What is Form 3CD?

5paisa Research Team Date: 13 Oct, 2023 11:21 AM IST

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June to September can be a hectic period for taxpayers in India. This is because every taxpayer needs to collect all their fiscal data from the previous financial year and put it forward to the taxation authority. The final liability of tax shall be evaluated based on those particular data. The evaluation procedure gets even more prolonged if the individual is entitled to a tax audit. In this case, the person has to submit a complete audit report to the taxation department apart from filing a return. This is where the essential purpose of Form 3CD comes into attention.

What is Form 3CD?

If you have been uninformed about what is Form 3Cd, here is what you need to know. The taxation audit Form 3CD is a comprehensive statement covering a group of particulars that present forty-one clauses. These terms are based on the business and its transactions, such as turnover, revenues, and details regarding asset liabilities, profits, and expenses. The taxpayer must include all of these crucial aspects.

Applicability of Form 3CD

The individual performing the audit needs to submit the specific findings included in the report with the help of the applicable audit form. The type of form one needs for the audit will be mentioned by the Department of Income Tax. Section 44AB demands the forms 3CA and 3CB. The auditor needs to furnish the form and the forms mentioned above. Form 3CD applies when an individual's financial data does not require any audit under other legal regulations besides income tax law.

Also, Form 3CD particulars need to be furnished as per Rule 6G along with the forms 3CA AND 3CB as required.

  • The forty-one clauses mentioned in this form are divided into two sections: specific disclosures related to deductions, TDS, loans, and more.
  • In the final part, the form explicitly mentions the auditor's address, name, signature, membership number, and FRN number with a seal/stamp.

Tax audit forms

Taxpayers' incomes are divided into two categories of forms when performing tax audits. Here is a detailed demonstration of the two categories. The audit report is generated either based on the Form 3CA or the form 3CB. The 3CA is addressed to the individuals whose financial data has already been audited under any legal regulations apart from the income tax legalities.

The 3CB is for individuals whose financial data is not audited under legal regulations. Therefore, these individuals' accounts are audited solely under the income tax regulations.

Statement of Particulars: 

On the other hand, the statement of particulars is based on Form 3CD. There are precisely forty-four clauses in this form. In this tax audit, the auditor is needed to report on the different matters included in it. These particular clauses are categorized into two sections, Part A and Part B. Part A encompasses the factual and fundamental information regarding the assessment. Alternatively, Part B comprises the different compliances listed under income tax laws.
 

Clause-wise summary of Form 3CD

The 3CD form is required to be filled by taxpayers, along with a list of highly detailed summaries. A group of crucial pointers need to be mentioned in the summary, such as relevant annexures and audit work details that apply to the assessment. This form aims to highlight the audit report's particulars relevant under any form specified under section 44AB.

Particulars of Form 3CD

Point 1

  • Address and name of the person paying the tax along attached with their PAN number
  • Auditor’s name (Company or individual).
  • The legalities under which the accounts were audited, for example, Companies Act
  • Audit Report date
  • Profit & Loss Account period/ Expenditure and Income Account. (End Date and beginning date)
  • Balance sheet date

Point 2

  • Declaration of the attachment of the 3CD form with the tax audit report

Point 3

  • Audit observations or Qualifications listed in the information relevant to Form 3CD.

Point 4

  • Place and date of signing the tax audit report
  • Auditor's address, name, and membership number
  • Seal or stamp of Auditor.
     

Due date of obtaining the audit report

The last day of the taxation audit is considered to be September 30, 2023, for the financial years 2022-23 (Assessment year20123-24), and the last day for filing ITR with the tax audit report is October 31, 2023. In case one misses the deadline, an audit report can still be filed by paying the penalty.

Penalty for not filing the audit report

A penalty will be charged for delaying or not filing the tax audit report. If a taxpayer is entitled to a tax audit but somehow fails to get it done, the minimum of the following shall be imposed as a penalty charge: 0.5% of the gross receipts, turnover, or the total sale, which is 1,50,000 INR.

Conclusion

Different types of audits are performed under various legal regulations. The categories of audits may include stock audits, cost audits, statutory audits performed under the company's legal provisions, company audits, and more. Likewise, the income tax also conducts an audit called the tax audit, and Form 3CD is an audit form implemented during the audit process. If your audit procedure has demanded Form 3CD, finding out more than just the Form 3Cd meaning is imperative. You can use this comprehensive guide to comprehend your tax audit process.

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