Yvk And Associate

The Ministry of Corporate Affairs has notified the Companies (Accounting Standards) Rules, 2021 on June 23, 2021. The Accounting Standards shall come into effect in respect of accounting periods commencing on or after the 1st day of April 2021.

Key features of the Rules are as follows:

• The notification deals with small and medium companies to revise the turnover and borrowing limits and help in making disclosure requirements less onerous.
• The notification has included the revised definition of MSMEs. Under the revised SMC definition, the turnover limit has been increased from Rs 50 crore to not exceeding Rs 250 crore and with enhanced borrowing limits. This is in addition to the requirements that such entities should be unlisted companies, which are not banks, financial institutions, or insurance companies.
• Every company, other than companies on which Indian Accounting Standards as notified under Companies (Indian Accounting Standards) Rules, 2015 are applicable, and its auditor(s) shall comply with the Accounting Standards.
• The Accounting Standards shall be applied in the preparation of Financial Statements.
• The government instructed that he SMC which does not disclose certain information pursuant to the exemptions or relaxations given to it shall disclose (by way of a note to its financial statements) the fact that it is an SMC and has complied with the Accounting Standards insofar as they are applicable to an SMC on the lines, “The Company is a Small and Medium Sized Company (SMC) as defined in the Companies (Accounting Standards) Rules, 2021 notified under the Companies Act, 2013. Accordingly, the Company has complied with the Accounting Standards as applicable to a Small and Medium Sized Company.”
• “Where a company, being a SMC, has qualified for any exemption or relaxation previously but no longer qualifies for the relevant exemption or relaxation in the current accounting period, the relevant standards or requirements become applicable from the current period and the figures for the corresponding period of the previous accounting period need not be revised merely by reason of its having ceased to be an SMC. The fact that the company was an SMC in the previous period and it had availed of the exemptions or relaxations available to SMCs shall be disclosed in the notes to the financial statements,” the MCA instructed.

Income Tax rules necessitate few taxpayers to get their accounts audited under Section 44AB.

The threshold limit of Rs 1 crore for a tax audit is increased to Rs 5 crores from AY 2021-22 and further to Rs.10 crore with effect from AY 2022-23 (FY 2021-22) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

The auditor has to furnish the audit report in the specified audit form along with the detailed particulars.

What is a Tax Audit?

Tax audit is a cross-examination of the books of accounts of the taxpayer by a Chartered Accountant (holding full-time Certificate of Practice) under the Income Tax Act 1961.

Section 44AB deals with the conditions under which Tax audit becomes mandatory for some taxpayers.

The main purpose of a tax audit is to verify the accuracy of the financial records and avoid any fraud or tax evasion.

What is a Tax Audit report?

The person conducting a tax audit has to provide the findings in a report using specified ‘Audit Forms’ prescribed by the income tax department.

Section 44AB prescribes Forms 3CA and 3CB. Along with these two forms, the auditor has to furnish a form 3CD. Let us discuss these forms in detail.

Prescribed Audit Forms

The audit report has to be furnished in either of the following forms:
(i) Form 3CA and (ii) Form 3CB

Form 3CA

In respect of a taxpayer carrying on a business or profession and who is already mandated to get his accounts audited under any other law (i.e. law other than income tax law).
For instance, A company is required to get its accounts audited compulsorily under the Companies Act 2013. So, it will furnish Form 3CA.

Form 3CB

In respect of a taxpayer carrying on a business or profession but who is not required to get his accounts audited under any other law.
A proprietorship entity or partnership firm, having a turnover of more than 1 crore and not opting for presumptive income scheme, is not required to get

its accounts audited under any other law except income tax. So, it will furnish Form 3CB.  

Along with either of the forms mentioned above, the tax auditor shall also furnish Form 3CD which forms part of the audit report and contains the prescribed particulars.

Particulars of Form 3CA

Point 1

• Name and address of the taxpayer along with Permanent Account Number.
• Name of the Auditor (Individual/ Firm as the case may be).
• Law under which accounts have been audited (eg: Companies Act).
• Date of Audit Report.
• Period of Profit & Loss Account/ Income & Expenditure Account. (Beginning Date & End Date)
• Date of Balance Sheet.

Point 2

• Declaration of attaching Form 3CD along with the audit report.

Point 3

• Audit Observations/ Qualifications found in the details related to Form 3CD.

Point 4

• Place & Date of signing audit report.
• Name, Address, and Membership Number of the Auditor.
• Stamp/ Seal of the Auditor.

Particulars of Form 3CB

Point 1

• Date of Balance Sheet.
• Period of Profit & Loss Account/ Income & Expenditure Account. (Beginning Date & End Date).
• Name and address of the taxpayer along with Permanent Account Number.

Point 2

• Address, where the books of accounts are kept
• Address of branches (if books are kept at branches also).

Point 3(a)

• Audit Observations/ Qualifications/ Comments/ Discrepancies.

Point 3(b)

• Declaration by the auditor regarding –

• Obtaining all the information and explanations necessary for the audit.
  • Assurance that the organization (including branches) maintains proper books of accounts.
  • Balance sheet and Profit & Loss Account gives a true and fair view.

Point 4

• Declaration of attaching Form 3CD along with the audit report.

Point 5

• Audit observations/ discrepancies found in the details related to Form 3CD.

Point 6

• Place & Date of signing audit report.
• Name, Address, and Membership Number of the auditor.
• Stamp/ Seal of the auditor.

Particulars of Form 3CD

Form 3CD is a 41-points detailed statement of particulars. All the details related to various aspects of the business and transactions have to be filled at appropriate places. A detailed explanation of each point of Form 3CD can be seenhere

Form 3CE – Audit report in respect of non-residents and foreign companies

Non-residents and foreign companies receiving royalty or fees for technical services from the government or an Indian concern have to get their accounts audited. The auditor will furnish the report in Form 3CE along with an annexure mentioning the particulars.

Particulars of Form 3CE

Point 1

• Name and address of the non-resident along with Permanent Account Number,
• Financial year, for which the auditor has conducted the audit,

Point 2

• Declaration about obtaining all the information and explanations necessary for the audit,

Point 3

• Certification about the permanent establishment/ fixed place of the profession in India,

Point 4

• Declaration of the income from royalty/ fees for technical services under section 44DA for the relevant assessment year,

Point 5

• Signature and name of the Auditor along with stamp/ seal

Details relating to income by way of royalty or fees for technical services will have to be mentioned in the Annexures that are a part of this form.

Due Date of obtaining the audit report

A taxpayer has to obtain the audit report on or before 30th September of the relevant assessment Year unless otherwise extended.

However, due to the pandemic situation, the Audit report for AY 2020-21, the due date for submitting the audit report was extended to 30th Jan 2021.

Penalty for not filing the audit report

Assessing Officer may impose penalty u/s 271B if the taxpayer doesn’t get his accounts audited or file the audit report. A minimum penalty can be 0.5% of the total sales, turnover or gross receipts, which can go up to Rs. 1,50,000. However, if the taxpayer gives reasonable cause for non-compliance, no penalty will be imposed.

The 1^st Proviso to Rule 46 of CGST Rules 2017 has been amended, vide Notification No.79/2020-CT dated 15-10-2020, for declaration of HSN code in invoice. Under this amended Proviso, Notification No. 78/2020 – Central Tax, dated 15.10.2020 has been issued to make HSN code mandatory up to 4 digits in the B2B invoices with effect from 01.04.2021 issued by taxpayers whose aggregate turnover in the preceding financial year is uptoRs. 5 crores. For the taxpayers whose turnover in the preceding financial year is more than Rs. 5 crores, HSN code is mandatory up to 6 digits in invoices with effect from 01.04.2021.

Ministry of Finance
(Department of Revenue)
(Central Board of Indirect Taxes And Customs)
New Delhi,

Notification No. 78/2020 – Central Tax

Dated: 15th October, 2020

G.S.R. 638(E).— In exercise of the powers conferred by the first proviso to rule 46 of the Central Goods and Services Tax Rules, 2017, the Central Board of Indirect Taxes and Customs, on the recommendations of the Council, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.12/2017 – Central Tax, dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 660(E), dated the 28^th June, 2017, namely:–

In the said notification, with effect from the 01^st day of April, 2021, for the Table, the following shall be substituted, namely, –

“TABLE

Provided that a registered person having aggregate turnover up to five crores rupees in the previous financial year may not mention the number of digits of HSN Code, as specified in the corresponding entry in column (3) of the said Table in a tax invoice issued by him under the said rules in respect of supplies made to unregistered persons.”.

[F. No. CBEC-20/06/09/2019-GST]

PRAMOD KUMAR, Director

Note: The principal notification number 12/2017 – Central Tax, dated the 28th June, 2017, published in the Gazette  of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 660(E), dated the 28^th June, 2017.

CBDT vide circular No. 15/2021 dated 03.08.2021 Extended time lines for electronic filing of various Forms under the Income-tax Act, 1961 in view of difficulties reported by the taxpayers and other stakeholders in electronic filing of certain Forms and considering the non-availability of the utility for e-filing of certain Forms. Forms for which dates been extended are Form No. 15CC, Equalization Levy Statement in Form No.1, Form No. 64D, Form No. 64C, Form No. 10BBB and Form II SWF.

Income Tax Due Date extension Table as per CBDT circular No. 15/2021 dated 03.08.2021 

• Clarifications by CBDT:

It is also clarified that the above said forms, e-filed, after the expiry of time limits provided as per Circular No.12 of 2021 dated 25.06.2021 or as per the relevant provisions, till date, will stand regularized accordingly. 

Disclaimer:  Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

Need of E-Way Bill ?

1. Tracking Transportation of Goods (as GST is a Destination Based Tax System)

2. To Avoid Tax Evasion

When E-Way Bill Needs to be Issue ?

• When ever there is Movement of Goods + Value of Goods Exceed 50,000
• Note :

1. Value means TAXABLE VALUE of Goods is Inclusive of GST (Does not Include Value of EXEMPTED SUPPLY)

2. Value is Considered PER INVOICE

Exception : (When Limit of 50,000 is NOT APPLICABLE)

1. If goods sent for Job Work from one state to another State (Inter State)

2. Handicraft Goods Transported from one state to another State (Inter State)

E-Way Bill Issued by Whom ?

When filling of Part-B information (Transporter’s Details) is Not Necessary ?

If Distance of Transportation is up-to 50 KM + Inter State

Validity of E-Way Bill

For Over Dimensional Cargo

Example:

If E-Way is generated on 14th August @ 2 PM – It is valid till 12 AM of 15th August

Extension of Validity ?

– 8 Hours Extra (after 12 AM) (With Exceptional Reasons)

When E-Way Bill is Not Required ?

• Transportation of LPG – Household Purpose or Non-Domestic Exempted Category
• Kerosene Oil Solid under PSD
• Postal Baggage transported by Department of Post
• Precious Metal or Stones or Jewellery
• Currency
• Used Household Goods
• Coral
• Where Transportation by non Moterised Vehicle (Hand Rickshaw etc)
• Transportation of Exempted Goods
• Transportation of Alcohol for Human Consumption, Petroleum Products
• Transportation of Goods (Covered under Schedule 3)

Important Points :

• Acceptance of E-Way Bill – If Does not Communicate Acceptance = Deemed Accepted
• Want to Reject (whichever is Earlier)

(a) Before 72 Hours (from Intimation) or

(b) Before Delivery

• Alteration in E-Way Bill – Not Possible
• If want to Cancel – Cancel within 24 Hours & fill New E-Way Bill