The deadline to submit income tax audit reports for AY 2025-26 is September 30, 2025, and eligible taxpayers must file through a chartered accountant using Form 3CA, 3CB, and 3CD. In March 2025, the Central Board of Direct Taxes (CBDT) introduced significant changes to Form 3CD, effective for FY 2024-25.
According to tax experts Kalpesh Unadkat and Yogesh Kale, some redundant clauses were removed while new reporting requirements have been introduced. Here are the top five key changes:
1. MSME Payments (Clauses 22 & 26)
- Reporting now extends beyond interest on delayed payments to MSMEs.
- Tax auditors must disclose the total dues to MSMEs, amounts paid within deadlines, and pending amounts.
- Clause 26 has been updated to show breakup of disallowances under Section 43B(h), highlighting payments cleared or left unpaid.
- This aligns tax reporting with MSME returns under company law, potentially increasing compliance efforts.
2. Buyback of Shares (New Clause 36B)
- With the Finance Act, 2025 reclassifying buyback as dividend, a new clause requires shareholders to report:
- Amount received on buyback
- Cost of acquisition of such shares
3. Expenditure on Settlement of Proceedings (Clause 37)
- Following amendments to Section 37, expenses incurred to settle legal proceedings under laws like SEBI, SCRA, or Competition Act are not deductible.
- Form 3CD now requires explicit reporting of such expenses, including professional fees linked to settlements.
4. Loans, Deposits & Advances (Clause 31)
- Updated to require coded reporting for transactions involving loans, deposits, and advances.
- CBDT has introduced codes (A–L) covering cash, instruments, transfers, conversions, journal entries, etc.
- Previously, adjustments through journal entries had no specific reporting requirement.
5. Presumptive Income from Cruise Ship Operations (Clause 12)
- Section 44BBC has been introduced for non-residents engaged in cruise ship operations.
- Clause 12 now mandates disclosure of such presumptive income.
⚖️ Impact of the Changes
These revisions align Form 3CD with recent legislative updates and aim to tighten compliance. The focus on MSME reporting is expected to enforce timely payments, though experts caution that it may create duplication of efforts and increase the compliance burden.
Tax professionals also note that capturing detailed MSME-related data could prove challenging for many taxpayers, potentially leading to ad hoc disallowances and scrutiny from the tax department.
