Income Tax Audit Forms Now Live on ITR e-Filing Portal  

The Income Tax Department, on July 18, 2025, officially enabled Forms 3CA-3CD and 3CB-3CD for income tax audit filing on the ITR e-Filing portal, marking a significant update for taxpayers and audit professionals. Alongside the online functionality, a common offline utility has also been released to streamline the preparation and submission of audit reports. As part of this rollout, the department published a comprehensive schema change document, detailing 71 critical updates—35 changes in Form 3CA-3CD and 36 in Form 3CB-3CD—applicable for Financial Year 2024–25 (Assessment Year 2025–26).

Tax Audit

A tax audit is mandatory for taxpayers whose income from business or profession exceeds specified thresholds set under the Income Tax Act. It applies to those required to maintain books of accounts and ensures that the financial records are accurate and compliant with tax regulations.

Who Needs to Conduct an Income Tax Audit for AY 2025–26?

The requirement for an income tax audit under Section 44AB for Assessment Year 2025–26 (Financial Year 2024–25) depends on turnover thresholds and the nature of transactions. Below is a clear breakdown of scenarios where a tax audit is mandatory:

Note: Taxpayers must evaluate their mode of transactions (cash vs. digital), turnover limits, and eligibility for presumptive taxation to determine whether a tax audit is required. Non-compliance may attract penalties under the Income-tax Act, 1961.

Types of Tax Audit Forms and Their Usage

As per the Income Tax Department, there are three key forms used for filing Tax Audit Reports under Section 44AB of the Income Tax Act, 1961. These are:

Form 3CA–3CD

Companies, LLPs, Co-operative societies, or other entities whose accounts are already audited under any other law (e.g., Companies Act, Societies Act). This form serves as the tax audit report for entities that have undergone a statutory audit under another law. It includes:

• Form 3CA – The audit report
• Form 3CD – A statement of particulars (detailed financial and tax-related disclosures)

Form 3CB–3CD

Sole proprietors, partnership firms, or individuals engaged in business or profession are not required to get their books audited under any other law. Used when the taxpayer's accounts are not audited under any external law, but an audit is required under Section 44AB.

• Form 3CB – The audit report
• Form 3CD – Statement of particulars

Quick Comparison Table

Tax Audit and ITR Filing Deadlines for FY 2024–25

The deadline to file the tax audit report for FY 2024–25 (AY 2025–26) has been extended to October 31 2025, 2025. After submitting the audit report, taxpayers must file their Income Tax Return (ITR) by October 31, 2025.

Key Changes in Income Tax Audit Forms (Forms 3CA-3CD & 3CB-3CD) for AY 2025–26

The Income Tax Department has rolled out 71 changes across the tax audit forms for FY 2024–25, significantly impacting how audit information is reported. Here are the five most important changes taxpayers and auditors need to know:

Enhanced MSME Payment Disclosures – Clause 22

Clause 22 of Form 3CD for tax audits has been updated to improve disclosure requirements regarding payments to micro and small enterprises (MSEs) under the MSMED Act. The new structure requires detailed reporting in the following manner:

• Sub-clause (i): Disclose the amount of interest not allowable under Section 23 of the MSMED Act.
• Sub-clause (ii): Report the total outstanding amount payable to micro or small enterprises as per Section 15 of the MSMED Act during the financial year.
• Sub-clause (iii): Provide a breakdown of payments made to MSEs:
• Payments made within the time limit prescribed under Section 15.
• Payments not made within the specified time are disallowed as deductions for the relevant year.

In summary, payments made after the due date under Section 15 and disallowed under tax laws must be clearly identified in the audit report. This change is aimed at improving compliance with timely payment provisions and enhancing audit transparency.

Example:

XYZ Textiles Ltd. made purchases worth ₹7,00,000 from MSEs in FY 2024–25.

Payment Details:

• Paid within 45 days: ₹4,00,000
• Paid after 45 days: ₹2,00,000
• Unpaid as on 31 March 2025: ₹1,00,000
• Interest on delayed payments (u/s 23): ₹8,000

Disclosure in Clause 22:

Particulars Amount (₹)

Note: The ₹2,00,000 paid late and ₹1,00,000 unpaid are considered not paid within the allowed time, and hence, ₹1,00,000 is disallowed as a deduction (assuming ₹2,00,000 late payment falls in the grace window or gets adjusted in the subsequent year).

Inclusion of Section 44BBC in Presumptive Taxation – Clause 12

An amendment has been made to include Section 44BBC, which applies to non-resident cruise ship operators. Under this section, 20% of specified receipts is deemed taxable as business income and must now be reported under Clause 12. Introduced via the Finance Act, 2024, this is a new reporting requirement for presumptive income.

Clause 19 – Removal of Redundant Deduction Reporting

Fields related to certain deductions have been removed due to their obsolescence. These include:

• Section 32AC (investment in new plant and machinery)
• Section 32AD (investment in backwards areas)
• Section 35AC (expenditure on eligible projects)
• Section 35CCB (expenditure on agro-based programs)

Clause 21 – Disallowable Expenses for Regulatory Violations

Any expenditure related to regulatory breaches or settlements is now non-deductible as per the Finance Act, 2024. Taxpayers must report such expenses under Clause 21.

Clause 22 – Detailed MSME Payment Reporting

Clause 22 has been revised to strengthen disclosure for payments to Micro and Small Enterprises. It now requires:

• Disclosure of interest is not allowable under Section 23 of the MSMED Act.
• Segregation of payments:
• Amounts paid within the time limit under Section 15.
• Amounts not paid within the time frame are disallowed as a deduction.
• A revised format for better visibility of compliance.

Clause 26 – Section 43B(h) Disclosure Added

A new field has been added to reflect compliance with Section 43B(h), which mandates timely payment to MSMEs for allowing deduction.

Clause 28 and 29 – Deletion of Obsolete Reporting

Reporting under Sections 56(2)(viia) and 56(2)(viib) has been removed, as these provisions were scrapped by the Finance Act, 2024.

Clause 29 – Optional Tag for Elements

The reporting element in Clause 29 has been modified from mandatory to optional, and will be omitted from AY 2025–26 onward.

Clause 31(a) – Loan and Deposit Categorisation

New sub-clauses (vii)(a) and (vii)(b) have been introduced to capture:

• Nature of the loan or deposit
• Whether the payment was made via account payee mode

Clause 36B – New Reporting for Share Buybacks

A new clause has been added to capture details of share buybacks, which are now taxable as deemed dividends. It requires reporting of: 

• Amount received from buybacks 
• Cost of acquisition of such shares

Audit Utility – Enhanced Functionality

The updated utility now features drop-down menus for simplified and error-free reporting across clauses.

Common Offline Utility for Income Tax Audit Forms (Form 3CA-3CD and 3CB-3CD)

The Income Tax Department provides a common offline utility for preparing and filing income tax audit forms such as Form 3CA-3CD and 3CB-3CD. This downloadable software allows auditors to:

• Enter clause-wise audit details
• Validate entries in real-time
• Generate a final JSON file for upload 

Once the audit report is prepared and validated in the offline utility, the JSON file is uploaded to the e-filing portal and digitally signed by both the auditor and the assessee (taxpayer).

Although the income tax portal also offers an online utility to directly fill out audit forms on the website, it is often seen as impractical for actual usage. Key limitations include: 

• Frequent session timeouts 
• Lack of draft-saving or rollback options 
• Poor handling of bulk data entry
• Not suitable for large and complex audits

For audits involving multiple disclosures, depreciation schedules, and detailed quantitative reporting under various clauses, manual online entry can be inefficient and error-prone.

Note on Common Utility Installation

The Income Tax Department's common offline utility is used to prepare and file Forms 3CA-3CD or 3CB-3CD. Before installing the utility, you must install Microsoft Edge WebView2 Runtime, as required by the portal.

• Schema Version 2.2 Released: The Income Tax Department released a major update to the Form 3CB-3CD schema on July 17, 2025.
• Outdated Utilities Rejected: Using even slightly older offline utilities can result in file rejection with cryptic errors like "schema mismatch", causing delays during filing.
• New Clause 36B Introduced: Mandatory in certain cases, this clause requires reporting of:
  • Amount received from share buybacks
  • Cost of acquisition of the shares (This clause did not exist in earlier years and could catch users off guard.)
• Clause 31 Overhauled: This clause, related to loans and deposits under Sections 269SS and 269T, now requires:
• Transaction nature
• Amount
• Code type
• Cheque/draft repayment flags (Granular reporting is now essential; even minor errors in structure can cause upload failures.)
• Many Fields Are Now Mandatory: Absence or incorrect formatting of required fields will lead to JSON file rejection.

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Related Guides

Tax Audit under Section 44AB

Tax Audit Report

Income Tax Audit Limit 

Tax Audit Due Date

Key Amendments in Tax Audit Report (Form 3CD)

Tax Audit Turnover

Section 44AB of Income Tax Act