Form 3CD: Definition & Applicability

Form 3CD is a reporting format which is used by an auditor highly involved in auditing the books of accounts of taxpayers who are eligible for tax audits. The Form 3CD is prepared by a certified Chartered Accountant on behalf of the assessees who wants to get their accounts audited. The prime aspect of the Form 3CD is to specify the particulars of the audit report under any of the Income Tax forms categorised under section 44AB. The tax audit limit under section 44AB is ₹5 crores, while the threshold limit is ₹10 crores where 95% of the business transactions are pursued in digital mode.

Components of Form 3CD

The Form 3CD is categorised in two parts-

Part A- Containing Clause 1 to Clause 8A

Part B- Containing Clause 9 to Clause 44

In this article, we would elaborate the components of Form 3CD in detailed manner. Check below the detailed lists of Part A and Part B

Part A

Clause 1– Name of the assessee

Clause 2– Address of the assessee

Clause 3– PAN or Aadhaar Number of the assessee

Clause 4– Taxpayer’s liability to pay indirect tax such as Service Tax, Sales Tax, Custom Duty and so on

Clause 5– Status of the return

Clause 6– Previous financial year pertaining to the audit

Clause 7– Assessment year pertaining to the audit

Clause 8– Indicate the relevant clause of section 44AB under which the audit has been conducted

Clause 8(a)– Whether the assessee has opted for taxation under section 115BA/115BAA/115BAB/115BAC/115BAD

Part B

Clause 9 (a)- If firm or association of persons, indicate name of partners/members and their profit sharing ratios

Clause 9 (b)– If there is any change in the partners or members or in their profit sharing ratio since the last date of the preceding year, the particulars of such change

Clause 10 (a)– Nature of business or profession (if more than one business or profession is carried on during the previous year, nature of every business or profession)

Clause 10 (b)– If there is any change in the nature of business or profession, the particulars of such change

Clause 11 (a)– Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed.

Clause 11 (b)– Lists of books of account maintained and the address at which the books of account are kept.

Clause 11 (c)– List of books of account and nature of relevant documents examined

Clause 12 -Whether the profit or loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant section (44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB, Chapter XII-G, First Schedule or any other relevant section)

Clause 13 (a)– Method of accounting employed in the previous year

Clause 13 (b)– Whether there had been any change in the method of accounting employed vis-à-vis the method employed in the immediately preceding previous year

Clause 13 (c)– If answer to (b) above is in affirmative, give details of such change, and the effect thereof on the profit or loss.

Clause 13 (d)– Whether any adjustment is required to be made to the profits or loss for complying with the provisions of income computation and disclosure standards notified under section 145(2)

Clause 13 (e)– If answer to (d) above is in the affirmative, give details of such adjustments

Clause 13 (f)– Disclosure as per ICDS

Clause 14 (a)– Method of valuation of closing stock employed in the previous year

Clause 14 (b)– In case of deviation from the method of valuation prescribed under section 145A, and the effect thereof on the profit and loss

Clause 15 (a)– Description of capital asset

Clause 15 (b)– Date of acquisition

Clause 15 (c)– Cost of acquisition

Clause 15 (d)– Amount at which the asset is converted into stock-in-trade

Clause 16 (a)– The items falling within the scope of section 28

Clause 16 (b)– The proforma credits, drawbacks, refund of duty of customs or excise or service tax, or refund of sales tax or value added tax where such credits, drawbacks or refunds are admitted as due by the authorities concerned

Clause 16 (c)– Escalation claims accepted during the previous year

Clause 16 (d)– Any other item of income

Clause 16 (e)– Capital receipt, if any

Clause 17– Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of the State Government referred to in section 43CA or 50C, please furnish details of property, consideration received or accrued and value adopted or assessed or assessable

Clause 18 (a)– Depreciation of asset/block of assets

Clause 18 (b)– Rate of depreciation

Clause 18 (c)– Actual cost of written down value, as the case may be

Clause 18 (d)– Additions/deductions during the year with dates; in the case of any addition of an asset, date put to use; including adjustment on account of: (i) Central Value Added Tax credits claimed and allowed under the Central Excise Rules, 1944, in respect of assets acquired on or after 1st March 1994, (ii) change in rate of currency, and (iii) subsidy or grant or reimbursement, by whatever name called

Clause 18 (e)– Depreciation allowable

Clause 18 (f)– Written down value at the end of the year

Clause 19– Amounts admissible under sections: 32AC, 32AD, 33AB, 33ABA, 35(1)(i), 35(1)(ii), 35(1)(iia), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABB, 35AC, 35AD, 35CCA, 35CCB, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E

Clause 20 (a)– Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend

Clause 20 (b)– Details of contribution received from employees for various funds as referred to in section 36(1)(va)

Clause 21 (a)– Please furnish the details of amounts debited to profit and loss account, being in the nature of capital, personal, advertisement, expenditure, etc.

Clause 21 (b)– Amounts inadmissible under section 40(a)(i), 40(a)(ia), 40(a)(ic), 40(a)(iia), 40(a)(iib), 40(a)(iii), 40(a)(iv), 40(a)(v)

Clause 21 (c)– Amounts debited to profit and loss account being, interest, salary, bonus, commission or remuneration inadmissible under section 40(b)/40(ba) and computation thereof

Clause 21 (d)– Disallowance/deemed income under section 40A(3)

Clause 21 (e)– Provision for payment of gratuity not allowable under section 40A(7)

Clause 21 (f)– Any sum paid by the assessee as an employer not allowable under section 40A(9)

Clause 21 (g)– Particulars of any liability of a contingent nature

Clause 21 (h)– Amount of deduction inadmissible in terms of section 14A in respect of the expenditure incurred in relation to income which does not form part of total income

Clause 21 (i)– Amount inadmissible under the proviso to section 36(1)(iii)

Clause 22– Amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006

Clause 23– Particulars of payments made to persons specified under section 40A(2)(b)

Clause 24– Amounts deemed to be profits and gains under section 32AC or 32AD or 33AB or 33ABA or 33AC

Clause 25– Any amount of profit chargeable to tax under section 41 and computation thereof

Clause 26 (a)– Pre-existed on the first day of the previous year but was not allowed in the assessment of any preceding previous year and was (a) paid during the previous year; (b) not paid during the previous year

Clause 26 (b)– Was incurred during the previous year and was (a) paid on or before the due date for furnishing the return of income of the previous year under section 139(1); (b) not paid on or before the aforesaid date (State whether sales tax, customs duty, excise duty, or any other indirect tax, levy, cess, impost, etc., is passed through the profit and loss account).

Clause 27 (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

Clause 27 (b)– Particulars of income or expenditure of prior period credited or debited to the profit and loss account

Clause 28– Whether during the previous year the assessee has received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia), if yes, please furnish details of the same

Clause 29– Whether during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if yes, please furnish details of the same

Clause 29 (a)– Whether any amount is to be including in income chargeable under the head ‘income from other sources’ as referred to in clause (ix) of sub-section (2) of section 56? (Yes/No)

Clause 29 (b)– If yes, please furnish the following details: (i) Nature of income (ii) Amount thereof

Clause 30– Details of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque [Section 69D]

Clause 30A (a)– Whether primary adjustment to transfer price, as referred to in sub-section (1) of 92CE, has been made during the previous year? (Yes/No)

Clause 30A (b)– If yes, please furnish the following details:- (i) Under which clause of sub-section (1) of 92CE primary adjustment is made? (ii) Amount (in Rs.) of primary adjustment (iii) Whether the excess money available with the associated enterprise is to be repatriated to India as per the provisions of sub-section (2) of section 92CE? (Yes/No) (iv) If yes, whether the excess money has been repatriated within the prescribed time (Yes/No) (v) If no, the amount (in Rs.) of imputed interest income on such excess money which has not been repatriated within the prescribed time

Clause 30B (a)– Whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding one crore rupees as referred to in sub-section (1) of section 94B? (Yes/No)

Clause 30B (b)– If yes, please furnish the following details:- (i) Amount (in Rs.) of expenditure by way of interest or of similar nature incurred: (ii) Earnings before interest, tax, depreciation and amortization (EBITDA) during the previous year (in Rs.): (iii) Amount (in Rs.) of expenditure by way of interest or of similar nature as per (i) above which exceeds 30% of EBITDA as per (ii) above: (iv) Details of interest expenditure brought forward as per sub-section (4) of section 94B (v) Details of interest expenditure carried forward as per sub-section (4) of section 94B

Clause 30C (a)– Whether the assessee has entered into an impermissible avoidance arrangement, as referred to in section 96, during the previous year? (Yes/No)

Clause 30C (b)– If yes, please specify:- (i) Nature of the impermissible avoidance arrangement: (ii) Amount (in Rs.) of tax benefit in the previous year arising, in aggregate, to all the parties to the arrangement”

Clause 31 of Form 3CD

Clause 31 (a)– Particulars of each loan or deposit in an amount exceeding the limit specified in section 269SS taken or accepted during the previous year: Name, address and PAN of the lender or depositor, Amount of loan or deposit taken or accepted, whether the same was squared up during the year, maximum amount outstanding at any time during the previous year, whether the same was taken or accepted by cheque or bank draft (specify if account payee) or use of ECS through a bank account

Clause 31 (b)– Particulars of each specified sum in an amount exceeding the limits specified in section 269SS taken or accepted during the previous year: Name, address and PAN (if available) of the person from whom specified sum is received, amount of specified sum taken or accepted, whether the specified sum was taken or accepted by cheque or bank draft (specify if account payee) or use of ECS through a bank account

Clause 31 (ba)– Particulars of each specified sum in an amount exceeding the limits specified in section 269ST taken or accepted during the previous year: Name, address and PAN (if available) of the person from whom specified sum is received, amount of specified sum taken or accepted, whether the specified sum was taken or accepted by cheque or bank draft (specify if account payee) or use of ECS through a bank account

Clause 31 (bb)– Particulars of each receipt in an amount exceeding the limit specified in section 269ST, in aggregate from a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person, received by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year:- (i) Name, address and Permanent Account Number (if available) of the payer; (ii) Amount of receipt (in Rs.)

Clause 31 (bc)– Particulars of each payment made in an amount exceeding the limit specified in section 269ST, in aggregate to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a person, otherwise than by a cheque or bank draft or use of electronic clearing system through a bank account during the previous year:- (i) Name, address and PAN (if available) of the payee; (ii) Nature of transaction; (iii) Amount of payment (in Rs.); (iv) Date of payment;

Clause 31 (bd)– Particulars of each payment in an amount exceeding the limit specified in section 269ST, in aggregate to a person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion to a person, made by a cheque or bank draft, not being an account payee cheque or an account payee bank draft, during the previous year:- (i) Name, address and PAN (if available) of the payee; (ii) Amount of payment (in Rs.)

Clause 31 (c)– Particulars of each repayment of loan or deposit or any specified advance in an amount exceeding the limit specified in section 269T made during the previous year: Name, address, PAN (if available) of payee, amount of repayment, maximum amount outstanding at any time during the previous year, whether the repayment was made by cheque or bank draft (specify if account payee) or use of ECS through a bank account

Clause 31 (d)– Particulars of repayment of loan or deposit or any specified advance in an amount exceeding the limit specified in section 269T received otherwise than by a cheque or bank draft or use of ECS through a bank account during the previous year: Name, address, PAN (if available) of the payer, amount of loan or deposit or any specified advance received otherwise than by a cheque or bank draft or use of ECS through a bank account during the previous year

Clause 31 (e)– Particulars of repayment of loan or deposit or any specified advance in amount exceeding the limit specified in section 269T received by a cheque or bank draft which is not an account payee cheque or account payee bank draft during the previous year: Name, address, PAN (if available), of the payer, amount of loan or deposit or any specified advance received by a cheque or a bank draft which is not an account payee bank cheque or bank draft during the previous year

Clause 32 (a)– Details of brought forward loss or depreciation allowance to the extent available

Clause 32 (b)– Whether a change in the shareholding of the company has taken place during the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79

Clause 32 (c)– Whether the assessee has incurred any speculation loss referred to in section 73 during the previous year. If yes, please furnish details of the same

Clause 32 (d)– Whether the assessee has incurred any loss referred to in section 73A in respect of any specified business during the previous year, if yes, please furnish details of the same

Clause 32 (e)– In case of a company, please state that whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, provide details of speculation loss if any incurred during the previous year

Clause 33– Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, 10AA)

Clause 34 (a)– Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes, please furnish details

Clause 34 (b)– Whether the assessee is required to furnish the statement of tax deducted or tax collected. If yes, please furnish the details

Clause 34 (c)– Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7). If yes, please furnish details

Clause 35 (a)– In the case of a trading concern, give quantitative details of principal items of goods traded: (i) Opening Stock; (ii) purchases during the previous year; (iii) sales during the previous year; (iv) closing stock; (v) shortage/excess, if any

Clause 35 (b)– In the case of a manufacturing concern, give quantitative details of the principal items of raw materials, finished products and by-products: A. Raw Materials: (i) opening stock; (ii) purchases during the previous year; (iii) consumption during the previous year; (iv) sales during the previous year; (v) closing stock; (vi) yield of finished products; (vii) percentage of yield; (viii) shortage/excess, if any. B. Finished products/by-products: (i) opening stock (ii) purchases during the previous year; (iii) quantity manufactured during the previous year; (iv) sales during the previous year; (v) closing stock; (vi) shortage/excess, if any

Clause 36– In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form:- (a) total amount of distributed profits; (b) amount of reduction as referred to in section 115-O (1A)(i); (c) amount of reduction as referred to in section 115-O (1A)(ii); (d) total tax paid thereon; (e) dates of payments with amounts

Clause 36A– a) Whether the assessee has received any amount in the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2? (Yes/No) (b) If yes, please furnish the following details:- (i) Amount received (in Rs.): (ii) Date of receipt

Clause 37– Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the cost auditor

Clause 38– Whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor

Clause 39– Whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/identified by the auditor

Clause 40– Details regarding turnover, gross profit, etc. for the previous year and preceding previous year: 1. Total turnover 2. Gross profit/turnover 3. Net profit/turnover 4. Stock-in-trade/turnover 5. Material consumed/finished goods produced

Clause 41– Please furnish 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 alongwith details of relevant proceedings

Clause 42 (a)– Whether the assessee is required to furnish statement in Form No. 61 or Form No. 61A or Form No. 61B? (Yes/No)

Clause 42 (b)– If yes, please furnish Income-tax Department Reporting Entity Identification Number, Type of form, Due date for furnishing, Date of furnishing (if furnished), Whether the form contains information about all details/ transactions which are required to be reported. If not, please furnish list of the details/ transactions which are not reported

Clause 43 (a)– Whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub-section (2) of section 286 (Yes/No)

Clause 43 (b)– If yes, please furnish the following details: (i) Whether report has been furnished by the assessee or its parent entity or an alternate reporting entity (ii) Name of parent entity (iii) Name of alternate reporting entity (if applicable) (iv) Date of furnishing of report

Clause 44 of Form 3CD– Break-up of total expenditure of entities registered or not registered under the GST

Form 3CD for AY 2021-2022

As Form 3CD is a reporting format prepared by the Chartered Accountant on behalf of the assessee. Below given is the PDF version of Form 3CD for AY 2021-2022.

Form 3CB 3CD

Both Form 3CB & Form 3CD are reporting formats wherein CAs audit the books of accounts of taxpayers. However, Form 3CB is particularly for those who don’t require mandatory audit under any law other than income tax law. On the other hand, Form 3CD is well-reported format having certain fields that highlights various audit information.

Form 3CD: FAQs