Amendments to Income Tax Rules, 1962

Introduction:

The CBDT in order to bring the Income Tax Rules, 1962 in line with the new taxation regime (for Individual, HUF and resident co-operative societies) and other changes introduced vide Finance Act 2021, has made certain amendments to the Rules vide its notification no 28/2021/F. No 370142/9/2018-TPL dated 01.04.2021.

The changes are as follows:

Changes in Form 3CD (w.e.f. AY 2021-22 onwards)

Following changes in Form 3CD has been made

• Clause 8a shall be amended regarding the new taxation regime opted by the assessee u/s 115BAC/115BAD which are applicable from AY 2021-22 onwards.
• Now, additional reporting is required in Clause 17 regarding any difference in “Consideration received” and “Stamp Value” with respect to land or building transferred during the previous year exceeding 10% but not exceeding 20%.
• This additional reporting is in consonance with the increase in safe harbour threshold from existing 10% to 20% under section 43CA of the Act, if the following conditions are satisfied (introduced by Finance Act 2021):

• The transfer of residential unit takes place during the period from 12.11.2020 to 30.06.2021.
• The transfer is by way of first-time allotment of the residential unit to any person.
• The consideration received or accruing as a result of such transfer does not exceed two crore rupees.

Clause 18(ca) shall be amended regarding the adjustment in opening written down value on account of unabsorbed depreciation existing before AY 2021-22, if the assessee opts for new regime u/s 115BAC and 115BAD.
Clause 18(cb) shall be amended regarding the adjustment in opening written down value of Intangible Assets due to exclusion of value of goodwill.
The amendment of Clause 18(ca) has resulted in consequential amendment in Clause 32(a) regarding the reporting of adjustment of unabsorbed depreciation in the opening written down value of depreciable block of assets. Further, reporting of losses/allowances disallowed due to opting the new taxation regimes u/s 115BAA, 115BAC and 115BAD is also required.
Clause 36 shall be omitted pertaining to the discontinuance of Taxation on distributed profits of domestic company u/s 115-O from AY 2021-22 onwards.

Revised Tax Audit Report (Form 3CD)

The Tax Audit can be revised by the assessee before the end of relevant assessment year by obtaining a revised Audit Report from the Chartered Accountant, if there are any changes in the disallowances due to payment of liability covered under section 40 and section 43B.

Source: Notification No. 28 /2021/F. No 370142/9/2018-TPL

Jaskaran Singh

Direct Tax Associate

SW India