CBDT notifies changes in Form 3CD from A.Y. 2021-22

The Central Board of Direct Taxes (CBDT) has amended Tax Audit Report in Form 3CD by inserting/omitting clause(s) in the Income-tax Rules, 1962 by Income-tax (eighth Amendment) Rules, 2021  vide Notification No. 28/2021 dated 01.04.2021. 

These rules which shall be effective from 01.04.21 has brought in total 6 (six) changes to Tax Audit Report in Form 3CD, which have been simplified in a very lucid manner.

The 6 amendments in the tax audit form in Form 3CD are as follow:

1. Revision of tax audit report in form 3CD in certain cases

This notification has allowed to revise the already filed tax audit report, if there is payment by such person after furnishing of report under sub-rule (1) and (2) which necessitates recalculation of disallowance under section 40 or section 43B. The revised tax audit report shall be signed by the chartered accountant and to be filled before the end of relevant assessment year.

This change necessitated after Finance Act, 2019 provided that tax audit report in Form 3CD is required to be filed one month prior to the due date of filing of return of income.

The said change has now removed the inconsistency in the provisions of Sec. 43B and Tax Audit report in form 3CD, and accordingly it has been now allowed to revise the TAR in Form 3CD to claim the deduction of expenses under section 43B if the same was disallowed in the original tax audit report. 

2. Modification to Clause 8a to include exercise of option under section 115BAC/115BAD

Existing Clause 8a of Form 3CD requires reporting of exercise of an option by the assessee under section 115BA/115BAA/115BAB

Finance Act, 2020 has introduced two new concessional tax rate regime under section 115BAC for Individuals and HUF and section 115BAD for cooperative societies. These two provisions have been made applicable from AY 2021-22.

In order to incorporate the same in the Tax Audit Report, Clause 8a of Form 3CD has been modified to include these two sections - section 115BAC and section 115BAD also.

For the said change to be effective, clause 8a has been amended.

3. Amendment in Clause 17 to report higher safe harbour rule of 20% between actual sales consideration and stamp duty value under section 43CA and section 56(2)(x)

In order to boost demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers, it is provided to increase the safe harbour from 10% to 20% under section 43CA for the period from 12th November 2020 to 30th June 2021 in respect of the only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% was also allowed to buyers of these residential units under section 56(2)(x) for the said period. Therefore, for these transactions, the circle rate shall be deemed as a sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%.

4. Changes in Clause 18 related to Adjustment in WDV of Assets

Adjustment made to the written down value under section 115BAC/115BAD (for assessment year 2021-2022 only)

In case of assessee opting for section 115BAC/115BAD, additional depreciation is not allowed and hence requires adjustment in WDV of the block of assets. Hence Clause 18(ca) has been substituted with the new sub-clause which is applicable for AY 2021-22 only.

Adjustment made to written down value of Intangible asset due to excluding value of goodwill of a business or profession

Finance Act, 2021 has amended the provisions of section 32 to deny depreciation on goodwill. It has been further provided that the block containing the goodwill as an asset shall be modified and depreciation on goodwill as appearing in that block at the WDV as of 1.4.2020 shall not be claimed from AY 2021-22 and such value of goodwill will be excluded from the block. The block needs to be modified to that extent.

5. Changes in Clause 32 to report adjustment in brought forward of losses if option u/s 115BAC/115BAD is exercised

The new tax regime under section 115BAA, section 115BAC and section 115BAD do not allow certain deductions and if the option under these provisions is exercised, then the brought forward losses need to be modified to the extent they are related to such restricted disallowed deductions. The modification has to be separately reported in Point 6 of Clause 32.

6. Omission of Clause 36 (DDT)

As from the A.Y. 2021-22, the dividend received by the assessee is taxable in his own hands and not in the hands of company distributing the dividend. Therefore, the Dividend Distribution Tax has been abolished resulting in omission of clause 36 in Form 3CD.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 1st April, 2021

(INCOME-TAX)

G.S.R. 246(E).– In exercise of the powers conferred by section 44AB read with section 295 of the Income-tax Act (43 of 1961), the Central Board of Direct Taxes, hereby, makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement.–

(1) These rules may be called the Income-tax (eighth Amendment) Rules, 2021.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962,-

(a) in rule 6G, after sub-rule (2), the following sub-rule shall be inserted, namely:-

^”(3) The report of audit furnished under this rule may be revised by the person by getting revised report of audit from an accountant , duly signed and verified by such accountant, and furnish it before the end of the relevant assessment year for which the report pertains, if there is payment by such person after furnishing of report under sub-rule (1) and (2) which necessitates recalculation of disallowance under section 40 or section 43B.^? ;

(b) in Appendix II, in Form 3CD,-

(i) in PART –A for clause 8A, the following clause shall be substituted, namely: –

^”8A Whether the assessee has opted for taxation under section 115BA/115BAA/115BAB/ 115BAC/115BAD?.^? ;

(ii) in PART-B, for clause 17,the following clause shall be substituted, namely:-

^”17. Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government referred to in section 43CAor 50C,please

(iii) in clause 18, for sub-clauses (ca) and (cb), the following sub-clauses, shall be substituted namely:-

“(ca) Adjustment made to the written down value under section 115BAC/115BAD (for assessment year 2021-2022 only)……

(cb) Adjustment made to written down value of Intangible asset due to excluding value of goodwill of a business or profession

(cc) Adjusted written down value……….”;

(iv) in clause 32, for sub-clause (a), the following sub-clause shall be substituted, namely:-

(a) Details of brought forward loss or depreciation allowance, in the following manner, to the extent available:

*If the assessed depreciation is less and no appeal pending then take assessed.

^To be filled in for assessment year 2021-2022 only.’’:

(v) clause 36 shall be omitted.

[Notification No. 28 /2021/F. No 370142/9/2018-TPL]

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