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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.
FORM 3CD – NEW CLAUSES
�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.
APPLICABILITY OF 44AB ONMR. A
•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.
APPLICABILITY OF 44AB ONMR. A
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.
FORM 3CD – NEW CLAUSES
�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.
FORM 3CD – NEW CLAUSES
�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.
FORM 3CD – NEW CLAUSES
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
� 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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
FORM 3CD - AMENDMENTS
�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.
Lunawat & Co.