Deferment of Reporting under clause 30C and clause 44 of Tax Audit Report

The Central Board of Direct Txe has vide Circular No.10 /2020 dated 24th April, 2020 stated that in view of the prevailing situation due to COVID-19 pandemic across the country, the reporting under clause 30C and clause 44 of the Tax Audit Report shall be kept in abeyance till 31 st March, 2021.

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. 

Let us understand the Clause 30C and Clause 44 of the Tax Audit Report.

1. What is clause 30C in Tax Audit Report under section 44AB?

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

If answer is "YES' ,person is required to furnish followings:-

(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”;

An impermissible avoidance arrangement would be an arrangement where the main purpose is to obtain a tax benefit and is not at arm’s length, results in tax evasion (directly or indirectly), lacks commercial substance or is carried out in a manner that does not otherwise occur if the arrangement was for bona fide purposes.

2. What is clause 44 in Tax Audit Report under section 44AB?

It requires the break-up of total expenditure of entities registered or not registered under the GST in a particular Format like expenditure in relation to exempt goods / services under GST, payments to entities under the Composition Scheme, Payments to entities not registered under GST etc. A similar schedule is available as a part of the Income Tax return forms to be filled up by those not liable for tax audit.

in view of the CBDT circular now , there is no need to report in these two column till the March 2021.