CBDT defers reporting in Clause 30C & 44 of Tax Audit Report till 31.03.2022

Tax Audit Report (Form 3CD- Applicability of Clause 30C and Clause 44 by one more year i.e. will be applicable for the Financials year 2022-23 Now. Central Board of Direct Taxes (CBDT) has issued Circular No. 05/2021 dated March 25, 2021 by which the CBDT has deferred the applicability of certain Clause of Form 3CD (Tax Audit Report) till March 31, 2022. Order under Section 119 of the Income-tax Act, 1961 Section 44AB of the Income-tax Act, 1961 (‘the Act’) read with rule 6G of the Income-tax Rules, 1962 (‘the Rules’) requires specified persons to furnish the Tax Audit Report along with the prescribed particulars in Form No. 3CD. The existing Form No. 3CD was amended vide notification no. GSR 666(E) dated 20th July, 2018 with effect from 20th August 2018. However, the reporting under clause 30C and clause 44 of the Tax Audit Report was kept in abeyance till 31 st March, 2019 vide Circular No. 6/2018 dated 17.08.2018, which was subsequently extended to 31 st March, 2020 vide Circular No. 9/2019. Vide circular no. 10/2020 dated 24.04.2020, it was further extended to 31 st March, 2021. In view of the prevailing situation due to COVID-19 pandemic across the country, it has been decided by the Board that the reporting under clause 30C and clause 44 of the Tax Audit Report shall be kept in abeyance till 31st March, 2022 . Brief introduction of Clause 30C and Clause 44 of the Form 3CD which is deferred till March 31, 2022 as mentioned below:- A) Clause 30C:- 30C. (a) Whether the assessee has entered into an impermissible avoidance arrangement, as referred to in section 96, during the previous year? (Yes/No.) (b) If yes, please specify:- (i) Nature of impermissible avoidance arrangement: (ii) Amount (in Rs.) of tax benefit in the previous year arising, in aggregate, to all the parties to the arrangement: The definition of ‘impermissible avoidance arrangement’ U/s 96 of Income-tax Act is as mentioned below: (1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it- (a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length; (b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act; (c) lacks commercial substance or is deemed to lack commercial substance under section 97, in whole or in part; or (d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes (2) An arrangement shall be presumed, unless it is proved to the contrary by the assessee, to have been entered into, or carried out, for the main purpose of obtaining a tax benefit, if the main purpose of a step in, or a part of, the arrangement is to obtain a tax benefit, notwithstanding the fact that the main purpose of the whole arrangement is not to obtain a tax benefit. B) Clause 44: Break-up of total expenditure of entities registered or not registered under the GST as: 1. Total amount of Expenditure incurred during the year 2. Relating to goods or services exempt from GST 3. Relating to entities falling under composition scheme. 4. Relating to other registered entities 5. Total payment to registered entities 6. Expenditure relating to entities not registered under GST You can reach out to us at +919811897982 or write us: associatesjptp@gmail.com for details and support in relation to the update.

Section 194R TDS – Analysis Applicable from 01/07/2022

APPLICABILITY: To all assesse (other than Individual & HUF) And Individual & HUF having Turnover is above Rs. 1,00,00,000 or Professional receipt is above Rs 50,00,000 in previous year 2021-22 assessment year 2022-23. Union Budget 2022, a new TDS section 194R, has been proposed in the Finance Bill 2022, w.e.f. 01.07.2022. This new section 194R requires deduction of tax at source @ 10%, by any person, providing any benefit or perquisite, exceeding Rs. 20,000 in value, in a year, to a resident, arising from the business or profession of such resident and such benefit or perquisite is in the nature of income falling under section 28(iv) of the Income tax Act. The benefit or perquisite referred to in this new section 194R is not the perquisite u/s 17(2), under the head salary income, paid or payable by the employer to employees, as for that perquisite u/s 17(2), another TDS section 192 is already there. The benefits or perquisites proposed to be covered by this new section 194R are those perks, benefits, amenities, or facilities, probably in kind, or in a combination of cash and kind, which a resident person enjoys, pursuant to, or in exercise of his business or profession, in lieu of the regular consideration payable to him, in monetary terms, in exercise of such business or profession. Such benefits or perquisites are taxable as business receipts u/s 28(iv) of the Income Tax Act. Sec 28 : The following income shall be chargeable to income-tax under the head “Profits and gains of business or profession”,— (iv): the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession Also, such gifts, perks or benefits provided on some special occasions like festivals (Eg. Diwali sweets), marriage occasions, etc. may not liable for tax deduction at source, as section 194R contemplates to cover only those benefits or perquisites, which arise out of business or profession. Purpose for Introducing of Sec 194R: It was observed by department that many companies claimed expenses for business promotions by offering various gifts/ perks/ benefits to its dealers (on fulfillments of conditions of under agreement or as per prevalent norms/ tradition practice followed by over the years by business entity) under section 37 of Income Tax Act 1961, however majority of dealer did not declared the said gifts/ perks/ benefits under business income as required by sec 28 (iv) of Income Tax Act 1961. So to bring such gifts/ perks/ benefits received due to business connections by resident dealers TDS U/s 194R is introduced to track the undeclared income. Special Points: 1. Applicable from 01/07/2022. 2. Such gifts, perks or benefits provided on some special occasions like festivals (Eg. Diwali sweets), marriage occasions, etc. may not liable for tax deduction at source, as section 194R contemplates to cover only those benefits or perquisites, which arise out of business or profession. 3. For calculating Aggregate limit of Rs. 20,000 financial year is to be considered as a whole and not period after 01/07/2022. 4. Such gifts, perks or benefits provided are not in relation to business of resident person. (Eg. honorarium given to resident as guest of honor for function or event) Regards CA J P Jain 98118-97982