CBDT amended Form 3CD through the Income-tax (Eighth Amendment) Rules, 2025 vide Notification No. 23/2025 dated 28th March 2025.
Effective from 1st April 2025, these changes impact audits for FY 2024-25 (AY 2025-26).
The e-filing portal has enabled updated Forms 3CA-3CD / 3CB-3CD and released a new offline utility/schema.
Clause-wise Amendments (with Examples)
Clause 12 – Presumptive Income Coverage Expanded
- What changed: Section 44BBC (non-resident cruise ship operators) has been added to the presumptive income list.
- Example: If a foreign cruise company operates in India and opts for presumptive taxation under 44BBC, auditor must now tick/mention this section in Clause 12.
Clause 19 – Deduction Rows Removed
- What changed: Rows for 32AC, 32AD, 35AC, 35CCB are deleted as these deductions are no longer available.
- Example: If a client previously claimed deduction u/s 35AC (expenditure on eligible social projects), auditor need not report this anymore as the section has been withdrawn.
Clause 21(a) – Settlement Payments u/s 37(1)(iv)
- What changed: New row to report expenditure incurred to settle/compound offences under any law.
- Example: A company paid ₹10 lakh to settle a pollution control violation with the Pollution Board. This settlement amount is disallowed under Section 37(1)(iv) and must be separately reported in Clause 21(a).
Clause 22 – MSME Payments & Section 43B(h)
- What changed: Auditors must now report MSME payments in detail –
- Interest disallowed u/s 23 of MSMED Act.
- Total payable to micro/small enterprises during the year.
- Break-up of payments: within time vs. beyond time (disallowed u/s 43B(h)).
Tips: Get List of Creditors from your client and check in which cases clause 43B(h) is not applicable, cases are listed below:
- Opening creditors
- Not registered under MSME
- Registered under MSME, but as Traders
- If client adopted cash system accounting
- Creditors of Capital Assets
- If payment is done before 31st March
Clause 26 – Alignment of Section 43B
- What changed: Language updated to clarify “pay-by-due-date” rule excludes MSME payments (clause h).
- Example: Employer pays PF contribution of ₹2,00,000 after the due date under PF Act but before the ITR filing due date. It is allowed under Section 43B.
But if MSME invoice is delayed, even if paid before filing return, it is not allowed for that year.
Clauses 28 & 29 – Deleted
- What changed: Reporting of deemed income under Section 56(2)(viia) (this is merged under section 56 (2) (x)) & 56 (2) (viib) (Angel Tax) removed.
- Example: Earlier, if a company issued shares above FMV and received premium, auditor had to report under Clause 29.
Clause 31 – Loans/Deposits Reporting with Mode Codes
- What changed: For Sections 269SS & 269T, auditor must specify mode of transaction using codes.
- Complete code list as drop down in audit form
- Example:
- Client accepted a loan of ₹1,00,000 in cash → Code “A”.
- Client repaid a loan of ₹2,00,000 by journal entry → Code “I”.
- Each transaction must now carry this code in the report.
Clause 36B – Buyback Receipts (New Clause)
- What changed: New clause introduced to disclose:
- Amount received on buyback, and
- Cost of acquisition of shares bought back.
Practical Implications for Auditors
- MSME register is now mandatory for audit working papers.
- Capture mode codes for loans/deposits to avoid schema errors.
- Buyback transactions need additional documentation.
- Disallow settlement/compounding expenses separately.
- Remove obsolete deductions & reporting from workpapers.
- Always update to the latest offline utility/schema before filing.
Summary Checklist
- ✅ MSME vendor list + payment status (for 43B(h))
- ✅ Loans & deposits with mode codes (Clause 31)
- ✅ Buyback receipts & cost reporting (Clause 36B)
- ✅ Identify & disallow settlement expenses (Clause 21)
- ✅ Remove old deductions & 56-related reporting
- ✅ Validate Form 3CD with updated schema
👉 This makes your audit file future-proof and avoids TAR schema rejection during upload.
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