Key takeaways of ICAI Technical Guidance on amended Tax Audit Report

ICAI’s implementation guide on Tax Audit Report covers amendment to Tax Audit Report (Form 3CD) which are effective from August 20, 2018 and thus, does not discuss GAAR and GST reporting (under clause 44); Clarifying on reporting relating to secondary adjustments, Guidance states that in cases where amount of imputed interest income on the excess money not repatriated to India relates to more than one year, “Prima-facie, it appears that reporting of such interest is not required to be reported under clause 30A(b)(v) since Clause 30A requires reporting only in relation to primary adjustment made during the relevant previous year”; However, ICAI Guidance also stresses that “it may be advisable for the taxpayer to furnish and tax auditor to verify and report the information pertaining to such primary adjustments in respect of interest income which is chargeable u/s. 92CE(2)” as the return filing utility may synchronize the parameters of imputed interest u/s 92CE(2) as offered in the return of income with the parameters stated in the Tax Audit Report; With respect to reporting of interest limitation u/s 94B, ICAI Guidance clarifies that “The computation of “excess interest” as per section 94B(2) should be within the boundaries of interest referred to in s.94B(1), which is NR AE interest”; Regarding disclosure of CbCR information, the Guidance clarifies that “the tax auditor is not required to comment upon correctness or completeness of the report filed under section 286(2)”; Further, apart from highlighting the widened scope of reporting requirements in respect to TDS/TCS returns, the Guidance clarifies on applicability of Sec. 269ST reporting (for cash transactions exceeding Rs. 2 lakh threshold) to Govt. companies and to capital and revenue payment / receipts;  Regarding reporting of deemed dividend u/s. 2(22)(e), the Guidance suggests that the tax auditor may arrive at the accumulated profits by appropriating the profit for the year on time basis, where he may not have access to the records of a closely held company making payment during relevant financial year.