CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable - - PowerPoint PPT Presentation

CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018

It contains total 6 Amendments and 10 Insertions, bringing in total 16 changes.

CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018

Sl. 3CD Point No. Remarks 1 4 (amended) GSTIN to be mentioned. 2 19 (amended) Allowances under Section 32AD to be reported 3 24 (amended) Deemed gains u/s 32AD to be reported. 4 26 (amended) Reporting of any sum payable to Railways u/s 43B(g) which is not allowable as deduction for non-payment. 5 29A (new) Reporting of amount chargeable u/s 56(2)(ix) as ‘income from other sources’ 6 29B (new) Reporting of amount chargeable u/s 56(2)(x) as ‘income from

• ther sources’

CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018

Sl. 3CD Point No. Remarks 7 30A (new) Reporting details of Primary Adjustments to Transfer Price u/s 92CE(1) 8 30B (new) Reporting details of interest expenditure incurred exceeding one crore rupees as referred u/s 94B(1) 9 30C (new) Reporting details of impermissible avoidance arrangements, as referred to in section 96 10 31(ba), 31(bb), 31(bc), 31(bd) (new) Reporting details of each cash receipt or payment in excess

• f the limit specified u/s 269ST

11 31(c), 31(d), 31(e) (amended) Clauses amended.

CBDT Notifies Amendments in Form 3CD (Tax Audit Report), applicable from 20 Aug. 2018: Income-tax (8th Amendment) Rules, 2018

Sl. 3CD Point No. Remarks 12 34(b) (amended) Reporting details of transactions not disclosed in TDS/ TCS Returns 13 36A (new) Reporting details of any dividend receipts u/s 2(22)(e) 14 42 (new) Reporting details of transactions not disclosed/ specified in Form No. 61/ 61A/ 61B 15 43 (new) Reporting whether assessee or its parent entity or alternate reporting entity is liable to furnish the report (CbCR) u/s 286(2) 16 44 (new) Reporting Break-up of total expenditure into expenditure with registered or not registered entities under the GST

• Whether the assesse is liable to pay indirect tax

like excise duty, service tax, sales tax, Goods & Service Tax, customs duty, etc. if yes, please furnish the registration number or GST number

• r any other identification number allotted for

the same.

Clau ause e 4

• Since Goods and Services Tax has come into force from 1st

July, 2017, the GST registration is also added to the list of indirect tax registrations to be disclosed. Thus, GSTIN needs to be mentioned in this field now.

• This is a simple requirement and should not cause any

problems while reporting.

Clau ause e 4

• Issue:
• What if the assessee is required to pay GST, but not

registered?

• (The Clause begins with “whether the assessee is liable to

pay indirect tax…?)

• Also, at present, The Tax audit report cannot be uploaded if

“Yes” is selected but no regn number ( as not registered)

Clau ause e 4

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

 A new clause has been inserted which will affect all entities irrespective

• f whether they are registered under GST or not. The following

information needs to be given:

 i. Total amount of Expenditure incurred during the year.  ii. Expenditure in respect of entities registered under GST:

• a. Relating to goods or services exempt from GST.
• b. Relating to entities falling under composition scheme.
• c. Relating to other registered entities.
• d. Total payment to registered entities.

 iii. Expenditure relating to entities not registered under GST.

Clau ause e 44

Break-up of total expenditure of entities registered or not registered under the GST:

Sl. No. Total amount

• f

Expenditur e incurred during the year Expenditure in respect of entities registered under GST Expenditur e relating to entities not registered under GST Relating to goods

• r

services exempt from GST Relating to entities falling under composition scheme Relating to

• ther

registered entities Total payment to registered entitites

Clau ause e 44

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

 With this clause, the government has clearly made its intention known

as regards reliance on data analytics. There is a very visible thrust on matching the data available with the various tax wings of the Finance

• Ministry. The intent of the government in tracking and punishing tax

evaders is obvious. One has to be extremely careful while submitting the information under this clause.

Clau ause e 44

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

Issues:

 Information sought under clause 44 is already part of Annual return under

GST which is to be filed along with the reconciliation statement.

 Due date for furnishing the Annual Return of GST is 31st December and is

later than the date of filing of Tax Audit Report.

 Reconciliation statement under GST is a much better tool to ensure the

correctness of data to be reported under Clause 44.

 This is because such reconciliation statement starts with figures as per

audited accounts and reaches the figures as per the GST annual return.

 It is advisable that such details are certified by GST Auditor as part of the

reconciliation statement which is already provided under CGST Act, 2017.

Clau ause e 44

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

Issues:

 Tax auditor may have limited time as well as knowledge of GST.  What kind of data mining if at all, will be possible is not clear.

Clau ause e 44

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

Issues:

 Every expenditure may not necessarily lead to a supply under GST.  As an example, salary expense is treated as neither supply of goods nor

supply of services as per Entry No. 1 of Schedule III to the CGST Act, 2017.

 Another instance can be of capital goods wherein only depreciation

forms part of the expenditure whereas input tax credit is claimed on entire purchase.

 Hence it is very difficult to provide break-up for “total expenditure” into

GST and non- GST expenditure without doing perfect reconciliation.

Clau ause e 44

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

Issues:

 Accounting system at many small and medium enterprises is not geared

for pulling out such information since the said requirement has been announced after the end of the year.

Clau ause e 44

Break up of total expenditure in respect of GST Registered and Unregistered Entities is required to be given

Issues:

 Seeking the quantum of total payments made to the registered entities

may create confusion since the expenditure is recorded on accrual

• basis. Such information is also very difficult to obtain.

[Payment includes “credit entries” or not? ]

 The data of import of goods/services is to be shown in the field

“Expenditure relating to entities not registered under GST. This may create illogical picture.

Clau ause e 44

• Whether any amount is to be included as income

chargeable under the head income from other sources’ as referred to in clause(x) of sub section (2) of section 56?

• (b) If yes, furnish the following details:
• (i) Nature of income

Clau ause e 29b

Section – 56(2)(x):

where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,— (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,— (A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (B) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:

Section – 56(2)(x):

(c) any property, other than immovable property,— (A) without consideration, the aggregate fair market value

• f which exceeds fifty thousand rupees, the whole of the

aggregate fair market value of such property; (B) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration.

Section – 56(2)(x): Exceptions: any sum of money

• r any property received;

1. from any Relative 2.

• n the occasion of the marriage of the individual

3. at contemplation of death of the payer 4. under a Will / inheritance 5. from local authority w/o consideration 6. from fund/university 7. from trust recognized u/s 12AA

Relevant Issues

• This clause refers to report, if any, amount to be included as
• taxable. So exempt gift need not required to be reported.
• However, as per Income Tax Return e-filing schema, the

details of exempt gift received is also required to be disclosed.

Clau ause e 29b

Amounts admissible u/s. 32AC, 32AD, 33AB, 33ABA, 35(1)(i), (ii), (iia), (iii) (iv), 35(2AA), (2AB), 35ABB, 35AC, 35AD, 35CCA, 35CCB, 35CCC, 35CCD, 35D, 35DD, 35DDA & 35E

• Debited to Profit / Loss Account

Therefore, amount debited to Profit and Loss Account & deduction allowable under each section is to be shown.

Clau ause e 19

Clause 19: Relevant Amendment

• The allowance under section 32AD needs to be disclosed herein.
• Section 32AD provides allowance @ 15% of the cost of any new

assets acquired and installed in an undertaking or enterprise for

manufacture or production of any article or thing, on or after 1st April 2015 and before 1st April, 2020 in any backward area notified on this

behalf in the States of Andhra Pradesh, Bihar, Telangana

• r West Bengal.
• The allowance allowed is 15% of the actual cost of such new
• asset. This section was introduced into the Statute w.e.f. 1-4-2016.

• Deemed profit under section
• 32AC - Deduction of 15% of investment in new plant &

machinery exceeding Rs.100 crore.

• 32AD - Investment in new plant or machinery in notified

backward areas in certain States

• 33AB – Profit from tea, coffee and rubber business
• 33ABA – Profit from business of extraction or production
• f petroleum or natural gas.
• 33AC – Profit from business of operating ships

Clau ause e 24

Clause 24: Relevant Amendment

 Deemed gains arising out of sale of asset on which

allowance was claimed under section 32AD will now have to be reported in clause 24 of the Form.

 If the asset acquired as per the provisions mentioned

above is sold or transferred within 5 years from the date of installation, then the deduction claimed earlier shall be deemed to be the income of the assessee and will be charged under the head ‘Profits and Gains of Business or Profession’.

• In respect of any sum referred to in Clauses (a), (b), (c), (d), (e), (f) or (g) of
• S. 43B, liability for which-
• Pre-existed on first day of P.Y but was not allowed in assessment of

preceding P.Y & was-

• Paid during P.Y
• Not paid during P.Y [Sub-Clause (i A)]
• Was incurred in P.Y & was-
• Paid on or before due date for furnishing returns of P.Y u/s. 139 (1)
• Not paid on or before due date [Sub-Clause (i B)]
• State whether sales tax, customs duty, excise duty or any other indirect tax,

levy, cess, impost etc. is passed through profit / loss account

Clau ause e 26

Clause 26: Relevant Amendments

• As per section 43B certain deductions can be claimed only on actual

payment by the assessee before the date of filing returns.

• Till date, all such payments covered under clause (a) to (f) of the section

43B of the Act were to be disclosed in the Form.

• Now, clause (g) of section 43B which states that any sum payable by the

assessee to the Indian Railways for the use of railway assets can be claimed only on payment of the same before the date of filing returns also needs to be reported herein.

• Whether during the previous year the assessee received

any consideration for issue of shares which exceeds the FMV of the shares as referred to in section 56(2)(viib).

• Relevant for Company Assessees.

Clau ause e 29

• Whether any amount is to be included as income

chargeable under the head income from other sources’ as referred to in clause(ix) of sub section (2) of section 56?

• (b) If yes, furnish the following details:
• (i) Nature of income
• (ii) Amount thereof:

Clau ause e 29a

Advance received and forfeited for capital asset to be reported

As per section 56(2)(ix), any advance received for the transfer

• f a capital asset, if forfeited – shall be treated under the head

“Income from other sources”. The tax auditor will be required to report the nature and amount of the advance involved.

Clau ause e 29a

Advance received on capital asset to be reported

The tax auditor should consider obtaining third party confirmations for advances in the assessee’s balance sheet as liability.

Clau ause e 29a

 (a) Whether primary adjustment to transfer price, as referred

to in sub-section 1) of section 92Ce, has been made during the previous year? (Yes/No)

 (b) If yes, please furnish the following details:—

 (i) Under which clause of sub-section (1) of section 92CE

primary adjustment is made?

 (ii) Amount (in Rs.) of primary adjustment:

Clau ause e 30a

 (iii) Whether the excess money available with the

associated enterprise is required to be repatriated to India as per the provisions of sub-section (2) of section 92CE? (Yes/No)

 (iv) If yes, whether the excess money has been

repatriated within the prescribed time (Yes/No)

 (v) If no, the amount (in Rs.) of imputed interest income

• n such excess money which has not been repatriated

within the prescribed time:

Clau ause e 30a

 (1) Where a primary adjustment to transfer price,—

(i) has been made suomotu by the assessee in his return of income; (ii) made by the Assessing Officer has been accepted by the assessee; (iii) is determined by an advance pricing agreement entered into by the assessee under section 92CC;

(iv) is made as per the safe harbour rules framed under section 92CB; or

(v) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 90 or section 90A for avoidance of double taxation,

Provided that nothing contained in this section shall

apply, if,— (i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; and (ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day

• f April, 2016.

 (2) Where, as a result of primary adjustment to the transfer price,

there is an increase in the total income or reduction in the loss, as the case may be, of the assessee, the excess money which

is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the interest on such advance, shall be computed in such manner as may be prescribed.

 (3) For the purposes of this section—

(i) "associated enterprise" shall have the meaning assigned

to it in sub-section (1) and sub-section (2) of section 92A; (ii) "arm's length price" shall have the meaning assigned to it in clause (ii) of section 92F; (iii) "excess money" means the difference between the arm's length price determined in primary adjustment and the price at which the international transaction has actually been undertaken; (iv) "primary adjustment" to a transfer price, means the determination of transfer price in accordance with the arm's length principle resulting in an increase in the total income or reduction in the loss, as the case may be, of the assessee;

 (a) Whether the assessee has incurred expenditure during the previous

year by way of interest or of similar nature exceeding one crore rupees as referred to in sub-section (1) of section 94B? (Yes/No.)

 (b) If yes, please furnish the following details:—

(i) Amount (in Rs.) of expenditure by way of interest or of similar nature incurred: (ii) Earnings before interest, tax, depreciation and amortization (EBITDA) during the previous year (in Rs.): (iii) Amount (in Rs.) of expenditure by way interest or of similar nature as per (i) above which exceeds 30% of EBITDA as per (ii) above : (iv) Details of interest expenditure brought forward as per sub- section (4) of section 94B:

Clau ause e 30b

 (1) Notwithstanding anything contained in this Act, where an Indian

company, or a permanent establishment of a foreign company in India, being the borrower, incurs any expenditure by way of interest

• r of similar nature exceeding one crore rupees which is deductible

in computing income chargeable under the head "Profits and gains

• f business or profession" in respect of any debt issued by a non-

resident, being an associated enterprise of such borrower, the interest shall not be deductible in computation of income under the said head to the extent that it arises from excess interest, as specified in sub-section (2) :

 Provided that where the debt is issued by a lender which is not associated

but an associated enterprise either provides an implicit or explicit guarantee to such lender or deposits a corresponding and matching amount of funds with the lender, such debt shall be deemed to have been issued by an associated enterprise.

 (2) For the purposes of sub-section (1), the excess interest shall mean an

amount of total interest paid or payable in excess of thirty per

cent of earnings before interest, taxes, depreciation and amortisation of the borrower in the previous year or interest paid or

payable to associated enterprises for that previous year, whichever is less.

 (3) Nothing contained in sub-section (1) shall apply to an Indian company or a

permanent establishment of a foreign company which is engaged in the business

• f banking or insurance.

 (4) Where for any assessment year, the interest expenditure is not wholly

deducted against income under the head "Profits and gains of business or profession", so much of the interest expenditure as has not been so deducted,

shall be carried forward to the following assessment year or

assessment years, and it shall be allowed as a deduction against the profits and gains, if any, of any business or profession carried on by it and assessable for that assessment year to the extent of maximum allowable interest expenditure in accordance with sub-section (2):

 Provided that no interest expenditure shall be carried forward under this sub-

section for more than eight assessment years immediately succeeding the assessment year for which the excess interest expenditure was first computed.

 (5) For the purposes of this section, the expressions—  (i)

"associated enterprise" shall have the meaning assigned to it in sub- section (1) and sub-section (2) of section 92A;

 (ii)

"debt" means any loan, financial instrument, finance lease, financial derivative, or any arrangement that gives rise to interest, discounts or other finance charges that are deductible in the computation of income chargeable under the head "Profits and gains of business or profession";

 (iii)

"permanent establishment" includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.]

Example :

(i) Amount (in Rs.) of expenditure by way of interest or of similar

nature incurred: : 1,50,00,000

(ii) Earnings before interest, tax, depreciation and amortization

(EBITDA) during the previous year (in Rs.):2,66,00,000 (iii) Amount (in Rs.) of expenditure by way interest or of similar nature as per (i) above which exceeds 30% of EBITDA as per (ii) above :

 30% of EBITDA : 79,80,000  Excess Amount : 70,20,000 (2,66,00,000-79,80,000)

(v) Details of interest expenditure carried forward as per sub-section (4)

• f section 94B: 70,20,000/-

 (a) Whether the assessee has entered into an impermissible

avoidance arrangement, as referred to in section 96, during the previous year? (Yes/No.)

 (b) If yes, please specify:—  (i) Nature of impermissible avoidance arrangement:  (ii) Amount (in Rs.) of tax benefit in the previous year arising, in

aggregate, to all the parties to the arrangement:

Clau ause e 30c

 Section 96  GENERAL ANTIAVOIDANCE RULES:

 .(1) An impermissible avoidance arrangement means an arrangement,

the main purpose of which is to obtain a tax benefit, and it—

 (a)

creates rights, or obligations, which are not ordinarily created between persons dealing at arm's length;

 (b)

results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act;

 (c)

lacks commercial substance or is deemed to lack commercial substance under section 97, in whole or in part; or

 (d)

is entered, or carried out, by means, or in a manner, which are not

• rdinarily employed for bona fide purposes.

 (2) An arrangement shall be presumed, unless it is proved to the

contrary by the assessee, to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, notwithstanding the fact that the main purpose of the whole arrangement is not to obtain a tax benefit.

 Issue:

 Whether Tax Auditor required to go through all the agreements

entered by the assessee during the assessment year , even though having no financial impact in the relevant Assessment Year?

 Whether Tax Auditor has sufficient professional competence and

access to all the required documents and information to come to conclusion?

• Particulars of each loan / deposit exceeding limits specified u/s.

269SS taken or accepted during P.Y-

• Name, address & PAN of lender / depositor
• Amount of loan / deposit
• Whether loan / deposit was squared up during P.Y
• Maximum amount outstanding at any time in P.Y
• Whether loan / deposit was taken / accepted otherwise than by account

payee cheque or account payee bank draft or use of electronic clearing system.

• Whether loan / deposit was taken / accepted otherwise than by account

payee cheque or account payee bank draft [Sub-Clause (a)]

Clau ause e 31

Cash receipts of Rs. 2,00,000 or more covered u/s 269ST to be reported

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.

Clau ause e 31

Cash receipts of Rs. 2,00,000 or more covered u/s 269ST to be reported

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) transactions of the nature referred to in section 269SS; (iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

Clau ause e 31

Cash receipts of Rs. 2,00,000 or more covered u/s 269ST to be reported Nature of receipt does not matter Person receives a sum which is not chargeable to tax still he would be hit by the provisions of this section and would be liable to penalty. Receipts can be anything such as proceeds of sales of goods, income of whatsoever nature – taxable or not, gifts, capital receipts, loans, advances, government grants, subsidies, encashment of bonds/securities, encashment of instruments like National Savings Certificates, proceeds of Life Insurance Policies, scholarships, sale of shares, transactions between related parties and so on.

Clau ause e 31

Nature Example Consequences In aggregate from a person in a day If a person receives Rs. 2.25 lakhs in cash for 2 different bills of Rs. 1 lakhs and 1.25 lakhs. Penalty is levied of 100% of amount received. In respect of single transaction If there is single bill of Rs. 3.10 lakhs and cash is received on different days of

• Rs. 1.6 lakhs and 1.5 lakhs.

Penalty is levied of 100% of amount received. In respect of transactions relating to one event or

• ccasion from a person

If marriage is one occasion and a person receives amount of Rs. 3 lakhs. Penalty is levied of 100% of amount received.

Examples of Section 269ST

• Particulars of each loan / deposit repaid exceeding limits specified u/s.

269T during P.Y-

• Name, address & PAN of payee
• Amount of repayment
• Maximum amount outstanding at any time during P.Y
• Whether repayment was made otherwise than by account payee cheque
• r account payee bank draft [Sub-Clause (b)]
• Whether the taking or accepting loan or deposit or repayment of the same

were made by account payee cheque drawn on bank or account payee bank draft based on the examination of BOA and other relevant documents.

Clau ause e 31

Particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggreate 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, where such receipt is othewise than by a cheque or bank draft or use of electronic clearing system through a bank account :— (i) Name, address and Permanent Account Number (if available with the assessee) of the payer; (ii) Nature of transaction; (iii) Amount of receipt (in Rs.); (iv) Date of receipt;

Clau ause e 31ba

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 transations relating to one event or occasions from a person, received by a cheque or bank draft, not being an account payee cheque

• r an account payee bank draft, during the previous year;—

(i) Name, address and Permanent Account Number (if available with the assessee) of the payer; (ii) Amount of receipt (in Rs.);

Clause use 31bb bb

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 transations relating to

• ne event or occasions to a person, otherwise than by a cheque or bank

draft, or use of electronic clearing system through a bank account, during the previous year:— (i) Name, address and Permanent Account Number (if available with the assessee) of the payee; (ii) Nature of transaction; (iii) Amount of payment (in Rs.); (iv) Date of payment;

Clau ause e 31bc

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 transations relating to one event or occasions to a person, made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year:— (i) Name, address and Permanent Account Number (if available with the assessee) of the payee; (ii) Amount of payment (in Rs.); (Particulars at (ba), (bb), (bc) and (bd) need not be given in the case of receipt by or payment to a Government company, a banking Company, a post office savings bank, a cooperative bank or in the case of transactions referred to in section 269SS or in the cse of persons referred to in Notification No. S.O. 2065(E) dated 3rd July, 2017)

Clause use 31bd

Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB.

Tax deducti

• n and

collecti

• n

account No. (TAN) Section Nature

• f

Payme nt Total amount

• f

paymen t or receipt

• f the

nature specifie d in column (3) Total amount

• n

which tax was reqiured to be deducte d or collecte d out of (4) Total amount

• n

which tax was deducte d or collecte d at specifie d rate Amount

• f Tax

deducte d or collecte d out of (6) Total amount

• n which

tax was deducte d or collected at less than specified rate ot of (7) Amoun t of tax deduct ed or collect ed on (8) Amoun t of tax deduct ed or collect ed not deposit ed to the credit

• f CG
• ut of

(6) & (8)

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Clau ause e 34a

• Whether the assessee is required to furnish the statement of tax

deducted or tax collected. If yes, furnish the details. Tax

deduction and collection Account No. (TAN) Type

• f

Form Due date for furnishin g Date of furnishing , if furnished Whether the statement of tax deducted or collected contains information about all transactions which are required to be reported. If not, furnish the list of details/transactions which are not reported. (1) (2) (3) (4) (5)

Clau ause e 34b

• Earlier, only requirement was that, “Whether the statement of tax deducted or

collected contains information about all details/transactions which are required to be reported.”

• Now, There is an requirement that, “Whether the statement of tax deducted
• r collected contains information about all details/transactions which are

required to be reported. If not, furnish list of details/transactions which are not reported.

• i.e. TDS not deducted,

TDS Deducted but not deposited, Late Deposited, Any change in the date of booking, as per books & Return.

Clau ause e 34b

(a) Whether the assesee has received any amount in the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2? (Yes/No.) (b) If yes, please furnish the following details:— (i) Amount received (in Rs.): (i i) Date of receipt

Section 2(22) of the Act defines Deemed Dividend. If any such dividend is received then the amount of dividend and the date of receipt need to be disclosed in the form now.

Clau ause e 36a

Dividend received u/s 2(22)(e)

Definition of deemed dividend under section 2(22)(e): Any payment by a company, not being a company in which public are substantially interested (i.e. closely held company), of any sum (whether representing a part of the assets of the company or otherwise) by way of loan or advance

• to a shareholder, being a person who is the beneficial owner of the shares (not

being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits), holding not less than 10% of the voting rights, or

• to any concern in which such shareholder is a member or a partner and in which

he has a substantial interest, or

• on behalf, or for the individual benefit, of any such shareholder, to the extent to

which the company in either case possesses accumulated profits.

• Also, loan given by a subsidiary company to the holding company would fall

within the ambit of Section 2(22)(e).

Clau ause e 36a

Relevant issue :

• Uptil now, no reporting requirement for recipient.

Now, Tax Auditor has also to report from the recipient point of view.

• E.g in tax audit of individual being the director of company the Tax auditor

has to look into the accounts of the company that loans / advances from company attracts deemed dividend under section 2(22)(e).

• Deemed dividend has always been very contentious issue. The new

reporting requirement makes it even more onerous and the auditor’s responsibility is now even greater in terms of reporting violations of this section.

Clau ause e 36a

 (a) Whether the assessee is required to furnish statement in

Form No.61 or Form No.61A or

 Form 61B?  (b) If yes, furnish :.

Income tax Department Reporting Entity Identification Number Type

• f

Form Due date for furnishing Date of furnishing, If Whether the Form contains information about all details/ furnished transactions which are required to be reported. If not, please furnish list of the details/transactions which are not reported.

Clau ause e 42

 1. What is statement of financial transaction?

SFT is a report of specified financial transactions by specified persons including prescribed reporting financial institution. Such specified persons who register, maintain or record such specified financial transaction are under a mandate to submit SFT to the income tax authority or such other specified authority or agency.

 The following details of Form 61 (Statement containing particulars of declaration

received in Form No. 60), Form 61A (Statement of Specified Financial transactions) and Form 61B (Statement of Reportable Account under sub-section (1) section 285BA of the Act), if submitted, are to be disclosed :

 i. Income-tax Department Reporting Entity Identification Number.  ii. Type of Form.  iii. Due date for furnishing.  iv. Date of furnishing, if furnished.  v. Whether the Form contains information about all details/transactions which are

required to be reported. If not, furnish list of the details/transactions which are not reported.

 One may recollect here that there has been a raging debate amongst

professionals as to whether these forms are to be filed even if there is nothing to

• report. Now, the auditor will have to even find out whether there was anything to

report and whether that has been reported or not.

 (a) Whether the assessee or its parent entity or alternate reporting

entity is liable to furnish

 the report as referred to in sub-section (2) of section 286? (Yes/No)  (b) If yes, please furnish the following details :  (i) Whether report has been furnished by the assessee or its parent

entity or an alternate

 reporting entity  (ii) Name of parent entity  (iii) Name of alternate reporting entity (if applicable)  (iv) Date of furnishing of report

Clau ause e 43

 Section: 286(2):

Every parent entity or the alternate reporting entity, resident in India, shall, for every reporting accounting year, in respect of the international group of which it is a constituent, furnish a report, to the prescribed authority[within a period of twelve months from the end of the said reporting accounting year], in the form and manner as may be prescribed.

 Section: 286(1):

Every constituent entity resident in India, shall, if it is constituent of an international group, the parent entity of which is not resident in India, notify the prescribed income-tax authority (herein referred to as prescribed authority) in the form and manner, on or before such date, as may be prescribed77a,—



(a) whether it is the alternate reporting entity of the international group; or



(b) the details of the parent entity or the alternate reporting entity, if any, of the international group, and the country or territory of which the said entities are resident.