Amendments in Form – 3CD for AY 2023-2024

Introduction: The Central Board of Direct Taxes (CBDT) has initiated crucial modifications to Form No. 3CD, the cornerstone for tax audit reporting, effective immediately from their announcement in the Official Gazette. Highlighted in Notification No. 27/2024 dated 05.03.2024, these amendments aim to refine and update the tax audit procedures to align with the evolving legislative and regulatory landscape. This article endeavors to dissect these changes, providing a comprehensive overview of their implications for tax professionals and assessees. By focusing on the adjustments in various clauses, from the inclusion of new sections to detailed reporting requirements, we aim to furnish a detailed guide to navigating these updates effectively.

CBDT has made certain changes in Form No. 3CD (tax audit report). The changes in the aforesaid forms are applicable w.e.f. date of their publication in the Official Gazette. You may refer the Notification No. 27/2024 dated 05.03.2024.

In Form No. 3CD, amendments have been made –

• in clause 8A relating to whether an assessee has opted for special provisions u/s 115BA/115BAA/115BAB/115BAC/115BAD, to include reference to section 115BAE;
• in clause 12 relating to whether profit and loss account includes profit computed on presumptive basis, to include reference to section 44ADA;
• in clause 18 relating to particulars of depreciation, sub-clause (ca) has been substituted to require adjustment to the WDV under the different provisos to section 115BAA/115BAC/115BAD for specified assessment years;
• in clause 19 relating to amounts admissible under different sections, to include reference to section 35ABA and any other relevant section;
• in clause 21 relating to details of amounts debited to profit and loss account, being in the nature of capital, personal and advertisement expenditure etc., to include reference to expenditures for any purpose which is an offence or which is prohibited by law or expenditure to compound an offence etc.;
• in clause 26, in respect of sum referred to in specified clauses of section 43B, to include reporting requirement in respect of compliance u/s 43B(h) relating to amount payable to micro and small enterprises;
• in clause 32(a) relating to details of brought forward loss/depreciation, to include reference to losses/allowances not allowed under section 115BAE and amount adjusted by way of withdrawal of additional depreciation on account of opting for taxation under section 115BAE.

Conclusion: The amendments introduced to Form No. 3CD for the Assessment Year 2023-2024 signify a pivotal shift towards enhancing the accuracy and accountability of tax audit reports. By broadening the scope of reporting and incorporating specific provisions for depreciation adjustments, presumptive profit computation, and compliance with laws, the CBDT has set a new benchmark for tax reporting standards. These changes necessitate a thorough reevaluation of tax audit practices and demand heightened diligence from taxpayers and professionals to comply with the updated regulations.