SEMINAR ON TAX AUDIT (RECENT AMENDMENT) Friday, 8 th August 2014

1. SEMINAR ON TAX AUDIT (RECENT AMENDMENT) Friday, 8th August 2014 **************************************************** Speaker : CA Deepak Maheshwari **************************************************** Hosted by: Jointly with :- Indore Branch of CIRC of ICAI CA Deepak Maheshwari, Indore

2. Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax, customs duty, etc. if yes, please furnish the registration number or any other identification number allotted for the same. Clause No. - 4 CA Deepak Maheshwari, Indore

3. Purpose – Obtain data for the purpose of cross • verification from other indirect tax department. • Tax Auditor is expert of Income Tax act but cannot • expect to be expert of all other acts • Obtain details from the assessee about his liability • and registration number . CA Deepak Maheshwari, Indore

4. Cross verify details from sales bill & other relevant • documents. • Suggestive Reporting :- • As informed by the assessee he is • liable to pay tax under following Acts, details of • which are given below along with their registration • number :- CA Deepak Maheshwari, Indore

5. Clause No. - 8 Indicate the relevant clause of section 44AB under which the audit has been conducted CA Deepak Maheshwari, Indore

6. 44AB • Clause (a) Business assessee Turnover exceeds 1 CR. • Clause(b) Professionals Gross Receipt exceeds 25 Lakh • Clause(c) Assessee covered u/s 44AE, 44BB, 44BBB • Clause(d) Assessee covered u/s 44AD • Now, audit ceiling limit compliance under ICAI • rules can be effectively checked. CA Deepak Maheshwari, Indore

7. Clause No – 11 (b) List of books of account maintained and the address at which the books of accounts are kept. (c) List of books of account and nature of relevant documents examined. CA Deepak Maheshwari, Indore

8. Place of business includes where the books of • accounts are kept • Information is useful for department for the purpose • of survey u/s 133-A • If more than one place than give detail of all places • obtain details from auditee regarding location • Section 2(12A)- Books of accounts includes ledgers, • day books, cash books and any other books CA Deepak Maheshwari, Indore

9. 13 (C). Where there is a change in method of accounting employed vis-a-vis the method employed in immediately preceding previous year, details of such change and effect thereof on profit and loss to be indicated in specific format Clause - 13(c) & 14(b) 14(b). In case of deviation from the method of valuation prescribed u/s 145A, and the effect thereof on the profit or loss to be indicated in specific format CA Deepak Maheshwari, Indore

10. Tabular format has inserted for proper reporting • Self explanatory CA Deepak Maheshwari, Indore

11. Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed orassessable by any authority of a State Government referred to in Section 43CA or 50C, Please furnish :- Clause -17 CA Deepak Maheshwari, Indore

12. Huge reporting & examination required in case of • assessee engaged in real estate sector • Any land or building or both are covered (rural • agriculture land too) • Reporting required for property appearing in books • only CA Deepak Maheshwari, Indore

13. In case of transaction through power of attorney , • ratio deal, ask for valuation certificate, if not • available than take representation letter from • assessee & appropriate disclosure of this fact to be • made. • If consideration received in installments, reporting to • be made in the year in which transfer of property • took place • Cross verification from 26-AS CA Deepak Maheshwari, Indore

14. Clause - 19 Amounts admissible under sections: CA Deepak Maheshwari, Indore

15. Some more sections like 32AC, 35AD inserted • No major changes in reporting CA Deepak Maheshwari, Indore

16. Clause - 20(b) Details of contributions received from employees for various funds as referred to in section 36(1)(va) : CA Deepak Maheshwari, Indore

17. Tabular format is inserted for proper reporting • Self explanatory CA Deepak Maheshwari, Indore

18. Clause – 21(a) Detailed information to be furnished of amounts debited to profit & loss account, being in nature of capital, personal, advertisement expenditure etc in specified format CA Deepak Maheshwari, Indore

19. Tabular format for reporting inserted • Advertisement expenses word used in the clause but • It is to be interpreted as advertisement expenses • in any souvenir, brochure, tract or pamphlet • published by a political party as used in old TAR • b) Disallowable expenses relate to section 37 CA Deepak Maheshwari, Indore

20. Clause - 21{b} Amounts inadmissible under section 40(a):- • i)Payment to Non resident without deduction of tax A. Details of payment on which tax is not deducted: B. 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) CA Deepak Maheshwari, Indore

21. Clause - 21{b} • ii) Payment to resident without deduction of tax (A) Details of payment on which tax is not deducted: (B) 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. CA Deepak Maheshwari, Indore

22. (iii) under sub-clause (ic) [Wherever applicable] FBT (iv) under sub-clause (iia) Wealth Tax • (v) under sub-clause (iib) Royalty from State Government undertaking (vi) under sub-clause (iii) Salary to NRI without TDS Details as under: (vii) under sub-clause (iv) Payment to employee’s benefit fund TDS not insured • (viii) under sub-clause (v) Tax paid on non monetary perquisites CA Deepak Maheshwari, Indore

23. Clause - 21{d} • Disallowance/deemed income under section 40A(3) • 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 a/c payee chequeor a/c payee bank draft • If not, please furnish the details: (B) On the basis of the examination of books of account and other relevantdocuments/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): CA Deepak Maheshwari, Indore

24. Tabular format inserted • Sub clause(B) inserted for reporting of transaction • covered u/s 40A (3A) • Requirement of obtaining certificate from assessee • has removed (Safeguard removed) • Now reporting is to be given on the basis of • examination of books and other relevant documents CA Deepak Maheshwari, Indore

25. Clause -28 & 29 28.Whether during the previous year the assessee has received any property, being share of a company not being a company in which the public are substantially interested, without consideration or for inadequate consideration as referred to in section 56(2)(viia), if yes, please furnish the details of the same. 29. Whether during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in section 56(2)(viib), if yes, please furnish the details of the same. CA Deepak Maheshwari, Indore

26. If any firm or Pvt. Ltd. Company receives • shares of any Pvt. Ltd. company without • consideration or inadequate consideration • then reporting required u/s 56(2)(viia) • (clause no.28) • If Pvt. Ltd. Company issue shares more than • its NAV than difference to be reported under • clause 29 CA Deepak Maheshwari, Indore

27. Determination of FMV is as per Rule 11U & • 11UA • Information to be called from assessee • regarding FMV valuation. • Added for the purpose of reporting transaction • of companies known as briefcase company CA Deepak Maheshwari, Indore

28. Clause -31 (c) Whether the taking or accepting loan or deposit, or repayment of the same were made by account payee cheque drawn on a bank or account payee bank draft based on the examination of books of account and other relevant documents (269SS, 269T) CA Deepak Maheshwari, Indore

29. Requirement of obtaining certificate from assessee • has been removed • Now reporting to be made on the basis of • examination of books & other relevant documents CA Deepak Maheshwari, Indore

30. Clause-32(c) & 32 (d) (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 anyspecified business during the previous year, if yes, please furnish details of the same . CA Deepak Maheshwari, Indore

31. 32(c) Requires reporting of speculation loss. • Commodity loss from agriculture produce is • speculation loss • 32(d) Requires reporting & speculation loss of • specified business as defined under section 35 (AD) CA Deepak Maheshwari, Indore

32. Clause -32(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. CA Deepak Maheshwari, Indore

33. Reporting for speculation loss of companies which • makes trading of shares of other companies • Exclusion for the companies whose GTI mainly consist of interest on securities, Income from House property, Capital gain & other sources. • Whose principal business is banking or giving loans & advances. • iii. Finance Act 2014 has amended this section and exclusion is also made applicable for the companies whose principal business is share trading CA Deepak Maheshwari, Indore

34. Clause -33 Section-wise details of deduction, if any, admissible under Chapter VIA or Chapter III (Sec. 10A, Sec. 10AA) CA Deepak Maheshwari, Indore

35. Now deduction details to be furnished for section • 10A Free Trade Zone(FTZ) & • 10AA Special Economic Zone (SEZ) • apart from chapter VI-A deductions CA Deepak Maheshwari, Indore

36. Clause-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 : CA Deepak Maheshwari, Indore

37. Clause-34 (b) whether the assessee has furnished the statement of tax deducted or tax collected within the prescribed time. If not, please furnish the details : CA Deepak Maheshwari, Indore

38. Clause-34 (c) whether the assessee is liable to pay interest under section 201(1A) or section 206C(7).If yes, please furnish: CA Deepak Maheshwari, Indore

39. Applicable for all assessee • Huge, voluminous & detailed information required • To avoid reporting under (b) , suggest clients to • timely file TDS returns & pay TDS within due time. • Problem in conducting Tax Audit of Bank Branch CA Deepak Maheshwari, Indore

40. Clause -36 In the case of a domestic company, details of tax on distributed profits under section 115-O in the following form :- (a) Total amount of distributed profits; (b) Amount of reduction as referred to in section 115-O(1A)(i); (c) Amount of reduction as referred to in section 115-O(1A)(ii); (d) Total tax paid thereon; (e) Dates of payment with amounts CA Deepak Maheshwari, Indore

41. Two points inserted in old TAR for reduction from • distributed profit 115-O(1A)(i) & 115-O(1A)(ii) which • is related to dividend received from subsidiary • company & dividend paid to any person for and on • behalf of the new pension system trust referred in • section 10(44). CA Deepak Maheshwari, Indore

42. 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. Clause-38 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. CA Deepak Maheshwari, Indore

43. Clause-39 • Whether any audit was conducted under section 72A of the Finance Act,1994 in relation to valuation of taxable services, 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. CA Deepak Maheshwari, Indore

44. Now report to be made of disqualification or • disagreement as reported in cost audit report/Excise • report/Service Tax report. • Earlier only requirement of attaching that audit • report was prescribed. • Service Tax Audit report clause, newly inserted. CA Deepak Maheshwari, Indore

45. Clause - 40 Details regarding turnover, gross profit, etc., for the previous year and preceding previous year : CA Deepak Maheshwari, Indore

46. Ratio analysis to be given for previous year & preceding • previous year • Total turnover comparison has been added • Annexure – A has been deleted. CA Deepak Maheshwari, Indore

47. 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. CA Deepak Maheshwari, Indore

48. Furnish details of demand raised/refund issued • under any other act along with relevant proceeding CA Deepak Maheshwari, Indore

49. Thanks & Best Wishes For HECTIC AUDIT SEASON AHEAD CA Deepak Maheshwari, Indore

50. Prepared & Presented by:- CA Deepak Maheshwari Mob. 9827233731 CA Deepak Maheshwari, Indore