Important updates - Tax and Regulatory

Relief in GST reporting in tax audit report

The government issued Income Tax Circular no. 10/2020 dated 24.04.2020 in relation to reporting requirements in two clauses of the tax audit report in Form 3CD.

In terms of the circular, clause 30C and clause 44, both have been deferred till 31st March 2021. The said clauses were earlier kept in abeyance till 31st March, 2020.

Clause 30C

Clause 30C deals with General Anti Avoidance Rules (GAAR) which applies to ‘impermissible avoidance arrangement‘ which is entered into to avoid tax.

In terms of the said clause, the auditor is required to report if the assessee has entered into an impermissible avoidance arrangement as per section 96 of the Income Tax Act, 1961. The auditor is also required to specify the nature of such arrangement and tax benefit arising out of such an arrangement.

Clause 44

Clause 44 deals with ‘Break-up of total expenditure of entities registered or not registered under the GST‘, the details to be given in the following table:

Based on the representations received by CBDT with regards to difficulty in implementing the reporting requirements under clause 30C and clause 44 of Form 3CD, the circular has kept these clauses in abeyance until 31st March 2021. Hence, no reporting would be required to be done under clause 30C and clause 44 in the tax audit report of FY 2019-20.

This is a major relief for all tax auditors in filing tax audit reports for FY 2019-20.

 

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