Auditors will now have to disclose details of transactions exceeding Rs 20,000 in connection with immovable property in reports which they file with the I-T authorities on behalf of their clients. Under the Income Tax Act, professionals earning gross receipts of more than Rs 50 lakh and companies with a turnover of over Rs one crore are required to get their accounts audited. The turnover limit for companies has been increased to Rs two crore from Assessment year 2018-19.
So far, auditors in their report had to mention details of loans, and repayment exceeding Rs 20,000 in the tax audit report filed along with Income Tax returns. Hence forth, all transactions exceeding Rs 20,000 relating to property will have to be mentioned in a specified format in the report.
The move will increase transparency in financial dealings and help check tax evasion. As per the notification by the I-T department, auditors will have to furnish details of transactions regarding “each specified sum” exceeding Rs 20,000 from financial year 2016- 17. These would include money paid or received with regard to immovable property.
The auditor report will also have to specify details of the mode of payments whether account payee or bearer cheque, or through electronic system. Through the notification, the tax department has revised the form 3CD for tax audit report under section 44AB of Income Tax Act.
The amended rules will come into effect from July 19, 2017 and will apply for assessment year 2017-18 for which the returns would be filed in the coming months.
Nangia & Co Associate Director Shalu Kedia said the notification mandates “enhanced reporting” as disclosure now needs to be given with bifurcation into — all transactions, cheque, bank draft transactions, and cheque and bank draft transactions which are not account payee.
Before amendment, the disclosure requirement was to report whether or not transactions are through account payee cheque or bank draft, she said. “By doing this, the tax department has ensured greater transparency in modes of transaction,” Kedia said.