CBDT notifies Income-tax (4th Amendment) Rules, 2024, updating Form 3CD & 3CEB, introducing new reporting for specified domestic transactions u/s 115BAE, and revising Form 65 requirements for IFSC units, vide Notification 27/2024.
CBDT has made several important changes to the Income-tax Rules, 1962 to incorporate various updates related to tax audit reporting requirements, specified domestic transactions, and certifications for units in International Financial Services Centres (IFSC). Let’s take a closer look:
I. Amendments to Form 3CD (Tax Audit Report)
1. Part A
The reference to Section 115BAD has been replaced with 115BAD/115BAE in clause 8a related to corporate tax calculations.
2. Part B
a) Clause 12 now refers to Sections 44AD and 44ADA for presumptive taxation.
b) New sub-clauses in 18(ca) mandate reporting of adjustments to written down value under Sections 115BAA, 115BAC, and 115BAD for specific assessment years.
c) Clause 19 has new rows for deductions under Sections 35ABA and any other relevant section.
d) In clause 21(a), the descriptions of disallowed expenditures have been expanded to cover offenses/prohibitions under any law in India or abroad, compounding fees, and benefits/perquisites violating applicable regulations.
e) Clause 26 adds a reference to new clause (h) relating to tax deducted on income.
f) The tables in clause 32(a) now include references to Section 115BAE along with 115BAD.
II. Introduction of Clause 25 in Form 3CEB for Specified Domestic Transactions
A new clause 25 has been inserted in the Annexure to Form 3CEB, requiring reporting of specified domestic transactions under Section 115BAE of the Income-tax Act, 1961, where such transactions have resulted in more than ordinary profits. Details like names of parties, transaction descriptions, amounts, and arm’s length price determination methods must be provided.
III. Updates to Form No. 65 for IFSC Units
a) A new clause (5) has been added under Verification, mandating a certification that the applicant is an IFSC unit filing within 3 months of Section 80LA deduction being inapplicable.
b) Part A has new clauses 6 and 6A regarding the date of becoming a qualifying company and details of Section 80LA deduction.
In summary, these Amendment in IT Rules by CBDT primarily aim to enhance tax audit reporting requirements, introduce compliance checks for specified domestic transactions under the new Section 115BAE, and streamline certification processes for IFSC units. Taxpayers, consultants and IFSC units should carefully review these changes to ensure full compliance with the updated Income-tax Rules.
CBDT Income Tax Notification 27/2024 dated 05/03/2024: Form 3CD, 3CEB and 65 Amended through 4th Amendment Rules, 2024
CBDT Income Tax Notification 34/2024 dated 19/03/2024: Corrigendum to Notification 27/2024