Short overview of key amendments in Form No. 3CD for AY 2025-26
The most recent and significant amendments to Form 3CD were notified by the Central Board of Direct Taxes (CBDT) on March 28, 2025, through the Income-tax (Eighth Amendment) Rules, 2025. These changes are applicable for the financial year 2024–25 (Assessment Year 2025–26) and onward.
Summary of key amendments for AY 2025-26
• Enhanced MSME payment reporting (Clause 22): Reporting requirements for payments to micro and small enterprises have been significantly expanded. Tax auditors must now report the total amounts payable to these entities, along with a breakup of amounts paid both within and beyond the specified due dates under the Micro, Small and Medium Enterprise Development (MSMED) Act, 2006.
• Detailed loans and deposits reporting (Clause 31): This clause has been updated to require more granular, transaction-wise reporting of all loans, deposits, and specified advances taken or repaid. A new coding system has been introduced to classify the nature of each transaction, such as cash payments, electronic transfers, or journal entries.
• New reporting for share buybacks (Clause 36B): A new clause, 36B, has been inserted to report income from share buybacks under Section 2(22)(f) of the Income-tax Act. Taxpayers must now disclose the amount received and the cost of acquisition of the shares.
• Reporting of expenditures to settle legal proceedings (Clause 21): Following changes to Section 37(1), Form 3CD now requires reporting of any expenditure incurred to settle legal proceedings related to the contravention of any law.
• Inclusion of cruise ship presumptive income (Clause 12): The scope of presumptive income reporting has been expanded to include Section 44BBC, which relates to the business of operating cruise ships by non-residents.
• Removal of obsolete clauses: Several outdated deduction clauses have been removed from the form to streamline reporting, including:
– Sections 32AC and 32AD for investment-linked deductions
– Sections 35AC and 35CCB for donations to certain welfare projects
– Clauses 28 and 29, which covered TDS non-compliance and disallowed payments to partners.
