612cc034-98e2-4f37-9614-acd7a3e58e0b.pptx

Tax audit cases

1. Tax Audit Section 44Ab of the Income Tax Act By: S. Venugopal, LLB, FCA,CITAX (ICA), DISA(ICA), FAFD(ICA)

2. INTRODUCTION A tax audit is an examination of books of accounts prescribed under Section 44AB of the Income Tax Act to ensure correctness of income, deductions, and compliance with tax laws. It must be conducted by a Chartered Accountant . Objective of Section 44AB Ensure accuracy of income declarations Prevent tax evasion Enhance voluntary tax compliance Facilitate tax assessments through audited data A dministration of tax laws by a proper presentation of accounts before the tax authorities

3. Tax Audit Applicability For every person carrying on Business If total sales, turnover or gross receipts > Rs 1 Crore in any previous year Provided that Threshold is Rs 10 Crore if aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount and aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment For every person carrying on Profession If Gross receipts > Rs. 50 lakh in any previous year Note: Limit increased to ₹75 lakh where the amount or aggregate of the amounts received during the previous year, in cash, does not exceed five per cent of the total gross receipts of such previous year

4. Presumptive Income carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year The above person shall get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed

5. Non-Applicability Provisos to Section 44AB: This section shall not apply to a person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA This section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later Where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section.

6. BUSINESS Section 2(13) of the Act defines business , as under: "Business" includes any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The following activities have been held to be business: Advertising agent Clearing, forwarding and shipping agents - CIT v. Jeevanlal Lalloobhai & Co. [1994] 206 ITR 548 (Bom). Couriers Insurance agent Nursing home Stock and share broking and dealing in shares and securities - CIT v. Lallubhai Nagardas & Sons [1993] 204 ITR 93 (Bom) Travel agent.

7. PROFESSION Section 2(36) of the Act defines profession to include vocation. The following have been listed out as professions in section 44AA(1) of the Act: ( i ) legal, (ii) medical, (iii) engineering or (iv) architectural profession or (v) the profession of accountancy or (vi) technical consultancy or (vii) interior decoration Further, under Rule 6F and other professions notified thereunder (Notifications No. 1620 SO-18(E) dated 12.01.1977, No. 9102SO 2675 dated 25.09.1992 10 Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 (Revised 2025) and No.116 SO 385(E), dated 04.05.2001), the following can also be considered as a profession: Authorised Representative, Company Secretary, Film Artists/Actors, Cameraman, Director including an assistant director; a music director, including an assistant music director, an art director, including an assistant art director; a dance director, including an assistant dance director; Singer, Story-writer, a screen-play writer, a dialogue writer; editor, lyricist and dress designer, Information Technology.

8. DUE DATE for furnishing tax audit report "specified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139. Hence, the due date for furnishing Tax Aduit report is September 30 – In cases where transfer pricing is not applicable October 31 – In cases where transfer pricing is applicable

9. PENALTY ON Failure to get accounts audited Section 271B As such, the failure of a person, to get his accounts audited in respect of any previous year or furnish a copy of such report as required under section 44AB may attract a penalty equal to 0.5% of the total sales, turnover or gross receipts, or Rs.1.5 lakh whichever is less . However, in view of the specific provisions contained in section 273B, no penalty is imposable under section 271B on the assessee for the above failure if he proves that there was reasonable cause for the said failure. The onus of proving reasonable cause is on the assessee.

10. Forms for Tax Audit

11. Clauses of Form 3CD

12. Clause 1 – Name of the Assessee Full legal name of the individual, firm, company, or other entity being audited. In case of a branch, name of such branch should also be mentioned. In case of change in the name of the assessee, if the change has taken place during the financial year, name at the end of the FY should be stated. However, if the change in name has taken place after the close of the FY but before signing of tax audit report, name as at the year ending date should be mentioned. Clause 2 – Address The current address of the assessee as per records. In case of a company, the address of the registered office should be stated Should match the address used in ITR and PAN. Clause 3 – Permanent Account Number (PAN) The PAN of the assessee issued by the Income Tax Department. Clause 4 – Registrations Under Other Laws Details of registrations such as: GSTIN Excise, VAT, Service Tax (if applicable) Other indirect taxes In case of multiple registration numbers, all such registration numbers should be duly reported

13. Clause 5 – Status Indicates legal status of the assessee: Individual / HUF / Firm / LLP / Company / AOP / BOI / Trust / etc. Clause 6 – Previous Year Start and end date of the previous year for which the audit is being conducted. E.g., 1st April 2024 to 31st March 2025. In case of amalgamations, demergers, reconstitution, new business, closure of existing business etc. the date of beginning/ ending of the previous year should be mentioned accordingly. Clause 7 – Assessment Year Specifies the assessment year relevant to the previous year. E.g., for PY 2024–25, AY is 2025–26. Clause 8 – Clause of Section 44AB under which audit is conducted Specifies under which clause of Section 44AB the tax audit is applicable: Clause 8A – Whether opted for Special Tax regimes Indicate whether the assessee has opted for taxation under section 115BA/ 115BAA/ 115BAB/ 115BAC(1A) 115BAD/ 115BAE

14. Clause 9 – Partners/Members Details Applicable only if assessee is a firm, LLP, AOP, BOI, etc. Requires: Name of partners/members Profit-sharing ratio If there is any change in the partners or members or in their profit sharing ratio since the last date of the preceding year, the particulars of such change. Clause 10 – Nature of Business or Profession Description of business/profession (if more than one business or profession is carried on during the previous year, nature of every business or profession) Also mention: If any new business/profession was started If any existing business/profession was discontinued during the year

15. CLAUSE 11 Particulars Comments (a) Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed. (b) Lists of books of account maintained and the address at which the books of account are kept. (In case books of account are maintained in a computer system, mention the books of account generated by such computer system. If the books of accounts are not kept at one location, please furnish the addresses of locations along with the details of books of accounts maintained at each location.) (c) List of books of account and nature of relevant documents examined. " books or books of account " includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or in electronic form or in digital form No books of account have been prescribed for the persons carrying on business or non-specified profession. Every person carrying on Profession whose total gross receipts > Rs. 150,000 in all the 3 years immediately preceding the previous year, needs to compulsorily maintain certain books of accounts as prescribed like cash book, journal, ledger, etc. Further, certain specified professionals have additional records prescribed that they must maintain. For example, a doctor must maintain a daily case register where certain details of patient visits are recorded. The tax auditor lists the books and records that were checked by him.

16. CLAUSE 12 Particulars Comments Whether the profit or loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant section (44AD, 44ADA, 44AE, 44AF (non-operative with AY 2011-12), 44B, 44BB, 44BBA, 44BBB, 44BBC, Chapter XII-G, First Schedule or any other relevant section) The amount of profit that relates to a business subject to the presumptive scheme of taxation and included in the Profit and Loss account must be reported here. In case of multiple businesses, only the amount of profit that relates to the businesses subject to the presumptive scheme of taxation should be reported section-wise.

17. S.No Section Business covered 1 44AD Eligible business of an eligible assessee resident in India 2 44ADA Professions referred to in section 44AA(1) 3 44AE Business of plying, hiring or leasing goods carriages of an assessee owning not more than ten goods carriages at any time during the previous year 4 44AF Not relevant from A.Y.2011-12 5 44B Shipping business other than cruise shipping in case of non-residents 6 44BB Business (of a non-resident) of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in prospecting for, or extraction or production of, mineral oils 7 44BBA Business of operation of aircraft in case of a non resident 8 44BBB Business (of a foreign company) of civil construction/erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the CG 9 44BBC Business of operation of cruise ships in case of non residents 10 Chapter XII-G Tonnage income of shipping companies 11 First Schedule Insurance Business 12 Any other relevant section Sections not listed above under which income may be assessable on presumptive basis including any other section that may be enacted in future (like section 44BBD inserted by the Finance Act, 2025 w.e.f A.Y. 2026-27 covers the business of providing service or technologies for setting up electronic manufacturing facility or in connection with manufacturing or producing electronic goods, article or things in India under a notified scheme)

18. CLAUSE 13 Particulars Comments (a) Method of accounting employed in the previous year The method of accounting, whether cash or mercantile must be mentioned. Companies however are compulsorily required to maintain their accounts on accrual or mercantile basis under the Companies Act (b) Whether there had been any change in the method of accounting employed vis-à-vis the method employed in the immediately preceding previous year. (c) If answer to above is in affirmative, give details of such change, and the effect thereof on the profit or loss. (d) Whether any adjustment is required to be made to the profits or loss for complying with the provisions of income computation and disclosure standards notified under section 145(2) The Income Tax Act has prescribed certain Income Computation and Disclosure Standards (ICDS) from ICDS I to ICDS X. The effect of these ICDS must be taken in the computation of tax to arrive at the net tax liability – The increase in profit, decrease in profit and net effect is mentioned as per each ICDS. (e) If answer to above is in the affirmative, give details of such adjustments The ICDS also contain certain disclosure requirements and this is the clause under which such disclosures are ultimately made. (f) Disclosure as per ICDS

19. Income computation and disclosure standards (ICDS) ICDS does not apply to assessees following the cash method of accounting. The general provisions of ICDS shall apply to all persons (e.g., Banks, Non-banking financial institutions, Insurance companies, Power sector etc.) unless there are sector specific provisions contained in the ICDS or the Act. The key aspects of each ICDS is discussed in detail separately. Please refer Technical Guide on ICDS issued by ICAI for further guidance. ICDS I Accounting Policies ICDS II Valuation of Inventories ICDS III Construction Contracts ICDS IV Revenue Recognition ICDS V Tangible Fixed Assets ICDS VII Governments Grants ICDS IX Borrowing Costs ICDS X Provisions, Contingent Liabilities and Contingent Assets

20. CLAUSE 14 Particulars Comments (a) Method of valuation of closing stock employed in the previous year. This method of valuation would be on the basis of the method of accounting regularly employed by the assessee subject to certain prescribed adjustment on account of tax, duty, cess , etc. (like excise duty, VAT) incurred in procuring the inventory. The tax auditor should study the procedure followed by the assessee in taking the inventory of closing stock at the end of the year and the valuation thereof. He should obtain the inventory of closing stock, indicating the basis of valuation thereof, for verifying the reporting on the method of valuation of closing stock under this clause. (b) In case of deviation from the method of valuation prescribed under section 145A, and the effect thereof on the profit and loss

21. CLAUSE 15 Particulars Comments Give the following particulars of the capital asset converted into stock-in-trade: Generally speaking, an asset held as a capital asset would attract income under the head capital gains at the time of its sale and an asset held as stock-in-trade would attract income under the head profits and gains of business. When it is decided to treat a capital asset as part of the stock of the business, it is treated as a ‘transfer’ for income tax purposes and will attract capital gains chargeable in the previous year in which such converted asset is sold or otherwise transferred. The particulars to be stated under clause 15 should be furnished with respect to the previous year in which the asset has been converted into stock in-trade. The clause does not require details regarding the taxability of capital gains or business income arising from such deemed transfer. (a) Description of capital asset; (b) Date of acquisition; (c) Cost of acquisition; (d) Amount at which the asset is converted into stock-in-trade.

22. CLAUSE 16 Particulars Comments Amounts not credited to the profit and loss account, being – Section 28 is the charging section for the income under the head ‘profits and gains of business or profession’. This clause intends to capture and report those incomes which ordinarily wouldn’t be a business income but is deemed to be business income by virtue of the Income Tax Act. For example, compensation received on account of termination of employment, profit on sale of import license, remuneration received by a partner from a partnership firm, etc. Even export benefits like pro forma credits, duty drawbacks, refund of customs, etc. would be covered under this clause if not credited to the profit and loss account. Further, a capital receipt would not normally attract tax unless the transaction is specifically covered in the provisions. Thus, if such receipt is not appearing in the profit and loss account it will be covered here. However, Equity, Loans and borrowings are not required to be stated under sub clause (e). (a) The items falling within the scope of section 28; (b) The proforma credits, drawbacks, refund of duty of customs or excise or service tax, or refund of sales tax or value added tax where such credits, drawbacks or refunds are admitted as due by the authorities concerned; (c) Escalation claims accepted during the previous year; (d) Any other item of income; (e) Capital receipt, if any.

23. CLAUSE 17 Particulars Comments Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of the State Government referred to in section 43CA or 50C, please furnish below details: If the sale consideration of an immovable property is less than the stamp duty value of such property, the stamp duty value shall be deemed to be the sale consideration for the purpose of computing capital gains thereon where such property is held as a capital asset and where the property is held as stock-in-trade, the stamp duty value shall be taken as income/sale value to be considered under the business head of income. This clause aims to check compliance in this regard. Details of property Consideration received or accrued Value adopted or assessed or assessable Whether provisions of second proviso to sub section (1) of section 43CA or fourth proviso to clause (x) of sub section (2) of section 56 applicable? [Yes/No]

24. CLAUSE 18 Particulars Comments Particulars of depreciation allowable as per the Income Tax Act, 1961 in respect of each asset or block of asset, as the case may be, in the following form:- The Income Tax Act prescribes depreciation to be charged as per the ‘block of assets system’ subject to certain conditions. This clause checks that the depreciation has been arrived at correctly. (a) Depreciation of asset/block of assets (b) Rate of depreciation (c) Actual cost of written down value, as the case may be (d) Adjustments made to the written down value under- ( i ) the proviso to section 115BAA(3) (for the AY 2020-21) (ii) the first proviso to section 115BAC(3) or the proviso to section 115BAD(3) (for AY 2021-22 only) (iii) second proviso section 115BAC(3) (For AY 2024-25 only) (e) Adjustments made to the written down value of Intangible asset due to excluding the value of goodwill of a business or profession (f) Adjusted written-down value (g) Additions/deductions during the year with dates; (h) Depreciation allowable ( i ) Written down value at the end of the year

25. CLAUSE 19 Particulars Comments Amounts admissible under sections: 33AB, 33ABA, 35(1)( i ), 35(1)(ii), 35(1)( iia ), 35(1)(iii), 35(1)(iv), 35(2AA), 35(2AB), 35ABB, 35AD, 35CCA, 35CCC, 35CCD, 35D, 35DD, 35DDA, 35E; These sections allow for special deductions for prescribed businesses. The tax auditor checks whether the assessee has complied with all the necessary conditions to claim a deduction under these sections. Some of these sections may require a certificate by a Chartered Accountant certifying the eligibility. Where the assessee has opted for special tax regimes, he is not eligible for claiming deductions under these sections. The amount not debited to the Profit & Loss Account but admissible under any of the Sections mentioned in the clause has also to be stated. The amount admissible under section 35ABA has to be reported w.e.f. A.Y. 2024-25, although such deduction is applicable from A.Y. 2017-18. Reference to Section 32AC, 32AD, 35AC,35CCB has been omitted w.e.f 01.04.2025

26. CLAUSE 20 Particulars Comments (a) Any sum paid to an employee as bonus or commission for services rendered, where such sum was otherwise payable to him as profits or dividend [Section 36(1)(ii)] The assessee would be allowed a deduction in respect of a payment made to an employee in the nature of a bonus of commission only if such bonus or commission was available exclusively to such employee in relation to the services rendered by him. (b) Details of contributions received from employees for various funds as referred to in section 36(1)( va ): Section 36(1)( va ) permits deduction of any sum received by the assessee from any of his employees towards contributions to any provident fund or superannuation fund or ESI Fund or any other Fund for employees’ welfare are applicable, if it is credited by the assessee to the account of the employees in the relevant statutory fund on or before the due date (the date by which it is required to be credited as per the provisions of the applicable law) S.No Nature of fund Sum received from employees Due date for payment The actual amount paid The actual date of payment to concerned authorities

27. CLAUSE 21 Clause 21(a) - Please furnish the details of amounts debited to the profit and loss account, being in the nature of Capital, personal, advertisement expenditure etc Capital Expenditure Personal Expenditure Advertisement expenditure in any souvenir, brochure, tract, pamphlet or the like published by a political party Expenditure incurred at clubs being entrance fees and subscriptions Expenditure incurred at clubs being cost for club services and facilities used. Expenditure for any purpose which is an offence or is prohibited by law or expenditure by way of penalty or fine for violation of any law (enacted in India or outside India) Expenditure by way of any other penalty or fine not covered above Expenditure incurred to compound an offence under any law for the time being in force, in India or outside India Expenditure incurred to provide any benefit or perquisite, in whatever form, to a person, whether or not carrying on a business exercising profession, and acceptance of such benefit or a or perquisite by such person is in violation of any law or rule or regulation or guideline, as the case may be, for the time being in force, governing the conduct of such person Expenditure incurred to settle proceedings initiated in relation to contravention under such law as notified by the Central Government in the Official Gazette in this behalf (inserted w.e.f. 1-4-2025)

28. CLAUSE 21 Clause 21(b) – amounts inadmissible under section 40(a) as payment to non-resident referred to in sub-clause ( i ) ( Non-Resident Payments) Details of payment on which tax is not deducted: Details of payment on which tax has been deducted but has not been paid during the previous year or in the subsequent year before the expiry of time prescribed under section 200(1) as payment referred to in sub-clause ( ia ) ( Resident Payments) Details of payment on which tax is not deducted: Details of payment on which tax has been deducted but has not been paid on or before the due date specified in sub section (1) of section 139. Under sub-clause ( ic ) [wherever applicable] Under sub-clause ( iia ) Under sub-clause ( iib ) Under sub-clause (iii) Under sub-clause (iv) Under sub-clause (v)

29. CLAUSE 21 Clause 21(c)- Amount debited to profit and loss account being, interest, salary, bonus, commission or remuneration inadmissible under section 40(b)/40( ba ) and computation thereof Section 40(b) deals with expenditure not allowable in case of a firm/LLP whereas section 40( ba ) deals with expenses not allowable in case of an AOP or BOI. Upto A.Y.2024-25, the limits laid down under section 40(b) were as under: on the first Rs.3,00,000 of the book profit or in case of loss: Rs.1,50,000 or at the rate of 90% of the book-profit, whichever is more; on the balance of the book-profit: at the rate of 60% From A.Y.2025-26 and onwards, the limits laid down under section 40(b) are as under: on the first Rs. 6,00,000 of the book profit or in case of loss: Rs.3,00,000 or at the rate of 90 % of the book-profit, whichever is more; on the balance of the book-profit: at the rate of 60% Section 40( ba ) lays down that any interest or remuneration paid by an AOP to its member shall not be allowed as a deduction to the AOP. It may also be noted that in computing such disallowance: where interest is paid by AOP / BOI to a member who has also paid interest to AOP/ BOI, only net amount of interest, if any, shall be disallowed; where a member is in a representative capacity, the disallowance of net interest paid by AOP/BOI shall be the amount of net interest received by the member in a representative capacity or by the person who is so represented by the member; where a person who is a member in his individual capacity receives the interest for the benefit of or on behalf of any other person, then, interest so paid by AOP/ BOI shall not be disallowed;

30. CLAUSE 21 Clause 21(d) - Disallowance/deemed income under section 40A(3): (A) On the basis of the examination of books of account and other relevant documents/evidence, whether the expenditure covered under section 40A(3) read with rule 6DD were made by account payee cheque drawn on a bank or account payee bank draft. If not, please furnish the details (B) On the basis of the examination of books of account and other relevant documents/evidence, whether the payment referred to in section 40A(3A) read with rule 6DD were made by account payee cheque drawn on a bank or account payee bank draft If not, please furnish the details of amount deemed to be the profits and gains of business or profession under section 40A(3A); Clause 21(e) - provision for payment of gratuity not allowable under section 40A(7); Clause 21(f) - any sum paid by the assessee as an employer not allowable under section 40A(9); Clause 21(g) - particulars of any liability of a contingent nature; Clause 21(h) - amount of deduction inadmissible in terms of section 14A in respect of the expenditure incurred in relation to income which does not form part of the total income Clause 21( i ) - amount inadmissible under the proviso to section 36(1)(iii)

31. Sub-Clause Relevant Section Nature of Disallowance Examples Auditor’s Responsibility (a) Section 37 Deductions claimed under section 37 that are not admissible Capital Expenditure, Personal Expenditure, Penalties Verify the amounts debited to Profit and Loss account and their nature (b) Section 40(a)( i )/( ia ) TDS not deducted or not deposited on payments Professional fees, interest, contractor payments, commission Verify TDS deduction and deposit dates; match with Form 26Q/27Q, and disallow if conditions not met. (c) Section 40(b)/40(ba) Excess/unauthorised payment to partners or AOP members Excess salary, bonus, or interest to partners beyond limits Review partnership deed, ensure compliance with section 40(b); verify calculation and approvals. (d) Section 40A(3) & 40A(3A) Cash payment to a person in a day exceeding ₹10,000 (₹35,000 for transporters) Cash purchases, labour payments Examine cash book; check whether payment qualifies under Rule 6DD exception. (e) Section 40A(7) Provision for gratuity not paid to an approved gratuity fund Gratuity provision without payment to approved trust Verify if fund is approved; check payment status. (f) Section 40A(9) Contribution to unapproved welfare or other funds Contribution to non-approved employee welfare funds Check approval status of fund; review trust deeds and supporting documents. (g) particulars of any liability of a contingent nature; Particulars of any contingent liability debited to the profit and loss account. Provision for Bad Debts Verify whether only the contingent liabilities debited to the Statement of Profit and Loss/Profit and Loss account have been reported in this clause and not the contingent liabilities shown in the Notes to the accounts. (h) Section 14A r.w. Rule 8D Expenses incurred for earning exempt income Interest, administrative expenses linked to dividend or exempt income Check if exempt income exists; apply Rule 8D if assessee hasn’t made a reasonable disallowance. ( i ) Proviso to section 36(1)(iii) Interest paid in respect of capital borrowed for the purposes of the business or profession Interest on Loans Verify the correctness of the particulars furnished by the assessee with the documentary evidence as per auditing standards, ICDS X and other issuances of the ICAI from time to time

32. Clause 22 ( i ) Amount of Interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act); or Particulars Details Relevant Law Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 Applicable Section Section 23 of MSMED Act Nature of Reporting Report interest on delayed payment to MSEs that is debited to P&L account but is inadmissible under the Income-tax Act Trigger Event Where the agreement is in writing: If payment to a registered MSE is delayed beyond the agreed period or 45 days, whichever is earlier Where there is no agreement in writing: In such a case, the payment needs to be made before the Appointed Day - the day following immediately after the expiry of the period of 15 days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier. Disallowance Reason Interest payable u/s 16 of MSMED Act is not allowed as deduction u/s 23 of the Act Disclosure Requirement Whether interest has been debited to P&L account and the amount inadmissible u/s 23

33. Clause 22 (ii) Total amount required to be paid to a micro or small enterprise, as referred to in section 15 of the MSMED Act, during the previous year; (iii) Of amount referred to in (ii) above, amount – paid up to time given under section 15 of the MSMED Act; not paid up to time given under section 15 of the MSMED Act and inadmissible for the previous year. (Revised w.e.f 01.04.2025) Clause 22(ii ) requires reporting of the total amount required to be paid during the year needs to be stated even if the said amount has been actually paid during the year. Under Clause 22(iii) – (a) all payments out of that included under 22(ii), which have been settled within the time limit laid down in Section 15 of MSMED Act need to be stated. (b) only such amounts which will attract disallowance under Section 43B(h) should be reported. This will include only amounts which – ( i ) have been claimed as a deduction during the year; (ii) are outstanding on the last date of the previous year; and (iii) have not been paid within the time limit specified in Section 15 of the MSMED Act Note: Sec 43B(h) inserted w.e.f 01.04.2024 reads as any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the MSMED Act, 2006 shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him:

34. Clause 23 Particulars Details Auditor’s Responsibility Nature of Reporting Disclosure of payments made to specified persons where such expenditure is claimed in P&L Review constitution documents, shareholder registers, and related party disclosures Examine whether payments are for goods, services, rent, interest, salaries, etc. Verify amounts paid or payable to each specified person during the year Though auditor need not judge reasonableness, unusual amounts should be noted Confirm transactions with ledger, contracts, and invoices Reporting Requirement Name of specified person Nature of payment Amount paid or payable Objective To help AO examine whether such payments are excessive or unreasonable Particulars of payments made to persons specified under section 40A(2)(b). If Assessee is Specified Persons u/s 40A(2)(b) include Individual Relatives (spouse, brother, sister, lineal ascendant/descendant) Company Directors and persons holding ≥20% voting power (including their relatives) Firm Partners and their relatives AOP/BOI Members and their relatives Any Assessee Persons with substantial interest (≥20% voting power or ≥20% share in profits)

35. CLAUSE 24 Amounts deemed to be profits and gains under section 32AC or 32AD or 33AB or 33ABA or 33AC. Particulars Details Relevant Sections Sections 32AC, 32AD, 33AB, 33ABA, 33AC Nature of Reporting Any amount debited to P&L or withdrawn from reserves created under these sections, which is deemed to be profits under Income-tax Act Purpose of the Clause To report deemed profits arising on withdrawal, misutilization , or transfer from specific reserves or deductions claimed earlier Examples Transfer of reserve created under section 33AB (tea/coffee/rubber development) Sale of asset for which deduction under section 32AC was claimed Reporting Requirement Section under which deduction was claimed Amount withdrawn/utilized Amount deemed as income/profit Documents to Verify Reserve account, fixed asset register, investment ledger, computation of income, prior year returns

36. Clause 25 Any amount of profit chargeable to tax under section 41 and computation thereof. Particulars Details Auditor’s Responsibility Relevant Sections Section 41(1), 41(2), 41(3), 41(4), 41(4A), 41(5) Identify expenses or losses allowed as deduction in earlier years (e.g., bad debts, liabilities) Check whether any amount has been recovered or liability has been waived by the creditor Look for remission of liability, sale of assets with prior 100% deduction, or refunds from authorities Ensure such income is properly credited in the P&L account or disclosed appropriately Compute the correct amount taxable under Section 41 Clearly mention: section invoked, nature of Nature of Income Amounts previously allowed as deduction, now recovered or benefit obtained are deemed as business income Common Examples Recovery of bad debts Remission of liability Sale of asset on which 100% deduction was claimed Refund of statutory payments Reporting Requirement Nature of income deemed under section 41 Amount Year in which deduction was originally claimed Purpose To ensure that any recovered or reversed benefit is taxed in the year of receipt or remission

37. Clause 26 In respect of any sum referred to in section 43B, the liability for which:- (A) pre-existed on the first day of the previous year but was not allowable * in the assessment of any preceding previous year and was paid during the previous year; not paid during the previous year; (B) was incurred in the previous year and (for clauses other than clause (h) of section 43B) was paid on or before the due date for furnishing the return of income of the previous year under section 139(1); not paid on or before the aforesaid date. (State whether sales tax, customs duty, excise duty or any other indirect tax, levy, cess , impost etc. is passed through the profit and loss account.) * The term “allowable” was substituted for “allowed” w.e.f. 01.04.2025

38. Clause 26 Section 43B states that a deduction otherwise allowable under this Act in respect of the below shall be allowed only in that previous year in which such sum is actually paid by him— (a) any tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) any sum payable by employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, or (c) any sum referred to in clause (ii) of sub-section (1) of section 36, or (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing , or (da) any sum payable by the assessee as interest on any loan or borrowing from such class of NBFCs as may be notified by the Central Government in the Official Gazette in this behalf, in accordance with the terms and conditions of the agreement governing such loan or borrowing, or (e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank in accordance with the terms and conditions of the agreement governing such loan or advances, or (f) any sum payable by the employer in lieu of any leave at the credit of his employee, or (g) any sum payable by the assessee to the Indian Railways for the use of railway assets, or (h) any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the MSMED Act, 2006 Such amounts shall be allowed in the previous year in which liability is incurred in case it is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 of that previous year

39. Clause 27 Clause 27(a): CENVAT credit is available on eligible inputs, input services and capital goods. Such credits are utilized for the payment of the excise duty liability. Accordingly, the tax auditor should check the relevant records maintained under CENVAT Credit Rules, 2017 and ascertain therefrom the amount of credit on eligible inputs, input services and the capital goods and the amount utilized during the previous year. Tax auditor should report the following: Opening balance CENVAT Availed CENVAT utilized Closing Balance Clause 27(b): The tax auditor should obtain the particulars of expenditure or income of any earlier year debited or credited to the profit and loss account of the relevant previous year when mercantile system of accounting is followed. It may be noted that there is a difference between expenditure of any earlier year debited to the profit and loss account and the expenditure relating to any earlier year, which has crystallised during the relevant year. Material adjustments necessitated by circumstances which though related to previous periods but determined in the current period, will not be considered as prior period items. Amount of Central Value Added Tax credits availed of or utilised during the previous year and its treatment in the profit and loss account and treatment of outstanding Central Value Added Tax credits in the accounts. Particulars of income or expenditure of prior period credited or debited to the profit and loss account

40. Clause 28 and 29 Clause 28: This clause requires the auditor to report whether the assessee received any property, specifically shares of a closely held company, without consideration or for inadequate consideration as referred to in Section 56(2)( viia ). Clause 29: This clause requires the auditor to report if the assessee received any consideration for the issue of shares that exceeds the fair market value of those shares as per Section 56(2)( viib ) Omitted by the IT (Eighth Amdt .) Rules, 2025, w.e.f. 1-4-2025

41. Clause 29A Whether any amount is to be included as income chargeable under the head ‘income from other sources’ as referred to in clause (ix) of sub-section (2) of section 56? (Yes/No) If yes, please furnish the following details: Nature of income Amount (in Rs.) thereof Section 56(2)(ix) provides for taxability as Income from Other Sources of any sum of money received as an advance or otherwise in the course of negotiations for transfer of a capital asset, if such sum is forfeited and the negotiations do not result in transfer of such capital asset Any such forfeited amount if it is in respect of a personal capital asset is not required to be reported Mere unilateral writing back of an advance by credit to the profit and loss account, asset account or capital account may not by itself amount to an act of forfeiture by the assessee.

42. Clause 29B Whether any amount is to be included as income chargeable under the head ‘income from other sources’ as referred to in clause (x) of sub-section (2) of section 56? (Yes/No) If yes, please furnish the following details: Nature of income Amount (in Rs.) thereof Section 56(2)(x) provides that the below shall treated as income from other sources: any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; any immovable property, without consideration, the SDV of which exceeds Rs. 50000, the stamp duty value of such property; for a consideration, the SDV of such property as exceeds such consideration, if the amount of such excess is more than the higher of Rs. 50000; and the amount equal to 10% of the consideration: any property, other than immovable property, without consideration, the aggregate FMV of which exceeds Rs. 50000, the whole of the aggregate fair market value of such property; for a consideration which is less than the aggregate FMV of the property by an amount exceeding Rs. 50000, the aggregate fair market value of such property as exceeds such consideration:

43. Clause 30 Details of any amount borrowed on hundi or any amount due thereon (including interest on the amount borrowed) repaid, otherwise than through an account payee cheque. [Section 69D]. For this purpose, the tax auditor should obtain a complete list of borrowings and repayments of hundi loans otherwise than by account payee cheques and verify the same with the books of account. There will be practical difficulties in verifying the loan taken or repaid on hundi by account payee cheque. In such cases, the tax auditor should verify the borrowing/repayments with reference to such evidence which may be available and in the absence of conclusive or satisfactory evidence, or the auditor may obtain suitable certificate/ management representation in this regard.

44. Clause 30A Whether primary adjustment to transfer price, as referred to in sub-section (1) of section 92CE, has been made during the previous year? (Yes/No) If yes, please furnish the following details:— Under which clause of sub-section (1) of section 92CE primary adjustment is made? Amount (in Rs.) of primary adjustment Whether the excess money available with the associated enterprise is required to be repatriated to India as per the provisions of sub-section (2) of section 92CE? (Yes/No) If yes, whether the excess money has been repatriated within the prescribed time (Yes/No) If no, the amount (in Rs.) of imputed interest income on such excess money which has not been repatriated within the prescribed time:

45. Clause 30A Section 92CE requires making of a secondary adjustment in certain cases where primary transfer pricing adjustments have been made. As per section 92CE(1), the secondary adjustment is required in the following cases where primary transfer pricing adjustment has been: ( i ) made by the assessee of his own accord in his return of income; (ii) made by the Assessing Officer and accepted by the assessee; (iii) determined under an Advance Pricing Agreement entered into by the assessee under section 92CC on or after 1st day of April 2017; (iv) made as per Safe Harbour Rules framed under section 92CB; or (v) arising as a result of a resolution of an assessment under Mutual Agreement Procedure under a double taxation avoidance agreement (DTAA) entered into under section 90 or 90A. No secondary adjustment is required if the primary adjustment relates to AY 2016-17, or an earlier AY. No secondary adjustment is required if the amount of primary adjustment made in any previous year does not exceed Rs. 1 crore. Sub-section (2) of section 92CE provides that where due to the primary adjustment, ( i ) there is an increase in the total income or (ii) a reduction in the loss of the assessee, the adjustment (difference between the arm’s length price and the actual transaction price) is regarded as excess money available with the associated enterprise and is to be repatriated to India within 90 days. Sub-section (2A) however, provides that where the excess money or part thereof has not been repatriated within the prescribed time, the assessee may, at his option, pay additional income-tax at the rate of 18% on such excess money or part thereof, as the case may be. Rule 10CB(2) further provides the manner of computation of interest at specified rates on excess money or part thereof which is not repatriated in India within the prescribed time limit.

46. Clause 30B Whether the assessee has incurred expenditure during the previous year by way of interest or of similar nature exceeding one crore rupees as referred to in sub-section (1) of section 94B? (Yes/No) If yes, please furnish the following details:— Amount (in Rs.) of expenditure by way of interest or of similar nature incurred Earnings before interest, tax, depreciation and amortization (EBITDA) during the previous year (in Rs.) Amount (in Rs.) of expenditure by way of interest or of similar nature as per ( i ) above which exceeds 30% of EBITDA as per (ii) above: Details of interest expenditure brought forward as per sub-section (4) of section 94B Details of interest expenditure carried forward as per sub-section (4) of section 94B Section 94B provides that, where an Indian company or a PE of a foreign company in India, incurs any expenditure by way of interest or of similar nature exceeding Rs. 1 in respect of a debt issued by a non-resident AE, such interest, to the extent of excess interest, shall not be deductible. The excess interest is to be computed as the lower of: ( i ) Total interest paid or payable in excess of 30% of EBITDA of the borrower in the previous year; or (ii) Interest paid or payable to AEs for that previous year. The excess interest, which is disallowed, can be carried forward for a period of 8 AYs to be allowed in the subsequent years, to the extent of maximum allowable interest expenditure under this section. Section 94B(3) excludes an Indian company or a PE of a foreign company engaged in the business of banking or insurance from applicability of the Section. W.e.f AY 2024-25 onwards, class of NBFC as notified, are also excluded from the purview of section 94(1). W.e.f. A.Y 2025-26, a finance company located in IFSC is also excluded. Section 94B(1A) also excludes interest paid in respect of a debt issued by a lender which is a PE in India of a non-resident, being a person engaged in the business of banking.

47. clause 30C Whether the assessee has entered into an impermissible avoidance arrangement, as referred to in section 96, during the previous year? (Yes/No) If yes, please specify:- Nature of the impermissible avoidance arrangement Amount (in Rs.) of tax benefit in the previous year arising, in aggregate, to all the parties to the arrangement The provisions of General Ant-Avoidance Rule (GAAR) are contained in Chapter X-A comprising of section 95 to section 102 and the procedural provisions relating to mechanism for invocation of GAAR and passing of the assessment order in consequence thereof are contained in section 144BA. Rules 10U to 10UF have been prescribed by the Central Government in respect of GAAR. An arrangement is to be treated as an IAA, if its main purpose is to obtain tax benefit (“Main Purpose” Test) and it satisfies any one or more of the four tests (“Additional Tests”) specified in Section 96. The four tests (“Additional Tests”) specified in Section 96 are: Arrangement creates rights/ obligations which are not ordinarily created between persons dealing at arm’s length, (which may also be referred to as “Abnormal Rights/Obligations”); Arrangement results, directly or indirectly, in misuse or abuse of the provisions of the Act, (which may also be referred to as “Misuse Test”); Arrangement lacks commercial substance or is deemed to lack commercial substance, by virtue of fiction created by section 97(which may also be referred to as “Lack of Commercial Substance’ Test”), or Arrangement entered into or is carried out, by means, or in a manner, which not ordinarily employed for bonafide purposes (which may also be referred to as “Abnormal Manner’ Test”).

48. Clause 31 Clause 31 requires disclosure of loans or deposits and specified sums received or repaid by the assessee in violation of or in compliance with: Section 269SS (restrictions on acceptance of certain loans or deposits or specified sums) Section 269T (restrictions on repayment of certain loans or deposits or specified sums) Section 269ST (restrictions on cash receipts)

49. Clause 31(a) and (b) Section 269SS: No person shall take or accept from any other person, any loan or deposit or any specified sum, otherwise than by an account payee cheque/account payee bank draft/ use of ECS through a bank account/through such other electronic mode as may be prescribed, if,— (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more The provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from or by (a) the Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45)of section 2 of the Companies Act, 2013; (e) such other institution, association or body or class of institutions, associations or bodies which the CG may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: (f) where the lender and borrower are both having agricultural income and neither of them has any income chargeable to tax under this Act: The Threshold will be "two lakh rupees" in the case of any deposit or loan where such deposit is accepted by or such loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member. Clause 31(a) seeks certain particulars of “each loan or deposit” in an amount exceeding the limit specified in section 269SS taken or accepted during the previous year. Clause 31(b) particulars of any “specified sum” taken or accepted in relation to transfer of an immovable property, whether or not the transfer takes place. Such specified sum may be any sum of money receivable whether by way of advance or otherwise.

50. Clause 31 ( ba ), (bb), ( bc ), (bd) Section 269ST: No person shall receive an amount of two lakh rupees or more— in aggregate from a person in a day; or in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed: The provisions of this section shall not apply to— ( i ) any receipt by Government or any banking company, post office savings bank or co-operative bank; (ii) transactions of the nature referred to in section 269SS; (iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify. Section 269ST does not distinguish between receipt on capital account and revenue account. Sub-clause 31( ba ) and (bb) requires particulars to be furnished in respect of transactions exceeding Rs 2 lakh where assessee has received the amount from a person, whereas sub-clause 31( bc ) and (bd) requires information about the transactions exceeding Rs 2 lakh where the payment has been made by the assessee to a person.

51. Clause 31(c), (d) and (e) Section 269T: No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit or paid the specified advance, or by use of ECS through a bank account or through such other electronic mode as may be prescribed if— (a) the amount of the loan or deposit or specified advance together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, or (c) the aggregate amount of the specified advances received by such person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such specified advances, is twenty thousand rupees or more. The provisions of this section shall not apply to repayment of any loan or deposit or specified advance taken or accepted from— ( i ) Government; (ii) any banking company, post office savings bank or co-operative bank; (iii) any corporation established by a Central, State or Provincial Act; (iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: Threshold shall be "two lakh rupees" in the case of any deposit or loan where,such deposit is paid by or such loan is repaid to a primary agricultural credit society or a primary co-operative agricultural and rural development bank to its member. Clause 31(c) seeks information in respect of all the repayments made by the assessee of loan or deposit or any specified advance in an amount exceeding the limit specified in section 269T made during the previous year. Clause 31(d) seeks to examine repayments received otherwise than by a cheque/bank draft/use of ECS through a bank account and Clause 31(e) seeks to repayments received by a cheque/bank draft which is not an account payee cheque or account payee bank draft during the previous year To classify the nature of each amount/ receipt/ repayment , a new drop-down feature has been introduced, providing a structured coding system. ( w.e.f 01.04.2025)

52. Clause 32(a) Details of brought forward loss or depreciation allowance, in the following manner, to the extent available: Particulars to be Reported Assessment Year in which loss/depreciation occurred Nature of Loss/Depreciation (e.g., business loss, speculation loss, capital loss, etc.) Amount as returned (in rupees) All losses/ allowances not allowed under section 115BAA/ 115BAC/ 115BAD/ 115BAE Amount as adjusted by withdrawal of additional depreciation on account of opting for taxation under section 115BAC/ 115BAD/ 115BAE ^ Amount as assessed (give reference to relevant order) Remarks ^ [To be filled in only for assessment year 2021-22 and 2024-25, as applicable.]

53. Clause 32 (b), (c), (d) and (e) (b) Whether a change in shareholding of the company has taken place in the previous year due to which the losses incurred prior to the previous year cannot be allowed to be carried forward in terms of section 79. (c) Whether the assessee has incurred any speculation loss referred to in section 73 during the previous year, If yes, please furnish the details of the same. (d) Whether the assessee has incurred any loss referred to in section 73A in respect of any specified business during the previous year, if yes, please furnish details of the same. (e) In case of a company, please state that whether the company is deemed to be carrying on a speculation business as referred in explanation to section 73, if yes, please furnish the details of speculation loss if any incurred during the previous year.

54. Clause 33 Section-wise details of deductions, if any, admissible under Chapter VIA or Chapter III (Section 10A, Section 10AA) Chapter VI-A deals with various deductions from gross total Income of the assessee and they have been categorised under the Act as follows: Deduction in respect of certain payments. Deduction in respect of certain incomes. Other Deductions. Section 10A - Special provisions in respect of newly established undertakings in free trade Zone etc and Section 10AA - Special provisions in respect of newly established units in Special Economic Zones. The tax auditor should Certify their eligibility and compliance with conditions prescribed under relevant sections. Ensure that deductions claimed under various sections (like 80C, 80G, 80IA, etc.) are valid, supported, and not excessive Confirm whether the conditions laid down for each deduction are fulfilled It may be noted that there are certain sections under Chapter VIA like section 80-IA, 80-IB, 80-IC, 80JJAA etc. where separate audit report or certificate is required to be issued. Since the details of exemptions admissible under sections 10AA are also to be reported in the desired format, the said information can be verified from the certificate issued by the chartered accountant in this regard. In case, a report under section 10AA has been issued by any other chartered accountant, then the same may be taken into consideration while reporting under this clause.

55. Clause 34 Sub-Clause Details Required 34(a) Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish: Section under which TDS/TCS was required Nature of payment Amount paid, Amount on which TDS/TCS was required Amount on TDS/TCS at specified rate Amount of TDS/TCS on above Amount on TDS/TCS at less than specified rate Amount of TDS/TCS on above Amount of TDS/TCS not deposited to the Central Government 34(b) Whether the assessee is required to furnish the statement of tax deducted or tax collected, if yes, please furnish the details: Type of Form Due date of furnishing Date of furnishing Whether the statement of tax deducted or collected contains information about all details/ transactions which are required to be reported. If not, please furnish list of details/trans actions which are not reported.] 34(c) Whether the assessee is liable to pay interest under section 201(1A) or section 206C(7), if yes, please furnish: Amount of interest under section 201(1A)/206C(7) is payable Amount paid out of above along with date of payment

56. Clause 35 (a) In the case of a trading concern, give quantitative details of principal items of goods traded : opening stock; purchases during the previous year; sales during the previous year; closing stock; shortage/excess, if any (b) In the case of a manufacturing concern, give quantitative details of the principal items of raw materials, finished products and by-products : A. Raw Materials : opening stock; purchases during the previous year; consumption during the previous year; sales during the previous year; closing stock; yield of finished products; percentage of yield; shortage/excess, if any. B. Finished products/by-products : opening stock; purchases during the previous year; quantity manufactured during the previous year; sales during the previous year; closing stock; shortage/excess, if any

57. Clause 36A Whether the assessee has received any amount in the nature of dividend as referred to in sub-clause (e) of clause (22) of section 2 ? (Yes/No) If yes, please furnish the following details: ( i ) Amount received (in Rs.) (ii) Date of receipt Section 2(22)(e) deems certain payments to be dividend. Conditions for attracting the provisions of the sub-clause (e) are as under: Payment should be by a company in which public are not substantially interested (referred here as `closely held company’); Payment should be by way of advance or loan or the payment by such company on behalf, or for the benefit, of any specified shareholder; Specified shareholder means a person who is the beneficial owner of shares holding not less than 10% of the voting power. It may be noted that for considering the 10% of the voting power, what is relevant is the percentage of stand-alone shareholding of such shareholder and shareholding of his relatives is not required to be considered; The auditor should consider the shareholding status as on the date on which the loan or advance is received. Payment by way of advance or loan should be to the shareholder or any concern in which the shareholder is a member or a partner and in which he has substantial interest; The company making the payment should have accumulated profits, at least to the extent of loan or advance or payment, as the case may be. The amount of dividend is restricted to the extent to which the company possesses accumulated profits

58. Clause 36b Whether the assessee has received any amount for buyback of shares as referred to in sub-clause (f) of clause (22) of section 2? (Yes/No) If yes, please furnish the following details: ( i ) Amount received (in Rs. ) (ii) Cost of acquisition of shares bought back (inserted w.e.f 01.04.2025) Sub-clause (f) was inserted in section 2(22) of the Income-tax Act, 1961 with effect from 01-10-2024 which is as follows “Dividend” includes any payment by a company on purchase of its own shares from a shareholder in accordance with the provisions of section 68 of the Companies Act, 2013 (18 of 2013); As such, while verifying the contents of the reporting under item ( i ) of sub-clause (b) of clause 36B, it should be verified that only such amount of received in respect of buyback completed on or after 1st October, 2024 is reported. The actual cost incurred to purchase such shares which has been bought back by the company should be mentioned in item (ii) of sub clause (b) of clause 36B. Any reporting made in item ( i ) and/or (ii) of sub-clause (b) of Clause 36B shall have a direct nexus to the computation of total income. The reporting made in item ( i ) of sub-clause (b) to Clause 36B shall have a direct effect on the computation of “Dividend Income” of the assessee.

59. Clause 37 Whether any cost audit was carried out, if yes, give the details, if any, of disqualification or disagreement on any matter/ item/value/quantity as may be reported/identified by the cost auditor. Applicable only to companies that fall under prescribed class of companies under Rule 4 of the Companies (Cost Records and Audit) Rules, 2014. Clause 39 Whether any audit was conducted under the Central Excise Act, 1944, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/ identified by the auditor. This is relevant only if excise law was applicable during the relevant financial year. Clause 38 Whether any audit was conducted under section 72A of the Finance Act, 1994 in relation to valuation of taxable services, if yes, give the details, if any, of disqualification or disagreement on any matter/item/value/quantity as may be reported/ identified by the auditor.

60. Clause 40 Details regarding turnover, gross profit, etc., for the previous year and preceding previous year: Particulars Details Total turnover of the assessee Total Turnover (Revenue from operations) Gross profit/turnover Total turnover – Cost of goods sold (COGS= Cost of material consumed + change in inventory + direct expenses) Net profit/turnover Net profit or loss before tax Stock-in-trade/turnover Stock-in-trade (Closing stock of finished goods) does not include stores and spare parts or loose tools Material consumed/finished goods produced Material consumed (Inventory at the beginning of the year + Purchases – Inventory of Raw Material at the end of the year) (include stores, spare parts, and loose tools) Finished goods produced (Raw material and consumables consumption + Direct labour + Other manufacturing expenses excluding depreciation other than on office assets +/- change in stock of WIP) This ratio need not be given for trading concern or service provider

61. Clause 41 Please furnish the details of demand raised or refund issued during the previous year under any tax laws other than Income Tax Act, 1961 and Wealth tax Act, 1957 along with details of relevant proceedings. The auditee may be assessed under various tax laws other than Income-tax Act, 1961 and Wealth-tax Act, 1957 resulting into a demand order or a refund order. The tax auditor should obtain a copy of all the demand/ refund orders issued by the governmental authorities during the previous year and received by the assessee up to the date of audit under any tax laws other than Income Tax Act and Wealth Tax Act. Normally, the tax laws such as Goods and Service Tax (GST), Central Excise Duty, Service Tax, Customs Duty, Value Added Tax, Central Sales Tax, Professional Tax etc. would be covered under as tax laws. Key Points to consider: Nature of the Tax Law : e.g., GST, Customs Act, Excise, VAT, etc. Section under which demand/refund arises Amount Involved Whether the demand/refund is accepted Whether it has been accounted for in the books Relevant Assessment Year / Period

62. Clause 42 (a) Whether the assessee is required to furnish statement in Form No.61 or Form No. 61A or Form No. 61B? (Yes/No) (b) If yes, please furnish: Income-tax Department Reporting Entity Identification Number Type of Form Due date for furnishing Date of furnishing, if furnished Whether the Form contains information about all details/ transactions which are required to be reported. If not, please furnish list of the details/trans actions which are not reported. Form no Due Date 61 31st October where declarations in Form No. 60 have been received during 01st April to 30th September; and by 30th April where declarations in Form No. 60 have been received during 01st October to 31st March of the immediately preceding financial year. 61A/61B 31st May of the immediately following financial year

63. Clause 43 Whether the assessee or its parent entity or alternate reporting entity is liable to furnish the report as referred to in sub-section (2) of section 286 (Yes/No) if yes, please furnish the following details: Whether report has been furnished by the assessee or its parent entity or an alternate reporting entity Name of parent entity Name of alternate reporting entity (if applicable) Date of furnishing of report Under section 286(1), every constituent entity resident in India, if it is a constituent of an international group and the parent entity of which is not resident in India, has to notify the prescribed income tax authority in Form No. 3CEAC whether it is the alternate reporting entity of the international group; or the details of the parent entity or the alternate reporting entity, if any, of the international group, and the country or territory of which the said entities are resident. The reporting requirement under section 286 shall not apply in respect of an international group for an accounting year, if the total consolidated group revenue, as reflected in the consolidated financial statement for the accounting year preceding such accounting year does not exceed Rs. 6,400 crores (Rule 10DB). Form No. 3CEAC has to be furnished within a period of 10 months from the end of the reporting accounting year referred to in section 286(2). Therefore, the due date for furnishing Form No.3CEAC will fall on 31st January, which is after the specified date of tax audit (30th September/31st October, as the case may be). Therefore, the details required under this clause relating to the immediately preceding previous year in respect of which Form No.3CEAC has been filed in the relevant previous year or before the specified date can be furnished.

64. Clause 44 Break-up of total expenditure of entities registered or not registered under GST Total Expenditure to be calculated as follows Total value of expenditure in P&L for the year (To be reported in column 2) XXX Add: Total value capital expenditure not included in P&L for the year XX Less: Total value of non-cash charges considered as expenditure XX Less: Total value of expenditure excluded for being transactions in securities and transactions in money XX Less: Total value of expenditure excluded by virtue of Schedule III to the CGST Act, 2017 XX Balance being value of expenditure for clause 44 XXX

65. Tax Audit Limit New Tax Audit Limit Guidelines by ICAI: Effective from 1st April 2026 60 Tax Audit assignments per member per Financial Year Each individual CA—including when acting as a partner in one or more CA firms—is now limited to signing a maximum of 60 tax audit reports in a single financial year (FY), regardless of whether audits relate to current or earlier assessment years. This cap includes all audits accepted and signed, across individual practice and firm capacity collectively No Sharing or Pooling of Limits Partners in a CA firm cannot pool or redistribute each other’s audit quotas. Each partner must stay within their individual limit—the firm’s total maximum is thus 60 × number of partners Exemptions from the 60‑Audit Count Audits under clauses (c), (d), and (e) of Section 44AB—i.e. tax audits for persons under Sections 44AE, 44ADA, and 44AD—are excluded from the 60‑audit count Revised tax audit reports are also exempt and do not contribute to the limit

66. Income computation and disclosure standards ( icds )

67. Key Aspects It is applicable to all taxpayers (corporate/non-corporate or resident/non-resident) irrespective of the turnover or income.  It will not have any impact on the minimum alternate tax (MAT) for corporate assessees as it will be based on the book profits to be determined as per the current applicable AS. It will only be applicable for computation of income chargeable under the heading “Profits and gains of business or profession” or “Income from other sources”.  It is applicable only on the computation of the income and not for maintenance of the books . If there is any conflict, then the Income Tax Act will prevail over ICDS.  Income Tax Authorities have the power to assess the income on the best judgment basis on non-compliance of ICDS.  All ICDS (except VII relating to Securities) contains transitional provisions which in general provide for recognition of outstanding contracts and transactions as on 1st April 2015 in accordance with it after taking into account income/expenditure/loss already incurred in the past. There is no ‘grandfathering’ for outstanding contracts or transactions as on 31st March 2015.  It does not provide any explanations or illustrations like AS. It only lays down the principles to be adopted for computing Income.  Revenue or Expenses on which there is no ICDS will continue to be governed by existing AS. ICDS is not applicable where books are maintained under cash system of accounting .

68. ICDS I – Accounting policies ICDS I deals with significant accounting policies - specific accounting principles and methods of applying those principles in preparation and presentation of financial statements. There are three fundamental accounting principles: Going concern:  Refers to the assumption of a continuous succession of an entity without the intention or necessity of its liquidation. Consistency:  Refers to the assumption that accounting policies will be followed consistently from one period to other.  Accrual:  Refers to the assumption that recognition and recording of revenues will be done as soon as they are earned and recognition of cost will be done as soon as they are incurred. ICDS I provides that any mark to market loss or expected loss should not be recognized unless ICDS provides for that. AS 1 considers ‘prudence’ as one of the factor to select or change the accounting policy, according to which profits should be recognized only when it is realized, whether in cash or not. Provision for known losses and liabilities should also be made. AS 1 considers ‘materiality’ as important factor for selecting/changing accounting policies, which provides that Financial statements should disclose all “material” items which might influence the decisions of the user of the financial statement. ICDS I does not provide specifically for the same. Disclosures All significant accounting policies adopted Any change in an accounting policy which has a material effect along with the amount, to the extent ascertainable, by which any item is affected by such change. Where such amount is not ascertainable, wholly or in part, the fact shall be indicated. If a change does not affect current year, but which is expected to have a material effect in upcoming years, the fact of such change shall be appropriately disclosed in the year in which the change is adopted and also in the year in which such change has a material effect. Disclosure of accounting policies or of changes therein cannot remedy a wrong or inappropriate treatment of the item. Whether any fundamental accounting assumptions of Going Concern, Consistency or Accrual is not followed, the fact shall be disclosed.

69. ICDS II - Valuation of Inventories ICDS II shall be applied for valuation of inventories, except Work-in-progress arising under construction contract, dealt with by the ICDS III or dealt with by any other ICDS Shares, debentures and other financial instruments held as stock-in-trade, dealt with by the ICDS VIII Producers’ inventories of livestock, agriculture and forest products, mineral oils, ores and gases to the extent that they are measured at NRV Machinery spares dealt with by ICDS V. Inclusions in the cost of inventories Inventories shall be valued at cost, or NRV, whichever is lower. Cost of Inventories shall include all purchase costs, service costs, conversion costs and all other costs which is incurred to bring the inventories to their present location and condition. Purchase cost shall include purchase price inclusive of duties and taxes, freight inwards and other expenses directly related to purchase. Trade discounts, rebates, etc. will not be included Service cost shall consist of labour and other costs of personnel directly engaged in providing the service. Conversion cost of inventories shall include costs directly related to the units of production. Interest and other borrowing costs shall not be included in the costs of inventories unless they meet the criteria for recognition of interest as a component of the cost as specified in the ICDS IX on borrowing cost. Exclusions from the cost of inventories Abnormal amounts of wasted materials, labour , or other production costs Storage costs, unless those costs are necessary in the production process prior to a further production stage Administrative overheads that do not bring the inventories to their present location and condition Selling costs Cost of inventories  shall be assigned by using the First-in First-out (FIFO) or weighted average cost formula The value of  opening inventory  will be the cost of inventory present at the date of commencement of business, in case of new business and in any other case, cost of inventory as on the last date of immediately preceding year In case of  dissolution , whether business is continued or not, the cost of inventories shall be valued at the net realizable value Disclosure:  The accounting policies adopted in measuring inventories along with the total carrying amount of inventories should be disclosed in the financial statements.

70. Comparison of ICDS II with AS 2 Sl. No. Basis ICDS II AS 2 1 Machine Spares ICDS II does not deal with machinery spares, which are dealt with by ICDS V on tangible fixed assets Stores and spares are one of the classification of inventories. AS 2 does not specifically exclude machine spares 2 Value of opening inventory Provides for the valuation of opening inventory Does not provide for the valuation of opening inventory 3 In case of dissolution Cost of inventory will be valued at net realizable value Does not specifically provide for the valuation of inventory in case of dissolution

71. ICDS III – Construction contracts A construction contract may be negotiated for the construction of a single asset. A construction contract may also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use. Construction contracts are formulated in a number of ways which, for the purposes of this ICDS, are classified as fixed price contracts and cost plus contracts. Some construction contracts may contain characteristics of both a fixed price contract and a cost plus contract, for example, in the case of a cost plus contract with an agreed maximum price. Contract revenue shall be recognized when there is reasonable certainty of its ultimate collection. Contract revenue shall comprise of: the initial amount of revenue agreed in the contract, including retentions variations in contract work, claims and incentive payments ( i ) to the extent that it is probable that they will result in revenue (ii) they are capable of being reliably measured. Contract costs shall comprise of : Costs that relate directly to the specific contract; Costs that are attributable to contract activity in general and can be allocated to the contract; Such other costs as are specifically chargeable to the customer under the terms of the contract; and Allocated borrowing costs in accordance with the Income Computation and Disclosure Standard on Borrowing Costs. These costs shall be reduced by any incidental income, not being in the nature of interest, dividends or capital gains, that is not included in contract revenue. Costs that cannot be attributed to any contract activity or cannot be allocated to a contract shall be excluded from the costs of a construction contract. Costs that are incurred in securing the contract are also included as part of the contract costs, provided They can be separately identified; and It is probable that the contract shall be obtained. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs when the contract is obtained in a subsequent period. Contract costs that relate to future activity on the contract are recognised as an asset. Such costs represent an amount due from the customer and are classified as contract work in progress.

72. Recognition of Contract Revenue and Expenses Contract revenue and contract costs associated with the construction contract should be recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. The recognition of revenue and expenses by reference to the stage of completion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. The stage of completion of a contract shall be determined with reference to: The proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs; or Surveys of work performed; or Completion of a physical proportion of the contract work. Progress payments and advances received from customers are not determinative of the stage of completion of a contract. When the stage of completion is determined by reference to the contract costs incurred upto the reporting date, only those contract costs that reflect work performed are included in costs incurred upto the reporting date. Contract costs which are excluded are: Contract costs that relate to future activity on the contract; and Payments made to subcontractors in advance of work performed under the subcontract. During the early stages of a contract, where the outcome of the contract cannot be estimated reliably contract revenue is recognised only to the extent of costs incurred. The early stage of a contract shall not extend beyond 25 % of the stage of completion.

73. Changes in Estimates The percentage of completion method is applied on a cumulative basis in each previous year to the current estimates of contract revenue and contract costs. Where there is change in estimates, the changed estimates shall be used in determination of the amount of revenue and expenses in the period in which the change is made and in subsequent periods. Disclosure A person shall disclose: The amount of contract revenue recognised as revenue in the period; and The methods used to determine the stage of completion of contracts in progress. 24. A person shall disclose the following for contracts in progress at the reporting date, namely:- Amount of costs incurred and recognised profits (less recognised losses) upto the reporting date; The amount of advances received; and The amount of retentions

74. ICDS-IV Revenue Recognition It deals with the basis for recognition of revenue which is earned by performing business activities like sale of goods, rendering of services, use of entity’s resources by other persons yielding interest, the royalty or any other such form of income. In case of sale of goods, the revenue will be recognized when the seller of goods has transferred the property/title in the goods for a price to the buyer, along with the significant risks and rewards attached to the goods, and the seller retains no effective control of the goods transferred. Recognition will be based on the reasonable certainty of the collection of revenue. Revenue from service transactions shall be recognized by the percentage completion method. Under this method, revenue from service transactions is matched with the service transaction costs incurred in reaching the stage of completion, resulting in the determination of revenue, expenses and profit which can be attributed to the proportion of work completed. If the services are being provided on a concurrent basis then the revenue will be recognized on a straight-line basis, like, monthly or quarterly. Revenue from service contracts with duration of not more than 90 days may be recognized when the rendering of services under that contract is completed or substantially completed. In case of use of entity’s resources: Interest or any other income arising will be accrued and recognized on the time basis determined by the amount outstanding and the rate applicable Interest on refund of any tax, duty or cess shall be deemed as the income of the previous year in which such interest was received Discount or premium on debt securities held is treated as if it has been accruing over the period till maturity For the purpose of this ICDS, following disclosures need to be made:    The transaction involved in sale of goods, amount not recognized as revenue done in lieu to lack of a reasonable certainty Amount of revenue from rendering of service, recognized as revenue in the reporting period The method used to determine the stage of completion of service For service transactions in progress at the end of the year: Amount of costs incurred and recognized profits at the end of the year The amount of advances received The amount of retentions (amount billed for work done but still not received to the satisfaction of the conditions specified in contract)

75. Comparison of ICDS IV and AS 9 Sl. No. Basis ICDS IV AS 9 1 Method of recognition Three methods: percentage completion, straight line and recognition when service contract is completed or substantially completed in case of service contract not more than 90 days. Two methods: completed service contract method and proportionate completion method

76. ICDS V – Tangible fixed assets ICDS V deals with the treatment of tangible fixed assets, which can be a land, a building, a machinery, a plant or a furniture, and that it is not held for sale, but is meant to be used for the purpose of producing or providing goods or services. Disclosure should be made in respect of : Description of asset or block of assets Rate of depreciation Actual cost or written down value Additions or deductions during the year Put to use date of asset Depreciation allowable Adjustments, if any, on account of CENVAT claimed or allowed Changes in rate of exchange of currency Subsidy or grant Forward Exchange Contracts Any premium or discount arising at the beginning of a forward exchange contract shall be amortized as expense or income over the life of the contract. Exchange differences on such a contract shall be recognized as income or as expense in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal shall be recognized as income or as expense for the previous year. Such treatment will not be applied in the cases when the contract is: not intended for trading or speculation purpose entered to establish the amount of reporting currency required or available at the settlement date of the transaction entered to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction   The premium or discount that arises on the contract is measured by the difference between: the foreign currency amount of the contract translated at the exchange rate at the last day of the previous year, or the settlement date where the transaction is settled during the previous year the same foreign currency amount translated at the date of inception of the contract or the last day of the immediately preceding previous year, whichever is later

77. Comparison of ICDS V and AS 10 Sl. No. Basis ICDS V AS 10 1 Exclusions It does not specify the asset which it does not deal with AS 10 does not deal with biological assets related to agricultural activity, wasting assets like, mineral rights, oil, natural gas and similar assets 2 Identification It prescribes capitalization of machinery spares when they are used only in connection of tangible fixed asset and its use is irregular Spares are recognized as asset if their usage is irregular and the cost should be allocated over a period 3 Revaluation It does not recognize re-evaluation of asset AS 10 provides re-evaluation of asset which should be done regularly in order to ensure that carrying amount does not differ materially from fair value at the balance sheet date 4 Retirement ICDS does not provide for retirement of assets Assets retired from active use and held for disposal should be stated at the lower of their carrying amount and net realizable value 5 Depreciation method It does not provide for the methods of depreciation AS 10 provides for different types of depreciation method that can be adopted

78. ICDS VII - Government Grants Recognition of Government Grants Government grants should not be recognized until there is a reasonable assurance that the conditions attached to such grant will be complied and the grant shall be received Recognition of Government grant shall not be postponed beyond the date when it is actually received Treatment of Government Grants Received When the grant has been received in relation to depreciable asset then the amount of grant will be reduced from the actual cost of the asset or the WDV of the block of asset When the grant has been received in relation to a non-depreciable asset which requires fulfillment of certain obligations then the amount of the grant will be recognized as income over the period till when the cost of meeting such obligations is charged to income When the grant is not directly relatable to the asset then so much amount of grant shall be reduced, from the actual cost of the asset or WDV of the block of asset, as it bears to the total grant amount in the proportion as such asset bears to all the assets The grant that is received as a compensation for expenses or losses incurred or for the purpose of giving immediate financial support, shall be recognized as income of the period in which it is received The grants which are in the form of non-monetary assets shall be accounted for on the basis of their acquisition cost Treatment of Government Grants refunded The amount refundable in respect of a grant shall be applied against any unamortized deferred credit remaining in respect of the grant, then the balance amount shall be charged to profit and loss statement Amount refundable in respect of a Government grant related to a depreciable fixed asset or assets shall be recorded by increasing the actual cost or the written down value of block of assets by the amount refundable. Where the actual cost of the asset is increased, depreciation on the revised actual cost or WDV shall be provided prospectively at the prescribed rate Disclosure Nature and extent of Government grants recognized by way of deduction from the actual cost of the asset and/or as income during the year Nature and extent of Government grants not recognized by way of deduction from the actual cost of the asset and/or as income during the year and reasons thereof

79. Comparison of ICDS VII and AS 12 Sl. No. Basis ICDS VII AS 12 1 Grants of the nature of Promoters’ contribution ICDS VII does not provide for grants of the nature of promoters’ contribution They are given with reference to the total investment and treated as capital reserve which can be neither distributed as dividend nor considered as deferred income 2 Treatment of Grants The grant should either be treated as revenue receipt or should be reduced from the cost of fixed assets Capital approach or the income approach are applied to recognize the grant received

80. ICDS IX - Borrowing Costs ICDS IX deals with the treatment of borrowing costs and other costs which are incurred in relation to borrowing of funds. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, shall be capitalized as cost of that asset qualifying asset means land, building, plant and machinery, furniture, inventories, patents, know-how, licenses, trademarks, copyrights, any other business or commercial rights. Capitalization of Borrowing Costs: The borrowing costs should be capitalized to an extent to which it is incurred during the reporting period on the borrowed funds, specifically for the purpose of acquisition, construction or production of qualifying asset The capitalization will commence from the date when the funds have been borrowed, in case funds have been borrowed for the purpose of acquisition, construction or production of qualifying asset. In case of inventory, it will commence from the date, the utilization of borrowed funds have been started The capitalization of borrowing cost will cease when the qualifying asset is first put to use. In case of inventory, it will cease when the activities necessary to prepare such inventory, for its sale, are substantially completed When the construction of qualifying asset is taken up in parts and a substantially completed part is capable of being used then, the capitalization of borrowing costs will cease: In case of part of qualifying asset, when such part of qualifying asset is first put to use In case of part of inventory, when the activities necessary to prepare such part of inventory, for its sale, are substantially completed Disclosure: The following should be disclosed in the financial statements:  i . the accounting policy adopted for borrowing costs   ii. the amount of borrowing costs capitalized during the year

81. Comparison of ICDS IX and AS 16 Sl. No. Basis ICDS IX AS 16 1 Qualifying Asset Qualifying assets are any tangible and intangible asset and inventory which require time of 12 months or more to bring them in saleable condition An asset that necessarily takes a substantial period of time to get ready for its intended use or sale 2 Commencement of Capitalization Capitalization will commence from the date when funds are utilized in case of inventories, otherwise, from the date when funds are borrowed Capitalization will commence when activities, to prepare the asset for sale, have begun and borrowing costs are being incurred 3 Suspension of capitalization There is no condition mentioned for suspension of capitalization Capitalisation of borrowing costs should be suspended during extended periods in which active development is interrupted

82. ICDS X - Contingent Liabilities and Contingent Assets ICDS X deals with provisions, contingent liabilities and contingent assets, except those resulting from financial instruments, executory contracts and others arising in the insurance business. Recognition Provision shall be recognized when: There is one present obligation as a result of a past event It is reasonably certain that the obligation will be settled A reliable estimate of amount of obligation can be made Contingent assets are assessed continually and when it becomes reasonably certain that the inflow of economic benefit will arise, the asset and related income are recognized in the previous year in which the change occurs Measurement Provision shall be recognized to the extent that its estimate is based on the expenditure required to settle the present obligation. Discounting will not be done on the present value of provision amount The amount of asset and related income shall be recognized to the extent that its estimate is based on the value of economic benefit arising from such asset. Discounting will not be done on present value of amount of asset and related income If any reimbursement is expected to be made by any third party in order to settle the provision, then such reimbursement will be recognized only when it is reasonably certain that the reimbursement amount will be received No provision shall be made for those costs, which the entity is not liable for payment in case the third party fails to pay Provision shall be reviewed at the end of each previous year, if it is reasonably certain that an outflow of economic resources will not be required to settle the provision then such provision should be reversed Disclosure  a brief description of the nature of the obligation / asset and related income the carrying amount at the beginning and at the end of the year additional provision made/ asset and related income recognized during the year amount used and charged against the provision amount of provision/ asset and related income reversed during the year.

83. Comparison of ICDS X and AS 29 Sl. No. Basis ICDS X AS 29 1 Recognition of provision Provision shall be recognized when it is  reasonably certain  that an outflow of economic resources will not be required to settle the obligation Provision shall be recognized when it is  probable  that an outflow of economic resources will not be required to settle the obligation 2 Recognition of contingent asset Contingent Asset is recognised when it is  reasonably certain  that inflow of economic benefit will arise Contingent Asset is recognised when inflow of economic benefit is  virtually certain 3 Reversal of provision If it is  reasonably certain  that an outflow of economic resources will not be required to settle the provision then such provision should be reversed If it is  probable  that an outflow of economic resources will not be required to settle the provision then such provision should be reversed 4 Reversal of Contingent asset If it is  reasonably certain  that an inflow of economic benefits will not arise then such asset and related income should be reversed If it is  probable  that an inflow of economic benefits will not arise then such asset and related income should be reversed

84. - S. Venugopal, LLB, FCA,CITAX (ICA), DISA(ICA), FAFD(ICA) 9848015416 [email protected]