Navigating the intricacies of the Indian tax regulations can be complex especially while dealing with audit reports. Different types of audits have been prescribed under Indian law including company audits, cost audits, etc. Certain taxpayers have to get their business or professional books of accounts audited under the Income Tax Act 1961. This is also known as a tax audit.
In compliance with the Act and the Income Tax Rules (1962), two tax audit forms; Form 3CA and Form 3CB govern the process of filing income tax returns in India. Understanding the difference between form 3CA and 3CB is crucial for taxpayers as well as for their chartered accountants to ensure accurate and compliant reporting. Moreover, while 3CA and 3CB pertain to tax audit reports, their applicability and underlying requirements differ significantly.
Who Needs To File Which Form 3CA vs 3CB?
The primary difference between 3CA and 3CB lies in the mandatory audit requirement.
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- Form 3CA: Under Section 44AB of the Income Tax Act 1961, in case a person who carries a business or profession and is required to get his accounts audited shall file an audit report in Form 3CA. This includes companies, LLPs, and certain cooperative societies.
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- Form 3CB: Under Section 44AB of the Income Tax Act 1961, in case a person who is business or professional and is not required to get his accounts audited shall file an audit report in Form 3CB. This applies to individuals, professionals, and partnership firms with a turnover exceeding ?1 crore. Also, they should not opt for the presumptive taxation scheme.
Navigating The Intricacies In Applicability Of Form 3CA and 3CB
The main difference between Form 3CA and Form 3CB is its audit requirement clause. While the audit requirement for submission of Form 3CA is compulsory, no such mandatory requirement exists in the case of Form 3CB. Here is the table below to show 3CA and 3CB differences.
| Feature |
Form 3CA |
Form 3CB |
| Mandatory Audit |
Required |
Not Required (but applicable if income exceeds ?1 crores under section 44AB) |
| Applicability |
Companies, LLPs, certain cooperative societies |
Individuals, professionals, and partnership firms |
| Turnover Threshold |
Not Applicable |
Total sales turnover or gross receipts of ?1 crore or more under Section 44AB |
| Supporting Documen |
A detailed statement of particulars Form 3CD |
A detailed statement of particulars Form 3CD |
| Filing Due Date |
On or before September 30th of the relevant assessment year* |
July 31st of the relevant assessment year |
*In case, a taxpayer is obtaining Form 3CE audit report, the due date is November 30 for that relevant assessment year.
The format and content for both Form 3CA and 3CB may be subject to changes based on the updates from the government. It is advised to consult a qualified tax consultant or chartered accountant for the latest guidance.
The key 3CA and 3CB difference lies in the audit requirement clause. While it is compulsory for submission of Form 3CA, there are no such mandatory requirements for Form 3CB. Additionally, Form 3CD is a very detailed statement of accounts supporting Form 3CA.
Particulars Of Form 3CA and 3CB
The particulars of Form 3CA include name and address of taxpayer and auditor, date of audit report, date of balance sheet, period of profit and loss account, and law under which accounts have to be audited. It also mentions the place and date of signing the audit report, name, address, and membership number of the Auditor with his or her stamp or seal.
The particulars of Form 3CB include the date of the balance sheet, period of profit and loss account, name and address of the taxpayer with his or her Permanent Account Number, address where books of accounts are kept, and its branches.
Supporting Role of Form 3CD
For many Indian taxpayers, Form 3CD can evoke confusion and apprehension. Since it plays a vital role in tax audits, demystifying its purpose and key elements empowers individuals and professionals to comply with ease.
Form 3CD is a statement of particulars that are required to be submitted by Rule 6G and Section 44AB of the Income Tax Act 1961. This is an addition to audit forms 3CA and 3CB. These primary forms filed by the taxpayers mandatorily audited under other laws (Form 3CA) or exceeding the exceeding ?1 crore income threshold (Form 3CB), require supporting details about their income, expenditure, and tax computations.
Form 3CD bridges the gap as it provides a comprehensive statement of particulars. There are 41 clauses in Form 3CD. These clauses are divided into Part A and Part B each containing disclosures related to loans, deductions, TDS, etc.
The form also specifies the name, address, membership number, FRN no., and signature of the auditor along with a stamp or seal.
Penalty For Not filing The Audit Report
In case, a taxpayer does not get his accounts audited or file an audit report, the assessing officer from the income tax department can impose a penalty under Section 271B. A minimum penalty of 0.5 of the Income Tax Act 1961 i.e. 0.5 per cent of the total sales turnover or gross receipts is applicable. This can go up to Rs. 1.5 lakhs. Furthermore, failure to file form correctly or meet the filing deadlines can attract penalties and interest charges too.
Under the provisions of Income Tax Act, no penalty will be imposed if the taxpayer gives one of the following reasonable cause for non-compliance;
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- Delays caused due to the physical inability or death of the partner who is responsible for accounts
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- If a delay in filing income tax is caused by the resignation of the tax auditor.
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- Delay caused by labor issues like strikes or lock-outs is exempted.
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- No penalty is imposed in case of a natural calamity.
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- Delay in filing 3CA and 3CB accruing to the loss of books of accounts audited for reasons about theft or fire, or an incident that is not under a taxpayer’s control.
FAQs
Is 3CA mandatory for Companies?
Form 3CA is compulsory specifically for businesses or professionals who are required to get their accounts audited under any other law. Companies Act 2013 mandates a company to get its accounts audited compulsorily.
Who is Eligible For 3CB-3CD?
Any taxpayer who files Form 3CA or 3CB needs to submit a corresponding Form 3CD. The form includes companies, LLPs, and certain cooperative societies that are subjected to mandatory accounts audits under other laws. Individuals, profession, and who is required partner firms exceeding the Rs. 1 crore income threshold specified in Section 44 AB of the Income Tax Act 1961 must fill this form.
What are The Types of 3CA?
Under the existing rules, audit reports have to be provided either by filling out Form 3CA or 3CB. Professionals and self-employed businesses mentioned under section 44AB are mandated to get their books of accounts audited under prevailing Income Tax laws. Additionally, auditors of companies should furnish Form 3CA. This must be submitted with Form 3CD.
