GAAR and GST reporting in tax audit deferred till 31 March
Tax audits to be furnished between 20 August 2018 and 1 April 2019 will not require additional reporting
New Delhi: The income tax department has deferred the implementation of a proposal that required tax audit to include reporting on goods and services tax and general anti-avoidance rules.
The proposed measure has been kept in abeyance till 31 March, said a circular issued by the income tax department on Friday.
So all tax audits to be furnished between 20 August 2018 and 1 April 2019 will not require the additional reporting. The income tax department last month through a notification had introduced additional reporting requirements effective 20 August.
However, stakeholders found these reporting requirements onerous and made representations to the Central Bureau of Direct Taxes seeking relaxation in the form 3CD that has to be filled by auditable companies. All firms that have a turnover of more than Rs 1 crore have to fill this form.
The form required auditors to flag arrangements that are considered impermissible under GAAR, something the auditors do not agree with. They argued that this was the responsibility of the taxman rather than that of the auditor.
GAAR is an anti-avoidance measure that gives the tax department powers to look into arrangements specifically designed to evade taxes.
Rahul Jain, Partner, Nangia Advisors LLP, said the decision of the government to consider the concerns expressed by auditors about the additional reporting is welcome. “However, the requirements are only postponed and not done away with. Any tax audit report signed after 31st of March 2019 will carry this reporting requirement, but in all fairness, it does allow the auditors to be better prepared,” he said.
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