Business entities having a turnover of more than Rs 1 crore (or Rs 2 crore if they have opted for presumptive taxation) and professionals with gross receipts of more than Rs 50 lakh have to comply with the tax audit requirements.
The Income Tax Department on Monday deferred for the third time the requirement for companies to include in their I-T audit report the details of the Goods and Services Tax (GST) and GAAR. The reporting requirement of these details in income tax audit form has been kept in abeyance till March 31, 2021 — meaning that all income tax audit reports need not include details on the GST and the General Anti-Avoidance Rules (GAAR) till March 2021.
Business entities having a turnover of more than Rs 1 crore (or Rs 2 crore if they have opted for presumptive taxation) and professionals with gross receipts of more than Rs 50 lakh have to comply with the tax audit requirements. The due date for its filing is September 30 and if the taxpayer is covered by transfer pricing provisions, the due date is November 30.
The Central Board of Direct Taxes (CBDT) in an order issued on Monday said the board has received representations with regard to difficulty in implementation of reporting requirements under clause 30C (pertaining to GAAR) and clause 44 (pertaining to GST compliance) of the Form No 3CD in view of the global pandemic due to COVID-19 and requested for deferring it’s applicability.
“The matter has been examined and 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 March 31, 2021,” the CBDT said.
In July 2018, the I-T department had changed the tax audit form – 3CD, seeking details under the GST as well as the GAAR, which seeks to prevent companies from routing transactions through other countries to avoid taxes. The changes were to come into effect from August 20, 2018.
With stakeholders complaining that the change is onerous and a burden on companies, the CBDT had then deferred the implementation of the change in I-T audit form till March 31, 2019. Further in May 2019, the CBDT had deferred its implementation till March 31, 2020, and with April 24 order it has now been deferred till March 31,2021.
Consulting firm AKM Global Tax Partner Amit Maheshwari said, “We don’t have a detailed guidance on certain aspects related to reporting on GAAR. This certification poses a challenge to auditors as it is very subjective in nature. Though this deferment comes as a relief to the auditors, it is better to do away with this requirement as it is not fair to expect the auditors to comment on such subjective piece of legislation.”
Nangia Andersen LLP Director Sandeep Jhunjhunwala said, “The decision to defer the onerous reporting requirements is a clear indicator that the CBDT is ensuring that there aren’t any slips between the cup and the lip, leading to taxpayers’ anguishes. In the midst of COVID-19 pandemic, tax authorities have been proactively announcing the relaxation in compliance and reporting obligations for businesses.”