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Wednesday, 5 September 2018

Detailed analysis of Form 3CD Reports Amendments Applicable w.e.f. 20.08.2018

CBDT Notification No. 33/2018 dated July 20, 2018
Amendment to Rules, Form 3CB, Applicable from 20th August, 2018.

                          Clause 4
(i) in serial number 4,-

(a) after the words “sales tax,”, the words “goods and services tax,” shall be inserted;

(b) after the words “registration number or”, the words “GST number or” shall be inserted;

¡In  addition to other indirect taxes, to report whether the assessee is liable to pay GST
¡Even if liability under RCM, state so
¡To report all GST registration No./Nos. of the assessee
Clause 19
 (ii) in serial number 19, in the table, after the   row with entry “32AC”, the row with entry “32AD” shall be inserted;


Addition in Reportiing

¡To report amount debited to profit and loss account w.r.t. acquisition and installation of new plant and machinery
¡To report  amount admissible u/s. 32AD
¡Amounts allowable as deduction u/s. 32AD
¡Compliances with conditions of section 32AD to be verified 
¡Assessee sets up an undertaking or enterprise
¡In notified backward area (Andhra Pradesh, Bihar, Telangana, West Bengal) for manufacture or production of any article or thing During period 01 04 2015 to 31 03 2020
¡Acquires and installs in the said notified backward area : new plant or machinery within the meaning assigned in 32AD(4)
15% deduction in the year of installation

Clause 24
(iv) in serial number 26, for the words “or (f)”, the words “, (f) or (g)” shall be substituted;

Added requirement in  existing clause 26 :

¡To report:  Amount deemed to be profits and gains under section 32AD

¡To report only when default provisions of section 32AD attracted
¡Section 32AD(2) provides the default provisions
¡Default: Sale or transfer of new plant or machinery within 5 years from date of installation
¡Deduction earlier allowed deemed as business income in the year of default
¡Tax auditor to report such income
¡Resultant capital gains, if any, not to be reported here
¡Check whether new asset acquired and installed in notified area, on which deduction u/s. 32AD was claimed, has been sold/ otherwise transferred  in 5 years
¡ Within 5 years from date of installation
¡ In the year of sale/otherwise transfer, the deduction earlier allowed is business income 
¡ In addition to chargeability of capital gains, if any but capital gains not to report here
¡Exceptions:  Amalgamations, demergers, reorganisations; ref. Sec. 47 Clause  (xiii), (xiiib)or (xiv)
Clause 26
(iv) in serial number 26, for the words “or (f)”, the words “, (f) or (g)” shall be substituted;
¡Addition in reporting  w.r.t. section 43B which allows deduction of taxes, duties, cess, fees,  in respects of such  liabilities  incurred and paid during the previous year or on or before due date of furnishing return of income
¡Now by this amendment added :
¡Sum payable to Indian Railways for use of railway assets
¡Use will not include freight, transportation
¡Use refers to hiring of assets
¡Ratio of relevant judgement on use vs. hire can be relied upon
¡Payments to put up hoardings on railway premises will depend upon terms of contract whether use of space or advertisement service
¡Obtain list of payments to railways and bifurcate according to nature of payments
To report: Liability pre-existed on the first day of the previous year but was not allowed in the assessment of any preceding previous year and was
a)paid during the previous year;
b)not paid during the previous year;
(B) was incurred in the previous year and was
a)paid on or before the due date for furnishing the return of income of the previous year under section 139(1);
b)not paid on or before the aforesaid date                                            Clause 29A
¡Clause Applicable in the previous year of forfeiture of advance or otherwise received in the course of negotiations for transfer of a capital asset

¡Sum is forfeited and capital asset is not transferred

¡Forfeiture has to be in previous year of amount received in previous year or earlier

¡ To verify transactions of immovable property where some token, part payment received and capital asset not transferred
¡ To verify cases of write backs, whether forfeiture
¡Long o/s advance may give rise to enquiry but is not forfeiture
¡Forfeiture is a conscious act
¡Only forfeiture of capital asset here
¡Forfeiture of advance against sale of stock in trade will be a subject matter of section 41(1)
¡Only the transactions of business or profession under tax audit as recorded in books of accounts
¡Many times transactions in capital assets are not a part of business, not to report
Clause 29B
(a) 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? (Yes/No)
 
(b) If yes, please furnish the following details: 
        (i) Nature of income: 
        (ii) Amount (in Rs.) thereof:
¡U/s.56(2)(x) various receipts without consideration are an income from other sources

¡Sum of money in  aggregate exceeding Rs.50,000/- :

¡Whole of receipt is income

¡Property or properties  other than immovable property :
Without consideration - 
Aggregate FMV exceeds Rs. 50,000/- : FMV is the income
With consideration -
Aggregate FMV exceeds aggregate of consideration by more than Rs.50,000: difference between FMV and the consideration is the income
•Property, whether immovable or other to be capital asset of  the assessee


¡other than immovable properties :

¡(ii)shares and securities;

¡(iii) jewellery;

¡(iv) archaeological collections; (v) drawings;
¡(vi) paintings;
¡(vii) sculptures;
¡(viii) any work of art; or
¡ (ix) bullion;
Clause 30A
¡vi) after serial number 30 and the entries relating thereto, the following shall be inserted, namely:-
¡30A.
¡ (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:
¡ (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 on such excess money which has not been repatriated within the prescribed time:
¡In the following circumstances the clause will be applicable and then the above particulars to be reported
¡Primary adjustment (determination of TP based on arm’s length principle ) exceeding Rs. 1 crore 

¡So motu by assessee, by AO and accepted by assessee, determined by an advance pricing agreement, made as per the safe harbour rules, assessment by way of the mutual agreement procedure 
¡Tax auditor to report whether primary adjustment for A. Y. 2017-18 exceeds Rs. 1 crore, to verify secondary adjustment and in case of non patriation within prescribed time, imputed interest as per Rule 10CB
¡Note:  This item relates to International Transactions for which separate Tax Audit Report u/s 92E is required to be submitted in Form 3CEB. It is not understood as to why this information is included in Form 3CD instead of Form 3CEB
Clause 30B
¡(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 of 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:

¡(v) Details of interest expenditure carried forward as per sub-section (4) of section 94B:
Clause 30C
¡(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:-
¡Nature of the impermissible avoidance arrangement:

¡Amount (in Rs.) of tax benefit in the previous year arising, in aggregate, to all the parties  to the arrangement
Clause 31
¡ (bb) 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, received 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 payer;
¡(ii) Amount of receipt (in Rs.);
¡(bc) 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, 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;
¡bd) Particulars of each payment 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, 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.);
(bd) Particulars of each payment 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, 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.);


Clause 34
(viii) in serial number 34, for item (b), the following item shall be substituted, namely:-
“(b) whether the assessee is required to furnish the statement of tax deducted or tax collected. If yes, please furnish the details:
Now, irrespective of whether  statement of TDS, TCS filed in time or not, tax auditor required to report whether statement of TDS, TCS contains all transactions attracting TDS, TCS
If not, furnish list of details/transactions not reported
Tax auditor will need to verify accounts w.r.t. applicability of TDS, TCS
¡The new requirement of transaction not reported is casting a huge responsibility upon the tax auditor

Clause 36A
(ix) after serial number 36 and the entries relating thereto, the following shall be inserted, namely:-
 “36A. (a) Whether the assessee 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.):
            (ii) Date of receipt:”
¡Auditor required to express opinion as to whether dividend u/s. 2(22)(e) received and if so date and amount
¡Very onerous task considering  the litigations around the subject
¡Substantial details may not be available in the books of account of the assessed
¡To obtain list of companies wherein assessee is a shareholder owning 10% or more of voting power
¡To obtain list of concerns wherein the assessed has substantial interest
¡To take into account and consider whether TDS by paying company
¡Remuneration to shareholder director, trade advances, advances in course of normal business or commercial transactions, not covered. Also confirmed in
¡Circular No. 19/2017 (F.No.279IMisc.l140/2015I1TJ) dated 12 June 2017
¡Since most reporting will be based on details outside assessee’s books, so appropriate remarks in 3CA or 3CB
¡Section 115-O amended by the Finance Act, 2018, provides  that the closely held company giving such advance or loan to a related party as specified in Section 2(22)(e), on or after 1/4/2018, will have to pay tax at the rate of 30% plus applicable surcharge and cess
¡Clause 36A will apply for tax audit for A.Y. 2018-19 only
Clause 42
(x) after serial number 41 and the entries relating thereto, the following shall be inserted, namely:- 
(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:
¡Under this item, if the assessee is required to file Forms 61, 61A or 61B with appropriate authorities, the above particulars relating to the same will have to be furnished
¡Section 139A(5)(c) r.w. Rule 114B : mandatory to quote pan in all documents in respect of prescribed transactions.
¡If no PAN, then Form No. 60
¡Rule 114D : Form no. 114D : to file form no. 61 by specified persons who have received form no. 60.
¡Form 61 : for declarations received till 30th Sept., by 31st Oct., for declarations received by 31st March, by 30th April.
¡Tax auditor to verify whether assessee entered into transactions where PAN was to be quoted by other party, whether PAN quoted, if not then whether form 60 received, whether form 61 filed.
¡Form No. 61A : section 285BA r.w. rule 114E :
¡To be filed by assessee, specified/prescribed persons required to furnish a statement in respect of SFTs or reportable account.
¡To be filed on or before 31st May for the preceding financial year

Clause 43

(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
CBC -Country by country reporting:
¡The above particulars have to be furnished in respect of International Group under section 286 by every parent company or alternate reporting entity resident in India, if it is constituent of such International group.
¡ The report is to be furnished within a period of 12 months from the end of the reporting period.
¡If March, 2018 submitted, then report the same
¡Else, to make workable, furnish for March, 2017
¡ Threshold : only if the consolidated revenue exceeds Rs. 5500 crores 
Clause 44

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

¡Clause 44 requires reporting of  break-up of expenditure w.r.t. GST.

¡Two broad categories : expenditure from registered vendors, un-registered vendors
¡In respect of expenditure from registered vendors : further break-up into expenditure exempt from GST, expenditure from vendors under composition scheme, expenditure from other registered entities
¡The basis and break up should be of audited financial statements
¡From GST angle break up of revenue expenditure as well as of capital nature
¡All assessees covered by this clause including those not registered in GST
¡GST operative from 1st July,2017  in J & K from 8th July, 2017
¡So break up of financial statements into 3 month and 9 months would be necessary
¡Heads in financial statements may be continued except when change required from GST point of view For e.g. cost of sale may be decomposed to write only purchases 
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