The form seeks a break-up of total expenditure of entities registered or not registered under the GST.
The form also has a column to know whether the assessee has entered an impermissible avoidance arrangement.
Frank Dsouza, partner at PwC India, said, “Whereas most of the changes sought in the form appear to be logically driven by the recent changes in law, the one relating to GAAR is interesting in so as much that it requires the auditor to call out impermissible arrangements."
He said this will place additional onus on the auditor, especially in an area devoid of precedence and largely characterised by interpretation issues.
The provisions of GAAR, under which the tax department gets the right to scrutinise transactions if they believe that they are structured for the purpose of avoiding taxes, came into effect from April 1, 2017 after much delay.
Prateek Agarwal, partner at Nangia Advisors, said with these additional inclusions, the scope of tax audits has significantly increased and requires various additional procedures.
A tax auditor needs to understand the applicability of these procedures on the respective assesses, and make adequate plans for performing the required procedures in advance and also exercise due professional experience before reporting on these additional requirements, he said.
"We also expect that Institute of Chartered Accountants of India will also issue the guidance on performing the procedures on these additional requirements very soon," Agarwal said.
- The form - 3CD - has to be filled by all auditable companies and professionals
- Firms with turnover of above Rs 10 million and professionals having gross receipts of over Rs 5 million per annum have to file this form
- The changes will capture country-by-country reporting, specific financial transactions, deemed dividend