GST DISCLOSURE IN TAX AUDIT REPORT - CLAUSE 44

 CBDT has added a new clause no. 44 to Form No. 3CD via notification no. GSR 666(E) dated 20^th July 2018.

This clause requires assessees who are required to get their accounts audited under section 44AB of the Income Tax Act,1961 read with rule 6G of the Income Tax Rules, 1961 to provide the break-up of total expenditure into expenditure relating to entities registered under GST and Expenditure relating to entities that are not registered under GST. Despite the fact that the notification was introduced in 2018, the applicability of the said clause was kept under abeyance until March 2022.

As a result, the aforesaid information has to be provided for all reports filed under section 44AB on or after 1^st April 2022.

The break-up of the expenditure has to be provided in the following manner.

Total Expenditure incurred during the previous year	Expenditure in respect of entities registered under GST				Expenditure relating to entities not registered under GST
	Expenditure relating to goods/ services exempt under GST	Expenditure relating to entities registered as Composition dealers	Expenditure relating to other registered entities	Total Payments made to registered entities
1	2	3	4	5	6

 

1.    Total Expenditure incurred during the year.

The total expenditure incurred during the previous year has to be provided under this column.

The total amount of expenditure irrespective of capital or revenue in nature has to be provided.

Though head-wise break-up of the expenditure is not required, it is recommended to provide the details of capital expenditure and revenue expenditure in separate row lines.

As the word used in column 1 is “Total Expenditure” incurred during the previous year, a question may arise as to whether the non-cash expenditure such as depreciation and amortization, actuarial valuation of gratuity, Provision of expenditure, and the expenses of like nature are to be included in this column. We may expect a clarification with this respect from the department.

It is also advisable to keep a reconciliation of total expenditure as shown in clause 44 and the total expenditure as debited to the statement of profit and loss.

 

2.    Expenditure relating to goods and services exempt under GST

The exempt supply shall include

a)    Goods or services attracting NIL rate of GST

b)    Goods or services supply of which is wholly exempt from the GST

c)    Non-taxable supply

 

3.    Expenditure relating to entities registered as Composition dealers.

The amount of expenditure as an inward supply from the composition dealers during the relevant previous year has to be declared.

 

4.    Expenditure relating to other registered entities

The total amount of expenditure as a supply from all registered GST suppliers except the details already provided in columns 2 and column 3 has to be declared here.

 

5.    Total Payments made to registered entities

The total payments made to all registered entities for the supplies listed in columns 2, column 3, and column 4 are to be reported here.

The question here is whether the payments made during the year can include payments for the opening balance as well or we are required to provide the information only to the extent of expenditure as shown in Column 1. The department may provide clarification in this regard.

Furthermore, the payments made to suppliers are inclusive of GST. A question may arise, whether the details as mentioned in Columns 1 to column 4 are to be provided inclusive of GST.

There is also a view that the total expenditure declared in columns 2 to column 4 may be declared in this column. However, we can expect clarification from the department in this regard as well.

 

6.    Expenditure relating to entities not registered under GST

All expenditure from the entities that are not registered under GST has to be declared under this column. 

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CA Ramakrishna Sanjay