lunawat& co. ca. pramod...

NEW TAX AUDIT REPORTS

LUNAWAT & CO.Chartered AccountantsLUNAWAT & CO.Chartered Accountants CA. PRAMOD JAIN

FCA, FCS, FCMA, LL.B, MIMA, DISA

CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA6th September 20146th September 2014

LEGISLATION ON TAR

•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

S. 44AB

•Prescribing the Forms for Report u/s 44ABRule 6G

• Report in case of a person who is required to get his A/cs audited under any law

Form 3CA

•Report in any other caseForm 3CB

•Particulars as required u/F 3CA or 3CBForm 3CD

Lunawat & Co.

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.

Lunawat & Co.

TAR CEILING

� ICAI clarified in 2011 that audit prescribed

under any statute (like DVAT, 2004), not

covered

� 44AD / 44AE audit not covered in limit

Lunawat & Co.

3045

60

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

Lunawat & Co.

FORM 3CA�Reporting period for PL amended from 31st

March to period wise.

�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. FRN??

�To be signed by person eligible as per s.

44AB (earlier CA, auditor as per Companies

Act, other person entitled to audit

Lunawat & Co.

FORM 3CB

�Same as Form 3CA except

examination of books

�Opinion subject to observations /

qualifications to be given:

�Financial Statements – 3(a)

�Form 3CD - 5

Lunawat & Co.

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.

Lunawat & Co.

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 chequewere not sufficient

�Amount of expense related to exempted income u/s 14A of Income tax Act, 1961 could not be ascertained

Lunawat & Co.

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.

Lunawat & Co.

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

Lunawat & Co.

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?

Lunawat & Co.


�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

Lunawat & Co.

APPLICABILITY OF 44AB ONMR. A

•No

Trading; Turnover – 50L; NP – 3L; TI-1.5L

•No

Manufacturing; TO – 80L; NP -5L; 80-IC-2L; TI-4L

•No

Commission - 50L; NP- 3 L; TI 4 L

•No

Trading; TO -60L; Commission - 2L; NP- 3L; TI 4L

Lunawat & Co.


•Yes

Mfg. - Turnover – 120L; NP -5L; 80-IC – 3 L; TI-3L

•Yes

Trading- Turnover – 110L; NP -3L; Architect – Fee – 30 L NP- 5 L; TI-7L

•No

Doctor - Trading; Turnover –80L -NP – 3L; Fee – 10 L – NP 5 L TI- 8 L4 L

Lunawat & Co.


Manufacturing – 80L ; NP – 8L

Trading – 25 L ; NP- 3 L

Commission –2 L; NP- 1L

Profession – 21 L ; NP –5 L

Lunawat & Co.

E-FILING UTILITIES�Now different filing utilities on

website:� Form 3CA-3CD

� Form 3CB-3CD

� Common Utility for

�Form 3CEB

�Form 29B

�Form 6B

�Form 10B

�Form 10BB

� Form 64

Lunawat & Co.


�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

Lunawat & Co.


�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

Lunawat & Co.

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

Lunawat & Co.


�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

Lunawat & Co.

FORM 3CD - AMENDMENTS

�10(a) – Nature of Business – select –code

�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…… Schema says – books examined only

Lunawat & Co.


�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

Lunawat & Co.


�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

Lunawat & Co.

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

Lunawat & Co.

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%

Lunawat & Co.


�20(b) – [old 16(b)] - contributions

received from employees for all funds

as referred to in s. 36(1)(va) covered.

� PF

� Superannuation

�Gratuity

� ESI

� Other Welfare fund

Lunawat & Co.

FORM 3CD - AMENDMENTS�20(b) –Details to be given for:

�Nature of fund

� Sum received from employees

�Due date for payment

� Actual amount paid

� Actual date of payment to

authorities

Lunawat & Co.


�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??

� Personal Exp., etc.

� Club entrance fee & subscription not

required by English version of Rule. – but

given in Schema

� Expenditure incurred at clubs being cost for

club services and facilities used to be given

Lunawat & Co.

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, PAN if

available also to be given

�Also amount of tax deducted (when deducted)

also to be given

Lunawat & Co.

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

Lunawat & Co.


�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

Lunawat & Co.


�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

Lunawat & Co.


�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 – 41(1)(a), (1)(b), (2), (3), (4), (4A), (5)

� Description of transaction

� Computation, if any

Lunawat & Co.


� S. 41(1)(a) – Cessation of trading liability by

assessee

� S. 41(1)(b) - Cessation of trading liability by

successor assessee

� S. 41(2) – Balancing Charge

� S. 41(3) – Asset used u/s 35 sold – to extent of

deduction claimed

� S. 41(4) – Recovery of bad debts

� S. 41(4A) – Amount withdrawn from special

reserve u/s 36(1)(viii)

� S. 41 (5) – After closure of business if income

u/ss 1,3,4, 4A, then can be set off against loss

Lunawat & Co.


�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) – carry forward losses – exact

nature of loss to be mentioned year-wise

�32(c)- 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

Lunawat & Co.


�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

Lunawat & Co.


�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

Lunawat & Co.


�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

Lunawat & Co.

TDS EXAMPLESectio

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

Lunawat & Co.


�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??? – yes / no??

Lunawat & Co.


�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)

Lunawat & Co.


�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

Lunawat & Co.


�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)

Lunawat & Co.

FILING DATES

�Date extended for 44AB to 30th

November 2014

�TAR filed upto 24th July 2014 -

valid

�Due date as per Law – 139(1)????

�What about other tax audits???

Lunawat & Co.

Lunawat & Co.