Tax Audit Guidance Note
Form 3CD - Clause-wise Summary
Section 44AB of the Income-tax Act, 1961
Clause 1: Name of the Assessee
- Name should be as specified in PAN
- Include trade name if different from PAN name
- For branches, mention branch name along with assessee name
- In case of name change during the year, use the name at year-end
- Document any name changes as observations in audit report
Clause 2: Address
- Address should match that communicated to Income Tax Department
- For branches/units, provide branch/unit address
- Companies must provide registered office address
- New assessees should give principal place of business address
- Verify address from income tax records or portal
Clause 3: PAN and Aadhaar Number
- Permanent Account Number (PAN) allotted to the assessee
- Aadhaar number required for individuals as alternative
- PAN is mandatory field in e-filing format
- Aadhaar is optional field in e-filing
Clause 4: Registration Numbers for Indirect Taxes
- GSTIN and other indirect tax registration numbers
- Customs duty, excise duty, VAT, sales tax registrations
- Report all registration numbers if multiple exist
- Include Importer Exporter Code (IEC) for customs
- Obtain copies of all registration certificates
Clause 5: Status of Assessee
- Individual, Hindu Undivided Family (HUF), Company, or Firm
- Association of Persons (AOP) or Body of Individuals (BOI)
- Local authority or artificial juridical person
- As defined in Section 2(31) of the Income Tax Act
Clause 6: Period of Previous Year
- Previous year uniformly begins on 1st April and ends on 31st March
- Mention relevant previous year period
- For amalgamations, demergers, reconstitutions, dates may differ
- For new business or closure, mention actual beginning/ending dates
Clause 7: Assessment Year
- Assessment year relevant to the previous year being audited
- Assessment year follows the previous year
- Format: AY 20XX-XX
Clause 8: Relevant Clause of Section 44AB
- Clause (a): Business with sales/turnover exceeding Rs. 1 crore
- Clause (b): Profession with gross receipts exceeding Rs. 50 lakhs
- Clause (c): Audit by virtue of sections 44AE, 44BB, 44BBB
- Specify the exact clause under which audit is conducted
Clause 9: Particulars of Members/Partners
- Details of partners in firm or members in AOP/BOI
- Name, PAN, and profit sharing ratio of each partner/member
- Changes during the year to be disclosed
Clause 10: Nature of Business or Profession
- Detailed description of business activities or profession
- Mention all lines of business if multiple activities exist
- Include manufacturing, trading, or service activities
- Specify professional services rendered
Clause 11: Books of Account and Documents
- List of books of account maintained by the assessee
- Details of whether books are maintained manually or electronically
- Location where books are kept
- Supporting documents and vouchers maintained
Clause 12: Presumptive Income
- Whether assessee opted for presumptive taxation under sections 44AD/44ADA/44AE
- Details of income computed on presumptive basis
- Turnover limits for presumptive taxation schemes
Clause 13: Method of Accounting
- Cash method or mercantile/accrual method of accounting
- Hybrid method if different methods used for different activities
- Changes in accounting method during the year
- Compliance with Income Computation and Disclosure Standards (ICDS)
Clause 14: Valuation of Closing Stock
- Method of valuation (cost or market value, whichever is lower)
- Compliance with Section 145A regarding inventory valuation
- Consistency in valuation method
- Separate disclosure for raw materials, work-in-progress, and finished goods
Clause 15: Conversion of Asset into Stock-in-Trade
- Details of capital assets converted to stock-in-trade
- Fair market value at the time of conversion
- Tax implications under Section 45(2)
Clause 16: Items of Income Not Credited
- Income chargeable under Section 28 not credited to profit and loss account
- Interest, salary, bonus, commission not credited but chargeable
- Benefits arising from business transactions
- Escalation claims and export incentives
Clause 17: Valuation of Property
- Fair market value of self-generated goodwill
- Valuation of intangible assets
- Property revaluation during the year
Clause 18: Particulars of Depreciation
- Block-wise details of depreciation claimed
- Rate of depreciation for each block of assets
- Additions and deletions during the year
- Written down value of assets
- Compliance with Section 32
Clause 19: Amounts Admissible under Sections 32AC to 35E
- Investment allowance under Section 32AC
- Deduction for expenditure on scientific research (Section 35)
- Weighted deductions for eligible expenditures
- Compliance with prescribed conditions
Clause 20: Bonus, Commission, PF Recoveries, etc.
- Bonus and commission payments to employees
- Provident fund contributions and recoveries
- Timing of deduction under Section 43B
- Statutory dues payment details
Clause 21: Amount Debited to P&L - Capital, Personal & Advertisement Expenditure
- Capital expenditure debited to profit and loss account
- Personal expenses of proprietor/partners/directors
- Advertisement expenses in prohibited publications
- Amounts inadmissible under Section 40(a)
- Interest, salary, bonus to partners (Section 40(b))
- Cash payments exceeding limits under Section 40A(3)
- Contingent liabilities and provisions
- Expenses related to exempt income under Section 14A
Clause 22: Amount Inadmissible under Section 23 of MSME Act, 2006
- Interest payable to Micro, Small and Medium Enterprises
- Unpaid amounts beyond specified time period
- Disallowance of interest not paid
Clause 23: Payments to Specified Persons under Section 40A(2)(b)
- Excessive or unreasonable payments to related parties
- Payments to relatives, directors, partners and their relatives
- Reasonableness test for such payments
Clause 24: Deemed Profits under Sections 32AC/32AD/33AB/33ABA/33AC
- Withdrawal of investment allowance or deduction
- Non-fulfillment of prescribed conditions
- Deemed profits chargeable to tax
Clause 25: Profits Chargeable under Section 41
- Balancing charge on sale of depreciable assets
- Remission or cessation of trading liability
- Recovery of bad debts previously written off
- Amount chargeable as income in subsequent years
Clause 26: Payments under Section 43B
- Tax, duty, cess or fee paid before filing of return
- Employees' contribution to provident fund and welfare funds
- Bonus and commission to employees
- Interest on loans from financial institutions
- Leave encashment and gratuity payments
Clause 27: CENVAT Credits & Prior Period Expenditure
- Central Value Added Tax (CENVAT) credits availed
- Timing and treatment of CENVAT credits
- Prior period income and expenditure
- Adjustments relating to earlier years
Clause 28: Property Received under Section 56(2)(viia)
- Immovable property received without consideration
- Property received for inadequate consideration
- Fair market value exceeding specified limits
Clause 29: Consideration for Issue of Shares under Section 56(2)(viib)
- Shares issued at premium exceeding fair market value
- Angel tax provisions for unlisted companies
- Valuation of shares as per prescribed methods
Clause 29A: Amount Includible under Section 56(2)(ix)
- Sum of money received without consideration
- Money exceeding Rs. 50,000 in aggregate during the year
- Gifts and donations received
Clause 29B: Amount Includible under Section 56(2)(x)
- Property (other than immovable property) received without consideration
- Movable property received for inadequate consideration
- Fair market value exceeding specified limits
Clause 30: Hundi Loans
- Loans or deposits taken through hundis
- Details of hundi transactions during the year
Clause 30A: Primary Adjustment to Transfer Price under Section 92CE(1)
- Transfer pricing adjustments made by Assessing Officer
- Primary adjustments in international transactions
- Specified domestic transactions covered
- Secondary adjustment implications
Clause 30B: Expenditure Exceeding Limit under Section 94B(1)
- Interest expenditure exceeding prescribed limits
- 30% restriction on interest deduction
- Thin capitalization and earnings stripping rules
Clause 30C: Impermissible Avoidance Arrangement (GAAR) under Section 96
- General Anti-Avoidance Rules (GAAR) provisions
- Arrangements lacking commercial substance
- Tax avoidance schemes identified
- Consequences and adjustments
Clause 31: Loans/Deposits Accepted and Repaid
- Compliance with Section 269SS (cash acceptance limit)
- Compliance with Section 269T (cash repayment limit)
- Compliance with Section 269ST (cash transaction limit)
- Details of loans/deposits accepted in cash exceeding Rs. 20,000
- Details of repayments made in cash exceeding Rs. 20,000
- Payee and payer details including PAN
Clause 32: Brought Forward Loss/Depreciation
- Unabsorbed depreciation and business losses brought forward
- Change in shareholding affecting loss set-off (Section 79)
- Speculation losses (Section 73)
- Losses from specified business (Section 73A)
- Deemed speculation business losses
Clause 33: Deductions under Chapter VIA or Chapter III
- Deductions under Section 80C to 80U
- Section 10AA - SEZ units deduction
- Section 80-IA/IB/IC/ID - Infrastructure and power sector deductions
- Compliance with prescribed conditions for each deduction
Clause 34: Deduction or Collection of Tax
- TDS compliance under Chapter XVII-B
- TCS compliance under Chapter XVII-BB
- Filing of TDS/TCS quarterly statements
- Interest payable under Section 201(1A) or 206C(7)
- Default in deduction or payment of tax
Clause 35: Quantitative Details
- Opening stock, purchases, sales, closing stock
- Production details for manufacturing concerns
- Quantity-wise reconciliation of inventory
- Shortage, wastage, and consumption patterns
Clause 36: Tax on Distributed Profits (Omitted)
- This clause has been omitted
- Dividend Distribution Tax (DDT) no longer applicable
Clause 36A: Receipt of Dividend under Section 2(22)(e)
- Deemed dividend received from closely held companies
- Loans and advances to shareholders
- Payment on behalf of shareholders
Clause 37: Cost Audit Report
- Whether cost audit was conducted during the year
- Details of cost audit report under Companies Act
Clause 38: Excise Audit Report
- Excise audit conducted under Central Excise Act
- Details of excise audit observations
Clause 39: Service Tax Audit
- Service tax audit under Finance Act, 1994
- Compliance with service tax provisions
Clause 40: Details of Goods Traded, Manufactured or Services Rendered
- Product-wise or service-wise details
- Turnover of each category
- Top items by value or volume
Clause 41: Details of Demand and Refund
- Demands raised by tax authorities during the year
- Refunds claimed and received
- Status of appeals and disputes
Clause 42: Information Pertaining to Form 61/61A/61B
- Statement of financial transactions
- High-value transactions to be reported
- Compliance with reporting requirements
Clause 43: Details of Report under Section 286(2)
- Country-by-Country reporting for multinational enterprises
- Master file and local file requirements
- Transfer pricing documentation
Clause 44: Goods and Services Tax (GST) Compliance
- Reconciliation of turnover with GST returns
- Input tax credit claimed and utilized
- GST paid and pending payments
- Filing of GST returns - GSTR-1, GSTR-3B, GSTR-9
- Discrepancies and adjustments in GST reporting
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