Clause 44 of Form 3CD

Analysis of Clause 44 of Form 3CD

Clause No. 44?in Form No: 3CD is applicable from the Assessment Year 2022-23, i.e. for the financial year ended 31st March, 2022.?

Details to be provided:

Column 1.???????????Sl.?No:

Column 2.???????????Total amount of?expenditure?incurred during the year:??

Expenditure in respect of entities registered under GST

Column 3.???????????Relating to Goods or Service?exempt?from GST;

Column 4.???????????Relating to entities falling under?composition Scheme;

Column 5.???????????Relating to?other registered?entities;

Column 6.???????????Total payments: to registered?entities:?

Column 7.???????????Expenditure?relating to?entities not registered?under GST:

Column 2.?Total amount of expenditure incurred during the year:?

This column requires furnishing of?total expenditure?incurred during the year. ‘Expenditure’ covers, both ‘revenue’ expenditure as well as ‘capital’ expenditure.?The Profit and Loss Account needs to be reviewed to ascertain ‘revenue’ expenditure and the Balance Sheet – Schedule ‘Property Plant and Equipment’ – additions during the year, to ascertain ‘capital’ expenditure.?The total of both ‘revenue’ expenditure and ‘capital’ expenditures have to be shown under ‘column – 2’.

Column 3 to 6: Expenditures in respect of entities registered under GST:

Column 3.?Expenditure relating to goods or services exempt from GST: {Section 2(47) & 2 (78) of CGST Act 2017}

Under this head, the total value of all inward supply of goods or services which are?exempt?from GST is to be furnished.?As per CGST Act, Sec: 2(47), exempt supply means:

- Supply of any goods or services or both which attracts ‘nil’ rate of tax; or

- Which may be wholly exempt from tax under IGST Act; and

- Includes non – taxable supply.

Non-taxable supply?includes:

• Supply of alcoholic liquor for human consumption;
• Supply of petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel.

The above will constitute exempted supplies and has to be reported in column 3 if applicable.

GSTR – 2A cross-checking needs to be done.

Column 4: Expenditure relating to entities falling under composition scheme. : (Section 10 of CGST Act)

The expenditure incurred to entities registered under composition scheme has to be reported in column: 4.??Composition scheme is governed by Sec: 10 of the CGST Act.?An entity registered under composition scheme:

a)????Cannot charge GST in their Invoices;

b)????Cannot make interstate supply;

c)?????Cannot use a tax invoice; (only?Bill of supply); and

d)????Shall mention on the top of the Bill of Supply that its registration is under composition scheme.

Column 5. Expenditure relating to other registered entities:

All other expenditures relating to registered entities, other than exempted supplies from registered dealers and supplies from composition dealers, have to be specified in column: 5.

Column 6. Total Payments to registered entities:

In column (6), the word used is?‘Payments’?and not ‘expenditure’.?However, the revised Guidance Note on Tax Audit u/s. 44AB of the Income-tax Act, 1961 [Revised-2022] has stated as follows in Para 82.13:

“The word ‘payment’ should harmoniously be interpreted as ‘expenditure’ as the combined heading of columns (3), (4) and (5) is ‘Expenditure?in respect of entities registered under GST’.?Hence, the total expenditure in respect of registered entities i.e., sum total of values reported in columns (3), (4) and (5) should be reported in column 6.”

Therefore, column 6 should be the sum total of column (3), (4) and (5).

Column 7. Expenditure relating to entities not registered under GST:

Expenditure incurred towards goods or services or both with unregistered entities should be reported here.

The revised Guidance Note on Tax Audit?– Para: 82.14: States that:

“the total of columns(6) and (7) tallies with the amount mentioned in column (2)?except?to the extent of expenditure / allowance mentioned in Para?82.2 and 82.3.”

Para: 82.2:?States: Depreciation, bad debts; need not be reported in Column (3) to (7); and

Para: 82.3: States: Expenditure incurred which are neither considered as a supply of goods nor as supply of services by the GST Acts, need not be reported in columns (3) to (7).?For e.g. salaries & allowances,

Other points:

1.?????The head wise expenditure details need not be given.

2.?????In case branches are there under same GSTIN, the figures of branches have to be consolidated and furnished.?

3. Transactions which are not Supply of Services or supply of Goods as per Schedule III of CGST Act, 2017 need not be given. For example, Salary.

All such type of expenditure which are covered under schedule III are not required to be reported under clause 44.