Representation to scrap the Clause No. 44 of the Tax Audit Report: Team The Tax Talk


Representation to scrap the Clause No. 44 of the Tax Audit Report : Team The Tax Talk


Smt. Nirmala Sitharaman

Respected Finance Minister

Government of India

New Delhi

Subject: Reducing the compliance and paper work of Businesses

Reference: Clause No. 44 of the Tax Audit Report in Form No. 3CD

Respected Madam,

Taxpayers who are in the business with turnover above a certain threshold are required to get their books of accounts audited and the auditor has to file an audit report in Form No. 3CD.

There are certain changes in the Tax Audit Report which have suddenly increased the pressure on the businessmen. Though the same is required to be reported by the tax auditor, the information regarding this is required to be given by the businessmen only.

In this regard, we would like to bring the following for your kind consideration:

  1. Not in TAR alone, there are various provisions in the Income Tax Law which have been incorporated just to make the taxpayers keep on doing the compliances & clerical work. The clause No. 44 is just one point here.
  2. Clause 44 has nothing to do with the Income Tax Act-1961.
    It is pertaining to the GST law and the reporting in that clause may not impact the computation of tax under the income tax law. It is just a reporting requirement and mere information without any implication on the tax computation.
  3. Everyone has trust, faith & confidence in the transparent, honest & genuine administration of the Modi Government. However, there is nothing to give the real EASE OF BUSINESS as of now which is the main thrust area of Hon’ble & Respected PM Shri Narendra ji Modi.

    Whether it is logical to impose the law just because it has power to do so. Whether commercial expedience, practicality & logical ideas can be of some help for the taxpayers? Whether we want India to be the country of Innovation or country of clerks & papers? What do we want our taxpayers to do? Every businessman is complaining about the unwanted paperwork they are required to do. The independent survey by the Government agencies may reveal the shocking fact that MSME are afraid of doing expansion because of the unending paperwork or unwanted compliance activities.
  4. The Income Tax Act itself is too voluminous and bulky. Income Tax Authorities are expected to ensure the compliance with the provision of the income tax law alone.

    It may not be proper for income tax law to ensure the compliances of the businesses with the provision of Foods & Drugs Act. Similarly income tax law is not supposed to ensure the compliances of the businesses with the provision of FEMA. It may not be appropriate for income tax law to ensure compliance with the provisions of Shop & Establishment Act, Money Laundering Act, Benami Property Act, Companies Act, Indian Penal Code etc. The authorities under the relevant law are already empowered and doing the needful. By making cross reporting requirements, the burden is going to increase again and again at all levels.

  5. There are enough machineries, manpower, and infrastructure under the respective law to ensure its compliances. They can work independently and make independent decisions. The question arises, why does the Income Tax Act or provision need to encroach in other areas and check their compliances at least when there is no impact in the income & tax computation. Income Tax Act and Rules may not be the “Father Law” to all other Acts & Law.

    Is it a little funny to ask the details of the world which may not be relevant from an income tax perspective. All this just because someone is doing a business?

  6. The reporting requirements in the Income Tax Law have to be restrictive for EASE OF BUSINESS. Asking the entire information of the world may not be the right way of using the power.
  7. By removing the unwanted details, the real ease of business can be given to the businesses.
  8. Already there is multiple reporting of the same data to various departments. A committee may be set up to simplify the reporting requirements and ensure that the same data is not required to be punched time and again to the Government department.

  1. The real ease of business could be the merger of the data flow requirements at one stage only.
  2. The details as sought in clause 44 can be more powerfully extracted by the Government by aligning the Income Tax & GST portal data, both of which are developed by Infosys. As a result, the more powerful report will be there with the Government agencies without burdening the taxpayers.

We strongly appreciate your sincere efforts and attempts for making India the fastest growing economy of the World.

This is just one small suggestion for your kind consideration. We hope that you will consider the suggestion in its true spirit and will take a call on its merits.

Team The Tax Talk