or any other guidelines, circular, etc, issued in this behalf. 34 (Old 27) TDS total revamped. TCS added Complied status of chapter XVIIB not required to be commented upon Full details of TDS / TCS required now
FORM 3CD - AMENDMENTS 34 (Old 27) (a) if required to deduct or collect tax as per provisions of Chapter XVIIB or XVIIBB furnish: 1. TAN 2. Section 3. Nature of payment or receipt 4. Total amount of payment or receipt specified in 3 5. Total amount on which tax was required to be deducted / collected under 4 6. Total amount on which tax was deducted / collected at specified rate out of 5
FORM 3CD - AMENDMENTS 34 (a) (Old 27) furnish: 7. Amount of tax deducted or collected out of 6 8. Amount on which tax was deducted / collected at less than specified rate out of 7 9. Amount of tax deducted or collected on 8 10. Amount of tax deducted or collected but not deposited out of 6 & 8
TDS EXAMPLE Sectio n (2) Natur e of Payme nt (3) Total amt of payme nt or receip t (4) Total amt on which tax was requir ed to be deduct ed out of 4 (5) Total amt on which tax was ded. / coll. at specifi ed rate out of 5 (6) Amo unt of tax dedu cted out of 6 (7) Amt on which tax was ded. / coll/ at < than specifie d rate out of 7 (8) Amou nt of tax deduct ed or collect ed on 8 (9) Amt of tax ded. or coll. but not deposi ted out of 6 & 8 (10) 194 C Tpt. 15 Cr 0 0 0 0 0 0 194 C Cont. 25 L 15 L 10 L 10000 5 Lacs 5000 0 194A Intt. 5 Crs 6 Lacs 5 Lacs 50K 1 Lac 5000 0 194I Rent 25 L 20 L 15 L 1.5 L 5 L 10000 10000 194J FTS 1 L 1 L 0 0 0 0 0
FORM 3CD - AMENDMENTS 34 (b) If TDS / TCS Statement not furnished within prescribed time, furnish: TAN Type of Form Due date of furnishing Date of furnishing, if furnished Whether the TDS / TCS Statement contains information about all transactions which are required to be reported Transporters???
FORM 3CD - AMENDMENTS 34 (c) If liable to pay interest u/s 201(1A) / 206C(7), furnish: TAN Interest payable u/s 201(1A)/206C(7) Amount paid along with date of payment 36 (Old 29) 115-O- 2 more details: amount of reduction in s. 115-O(1A)(i) dividend from subs domestic or 115BBD amount of reduction in s. 115-O(1A)(ii) NPS 10(44)
FORM 3CD - AMENDMENTS 37 (Old 30) Cost Audit not to attached report - details, of disqualification or disagreement on any matter / item / value / quantity as may be reported / identified by cost auditor 38 (Old 31) Excise Audit not to attached report - details, of disqualification or disagreement on any matter / item / value / quantity as may be reported / identified by auditor
FORM 3CD - AMENDMENTS 41 (Old 32) Ratios Previous year information also to be given Turnover also to be given now Now details to be given??? No ratios?? Total turnover of the assessee Gross profit / turnover Net profit / turnover Stock-in-trade / turnover Material consumed / finished goods produced (The details to be furnished for principal items of goods traded or manufactured or services rendered)
FILING DATES Date extended for 44AB to 30 th November 2014 TAR filed upto 24 th July 2014 - valid Due date as per Law 139(1)???? What about other tax audits???
CA. Pramod Jain pramodjain@lunawat.com +91 9811073867 2014 CA. Pramod Jain, Lunawat & Co