10 Major Changes in Form 3CD for FY 2025-26: A Complete Guide for Taxpayers

Form 3CD is an important part of the tax audit process in India. It contains detailed information about a taxpayer’s financial statements, expenses, deductions, loans, deposits, and other tax-related reporting requirements.

For FY 2025-26 (AY 2026-27), the tax audit reporting requirements highlighted in the revised Form 3CD require businesses and tax professionals to review their records carefully before filing tax audit reports.

In this blog, BSA & Company, Chartered Accountants, explains 10 important changes and reporting areas highlighted in our compliance alert, along with the practical steps businesses should take before completing their tax audit.

What is Form 3CD?

Form 3CD is a statement of particulars required to be furnished along with a tax audit report under Section 44AB of the Income-tax Act, 1961, in applicable cases.

It helps tax auditors report important financial and tax information, including:

• Business income and expenses.
• Tax deductions and disallowances.
• Payments to Micro and Small Enterprises.
• Loans, deposits and specified advances.
• GST-related expenditure.
• Other statutory reporting particulars.

Accurate reporting in Form 3CD is essential for maintaining proper tax compliance and reducing the risk of errors during assessment.

10 Major Changes in Form 3CD for FY 2025-26

1. Clause 12 – New Section 44BBC reporting

The infographic highlights the inclusion of reporting of presumptive income under Section 44BBC for eligible non-resident cruise-ship operators.

What businesses should do:

Taxpayers and tax auditors should review whether the provisions of Section 44BBC apply to the business and ensure that the relevant income particulars are appropriately considered for tax audit reporting.

2. Clause 19 – Four deductions removed

The revised Form 3CD highlighted in the document omits references to Sections 32AC, 32AD, 35AC and 35CCD.

These provisions relate to deductions that are no longer applicable in the manner previously reported.

Practical implication:

Tax auditors should update their tax audit checklist and ensure that obsolete reporting references are not carried forward without review.

3. Clause 21 – Settlement expenditure reporting

The infographic identifies a reporting requirement relating to expenditure incurred to settle proceedings concerning contraventions under notified laws.

Why it matters:

Businesses may incur legal settlement costs, penalties, or other related expenditure. Such payments should be examined carefully to determine the appropriate tax treatment and reporting requirements.

Maintain supporting documents such as:

• Settlement agreements.
• Legal notices and orders.
• Payment records.
• Details of the underlying proceedings.

4. Clause 22 – MSME payment reporting

Reporting of amounts payable to Micro and Small Enterprises is an important area of tax audit compliance.

The infographic highlights revised reporting of amounts payable to Micro and Small Enterprises, including interest inadmissible under Section 23 of the MSMED Act.

What businesses should review:

• Vendor classification as Micro, Small or Medium Enterprise.
• Outstanding balances payable to eligible enterprises.
• Payment dates and credit periods.
• Applicable interest and tax disallowance.
• Reconciliation of trade payables with books of accounts.

Businesses should maintain accurate MSME vendor data to support the tax audit report.

5. Clause 26 – Section 43B reporting

The infographic highlights updated reporting of liabilities under Section 43B, including information relevant to disallowance under Section 43B(h).

Section 43B(h) is particularly relevant to payments due to Micro and Small Enterprises, subject to the applicable statutory conditions.

Action required:

Businesses should reconcile outstanding MSME dues, payment dates and applicable reporting details before finalising the tax audit.

6. Clause 28 – Reporting omitted

The document states that the earlier reporting requirement under Clause 28 has been omitted from the amended Form 3CD.

Practical implication:

Tax professionals should use the applicable Form 3CD format for the relevant assessment year and remove outdated checklist items where appropriate.

7. Clause 29 – Angel Tax reporting omitted

The infographic highlights the omission of the earlier Clause 29 reporting requirement relating to Section 56(2)(viib).

This provision was associated with the reporting of certain share premium transactions and the so-called angel tax provisions.

What businesses should do:

Companies should ensure that their tax audit working papers reflect the applicable law and reporting requirements for the relevant year.

8. Clause 31 – Loan and deposit disclosures

The infographic highlights expanded reporting of loans, deposits and specified advances, along with standardised transaction nature codes.

This is an important area because tax audit reporting must be supported by proper records of financial transactions.

Businesses should maintain:

• Loan and deposit registers.
• Bank statements.
• Party-wise transaction details.
• Repayment schedules.
• Details of the mode of receipt and repayment.
• Supporting agreements, wherever applicable.

These records help auditors evaluate compliance with the provisions relating to loans and deposits, including Sections 269SS and 269T, wherever applicable.

9. Clause 36B – Share buyback reporting

The document highlights a new reporting requirement relating to share buyback transactions, including relevant proceeds and acquisition cost details.

Why this matters for companies:

Companies undertaking share buybacks should maintain complete transaction records, including:

• Buyback date.
• Number of shares bought back.
• Buyback consideration.
• Original acquisition cost.
• Relevant supporting documents.

The tax treatment and reporting requirements should be reviewed based on the applicable law for the relevant financial year.

10. Clause 44 – GST expenditure reporting

GST-related expenditure reporting continues to be an important part of Form 3CD.

Businesses should reconcile their GST-related expenses with their books of accounts and relevant GST records.

Key areas to review:

• GST paid on expenses.
• Input tax credit claimed.
• Input tax credit not claimed.
• GST payable and paid.
• Expense ledgers and tax invoices.
• Reconciliation with GST returns.

Proper reconciliation helps ensure accurate reporting and reduces discrepancies during tax audit.

Important Tax Audit Deadline for FY 2025-26

The uploaded compliance alert mentions:

30 September 2026 – Tax audit reports for FY 2025-26, subject to applicable exceptions.

Taxpayers should verify the applicable statutory deadline and any extensions or category-specific exceptions before filing.

Action Required Before Filing Form 3CD

Businesses should take the following steps:

1. Review the revised Form 3CD clauses applicable to FY 2025-26.
2. Update the tax audit checklist.
3. Reconcile MSME dues and payment dates.
4. Review loans, deposits and specified advances.
5. Check settlement expenditure and share buyback transactions, wherever applicable.
6. Reconcile GST-related expenditure.
7. Ensure accurate and complete reporting in Form 3CD.
8. Keep all supporting documents ready for the tax auditor.

Why Accurate Form 3CD Reporting Matters

Proper tax audit reporting helps businesses maintain:

• Accurate financial and tax records.
• Better transparency.
• Stronger compliance controls.
• Reduced risk of reporting errors.
• Improved readiness for assessment and scrutiny.

Tax audit is not merely a filing exercise. It is an opportunity to review the financial and statutory compliance of a business.

Conclusion

The 10 changes highlighted in the Form 3CD compliance alert for FY 2025-26 demonstrate the importance of keeping tax audit working papers updated.

From MSME payments and Section 43B reporting to loans, deposits, share buybacks and GST expenditure, businesses should review relevant transactions and maintain complete documentation before finalising the tax audit report.

If you need assistance with tax audit, Form 3CD reporting, GST reconciliation, or financial compliance, consult a qualified Chartered Accountant.

BSA & Company – Chartered Accountants

Siliguri (Head Office) | Gangtok, Sikkim (Branch)

Your Compliance. Our Expertise. A Stronger Tomorrow.

Disclaimer: This blog is based on the accompanying compliance alert and is intended for general informational purposes. Tax laws, reporting requirements and deadlines should be verified against the applicable official notifications, legislation and assessment-year requirements before filing.