CBDT vide Notification No. 82/2020 dated 01.10.2020 has notified amendments in the Tax Audit Report Form No. 3CD, Form No. 3CEB and ITR-6. The Notification has also amended Rule 5 of the Income Tax Rules, 1962 and inserted two new Rules - Rule 21AG and Rule 21AH for exercising concessional tax regime under section 115BAC(5) in Form No. 10-IE and under section 115BAD(5) in Form No. 10-IF respectively. The two new Forms - Form No. 10-IE and Form No. 10-IF is also inserted.
These changes in the Tax Audit Report in Form No. 3CD, Form No. 3CEB and ITR-6 are made applicable for Assessment Year 2020-21.
This Notification No. 82/2020 shall come into force on the date of their publication in the Official Gazette which is 1st October, 2020. Hence, if any ITR-6 or Tax Audit Report in Form No. 3CD or Form No. 3CEB has already been filed before that date there is no need to revise the ITR-6 or the Tax Audit Report in view of the changes so notified in this Notification. However, if any such return or report is not yet filed, it has to be filed according to the amended provisions.
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Amendment in Rule 5 of the Income Tax Rules, 1962
Rule 5 prescribed the computation of depreciation allowance under section 32(1)(ii) in respect of any block of assets. Presently, the proviso to Rule 5(1) restricts the rate of depreciation to 40% on the written down value of the block of assets if the prescribed rate of depreciation is higher than 40% for such block of assets for the purpose of claiming depreciation allowance under section 32(1)(ii) in case of a domestic company which has exercised an option under section 115BA(4).
This proviso is amended and substituted with a new proviso to include the new beneficial lower tax regime provisions under section 115BAA, section 115BAB, section 115BAC and section 115BAD apart from existing section 115BA to restrict the rate of depreciation to 40% for claiming depreciation allowance u/s 32(1)(ii). Hence, a person opting a lower tax regime under section 115BA, 115BAA, section 115BAB, section 115BAC and section 115BAD cannot claim depreciation allowance more than at the rate of 40% for any block of assets.
Section 115BA, section 115BAA, and section 115BAB is applicable for a domestic company. Section 115BAA and section 115BAB is applicable from AY 2020-21.
Section 115BAC is applicable for an Individual and HUF whereas section 115BAD is applicable for a co-operative society. Section 115BAC and section 115BAD is applicable from AY 2021-22.
Insertion of new Rule 21AG
Rule 21AG states that an Individual or a HUF shall exercise the option of the lower tax regime under section 115BAC(5) in Form No. 10-IE from AY 2021-22.
The option in Form No. 10-IE shall be furnished electronically either under digital signature or electronic verification code. The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the procedure for filing of Form No. 10-IE.
Insertion of new Rule 21AH
Rule 21AH states that a cooperative society resident in India shall exercise the option of the lower tax regime under section 115BAD(5) in Form No. 10-IF from AY 2021-22.
The option in Form No. 10-IF shall be furnished electronically either under digital signature or electronic verification code. The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the procedure for filing of Form No. 10-IF.
There is a typographical error in the Notification wherein Rule 21AH the reference is wrongly written as Form No. 10-IE instead of Rule 10-IF in the line containing the text ‘specify the procedure for filing of Form No. 10-IE’.
Changes in Tax Audit Report in Form No 3CD
(i) Suitable changes are made in Form No 3CD and a new serial 8a. is inserted to provide information on whether the assessee has opted for taxation under section 115BA/115BAA/115BAB.
(ii) Further information is required to be given for adjustment made to the written down value under section 115BAA (for assessment year 2020-21 only) and the Adjusted written down value. For this purpose, serial 18(ca) and 18(cb) is inserted in the Part-B of Form No. 3CD.
(iii) Details of brought forward loss or depreciation allowance in serial no. 32(a) in the Part-B of Form No. 3CD is modified to incorporate the adjustments for losses and allowances under section 115BAA.
Changes in Tax Audit Report in Form No 3CEB
Changes have been introduced in serial no. 22, 23 and 24 in Part-C of the Form 3CEB notified.
Format of Form 10-IE
The Notification seeks to insert Form 10-IE as per Rule 21AG pertaining to Application for the exercise of option under sub-section (5) of section 115BAC.
Format of Form 10-IF
Format of Form 10-IF as per Rule 21AH Application for exercise of option under sub-section (5) of section 115BAD notified.
Changes in ITR-6
(i) Changes in Schedule-DPM of ITR-6 have been made to incorporate the adjustments of depreciation amount under section 115BAA.
(ii) Changes in Schedule-CFL of ITR-6 have been made to incorporate the adjustments for losses and allowances under section 115BAA.
(iii) Changes in Schedule-UD of ITR-6 have been made to incorporate the adjustments for depreciation allowances for opting section 115BAA.
Download Copy of Notification No. 82/2020 dated 01.10.2020 on Changes in Tax Audit Report Form 3CD, ITR 6
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