Tax Audit Checklist on Clauses 31 & 32 of Form 3CD Under the Income Tax Act, 1961

The Tax Audit Checklist for Clauses 31 and 32 of Form 3CD under the Income Tax Act, 1961 outlines the reporting responsibilities of tax auditors, addressing key compliance requirements. Clause 31 ensures loans and deposits exceeding limits under section 269SS, ensuring they are accepted through approved methods like account payee cheques or bank drafts. It also covers “specified sums” related to immovable property transfers and requires reporting of repayments under section 269T, indicating if non-approved methods were used. Additionally, focus on repayments of advances or loans made with non-account payee cheques, allowing exemptions for repayments from government entities.

Clause 32 requires tax auditors to report on brought-forward losses and their eligibility for set-off against current-year income. It emphasizes the need to quantify these losses or unabsorbed depreciation in line with filed returns and assessment orders. The clause also examines the impact of shareholding changes on closely held companies, restricting loss set-offs under Section 79 in cases of significant ownership changes. Additionally, it addresses speculation business losses and covers losses from specified businesses, classifying companies engaged in share trading as speculation businesses for reporting purposes.

This checklist document offers a comprehensive guide on navigating clauses 31 and 32, ensuring compliance and accuracy.

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