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The Central Board of Direct Taxes (CBDT) has put off till March 31, 2019, the proposed GST and GAAR reporting under the amended tax audit form. This dispensation would be available for tax audit reports to be furnished on or after August 20 but before April 1, 2019.
In a circular issued on Friday, the CBDT said representations had been received by the Board that the implementation of the reporting requirement under the proposed Clause 30C (pertaining to General Anti-Avoidance Rules or GAAR) and the proposed Clause 44 (pertaining to Goods and Services Tax compliance) of the tax audit Form No 3CD may be deferred.
“The matter has been examined and it has been decided by the Board that reporting under the proposed Clause 30C and proposed Clause 44 of the Tax Audit Report shall be kept in abeyance till March 31, 2019. Therefore, for Tax Audit Reports to be furnished on or after August 20, 2018 but before April 1, 2019, tax auditors will not be required to furnish details called for under the two clauses,” the CBDT circular said.
Expert take
Anupam Jain, Executive Director, Nangia Advisors LLP, said the CBDT move is a welcome step, given the new reporting requirement and lack of any guidance on it.
“Ever since the revised audit format was circulated, there was much restlessness in the industry and auditors alike on the expansive import of the clause introduced on GAAR. It was indicative of loading tax auditors with an onerous responsibility to step into the shoes of a tax officer and determine if any transaction was an impermissible arrangement,” he said.
Further, even though the Act prescribes a threshold of ₹3 crore of tax impact, for a transaction to be categorised as an impermissible transaction, the proposed clause, at the first step wanted disclosure on any ‘impermissible transaction’ and then required quantification, said Jain.
Rahul Garg, Senior Partner, Tax and Regulatory, PwC India, said it would have been burdensome for companies to compile the enhanced requirements for tax audit after the close of the accounting period and statutory audits.
“The decision of the CBDT would save companies from the effort to go back to their closed and audited books to compile additional information for last year,” said Garg.
Sanjay Sanghvi, Partner, Khaitan and Co, said a fair decision has been taken by the CBDT.
“It was practically not possible for a tax auditor to provide those details/ remarks concerning applicability of GAAR,” said Sanghvi.
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