The persons carrying on business or profession and having turnover/receipts exceeding specified limits are required to get their accounts audited under Section 44AB of IT Act 1961. The auditor who conducts such audit is required to issue a audit report under Section 44AB in Form 3CA/3CB and statement of particulars in Form 3CD.
In this backdrop, it would be relevant to go through the changes made by the CBDT via Notification No. 33 dated 25th July 2014, in Form 3CA, 3CB and 3CD. We have compiled all amendments and its impact on indirect taxes below.
Major Changes and impact:
1. 3CA: Point 3 In the opinion part, now apart from mentioning that particulars in Form 3CD are true and correct, auditors have to mention observations/ qualifications if any.
Insertion of words “According to examination of books of account including other relevant documents” –this increases the verification Scope of the Auditor.
2. Changes made are on similar lines as that in Form 3CA as mentioned above to extent observations/qualifications, if any to be listed out.
The important changes made in Form 3CD are addition of some new clauses thereby requiring more disclosures as listed below.
- Point 4: Now have to mention whether the assessee is liable to pay Indirect tax like excise duty, service tax, sales tax, custom duty etc and furnish the registration number for the same. If not registered then report, opinion in case of doubt.
- Point 6: Date of commencement of previous year for newly started business:Comments: Date of commencement of new business: Can find out new business activities and excise/service tax/VAT registration details where liable to pay such taxes to be disclosed at 4. If not registered then report.
- Point 11(b) and (c): Earlier only required to mention a list of books of account maintained; now also to mention the address at which the books of accounts are kept. Further if books of accounts are not kept at one location, now need to furnish the addresses of all locations. Apart from mentioning the list of books examined, also have to mention the nature of relevant documents verified. If required registration of additional premises-report
- Point 37. Disclosures on cost Audit to include disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/ identified by the Cost Auditor. Earlier the requirement was to only state whether Cost Audit was carried out or not & to enclose copy of report. Very limited practically.
- Point 38: Similar disclosure as above point 37, to be made with respect to audit under Central excise Act as mentioned above. Disqualifications and disagreements to be reported.
- Point 39: Disclosure as above point 37, to be made with respect to audit under section 72A of Finance Act as mentioned above.
- Point 41: Details of demand raised or refund issued during the previous year under any tax laws other than Income Tax Act, 1961 and Wealth tax Act, 1957 along with details of proceedings: Comments: This could impact going concern especially where a demand under central excise or service tax is huge.
- Point18(d)(i): Disclosure of Central Value Added Tax credits claimed and allowed under the Central Excise Rules, 1944, in respect of capital assets acquired on or after 1st March, 1994- earlier referred to Modified Value Added Tax Credits.
Comments: The terminology made contemporary. There is no substantive impact of this change.Ensure no double benefit
Similarly in point 27(a) where sets out now: (a) Amount of Central Value Added Tax credits availed of or utilised during the previous year and its treatment in the profit and loss account and treatment of outstanding Central Value Added Tax credits in the accounts.-earlier referred to Modified Value Added Tax Credits.
Comments: The terminology made contemporary. There is no substantive impact of this change. Credits availed in excess/ short/ not availed can be pointed out and reported to management as value addition
The new format contains more details to be given and leads to more reporting requirements on statutory auditor. They may also need to get acquainted with indirect taxation laws to realize impact of the reported items and guide their clients accordingly.
CA Roopa Nayak