Form 3CD tax audit report

The Form 3CD Tax Audit screen lays out the clause-wise statement of particulars that a tax auditor completes under section 44AB, for one company and one fiscal year, and fills the clauses that xMatix can answer from its own records. The tax audit comes after the year is closed: the ledger, the asset blocks and the TDS register for the year should be final before you read the report. The clauses that no system can answer, such as the books the auditor examined, are typed by the auditor and stored with the report's clause list.

Overview

Form 3CD has two parts. Part A holds the assessee's general particulars (name, address, PAN, registrations, the year). Part B holds the audit particulars, clauses 9 to 44. In xMatix the report is computed live every time you open it and is never saved as a copy, so it always agrees with the current ledger. What is saved is the clause list and the typed answers, on a Statement Data Entry record for that company and fiscal year.

The clause list is data, not a fixed form. When a clause is inserted, omitted or reworded, you change the list on the Statement Data Entry record and the report follows on the next refresh. A new record starts from xMatix's starter list of 50 clauses (1 to 44 with their lettered sub-clauses; clause 36 is not included, 36A is).

When to use it

• To prepare the figures the auditor needs for clauses 18, 34 and 40 straight from the books.
• To check that the company master holds the particulars Part A prints (name, billing address, PAN, GSTIN).
• To keep the auditor's typed answers in one place, published and locked once agreed.

The report is not a filing. xMatix does not submit Form 3CD to the income-tax portal; the auditor files it there.

How xMatix handles it

The report reads the clause list from the Statement Data Entry record of type Form3CDAudit for the fiscal year's company and the fiscal year. Each clause carries an optional computation key. A clause whose key names a computation is answered by xMatix; every other clause shows the auditor's typed answer, or nothing.

Clauses xMatix computes:

When a Part A field is blank on the company, the answer reads Not recorded on the company master, so you can tell a blank master from a clause that was not computed.

Clause 18 in detail. For each Asset Block of the company and fiscal year with a usable Depreciation Rate, xMatix applies the rate to the block's Opening Wdv and lists the result as "… @ n% (Income-tax Act)". A rate can be stored as a fraction (0.15) or a percentage (15); both are read as 15%. A block with no rate, or a rate of 100% or more, is skipped. Book depreciation is the year's credits to the company's Accumulated Depreciation GL accounts. Three closing rows show the Income-tax total, the books total and the difference. An Asset Block has no additions or deductions, so the Income-tax figure is depreciation on the opening written-down value only: the year's additions and the 180-day half-rate rule are not applied, and you must adjust for them by hand. When no blocks exist for the year, the first row reads "No asset blocks defined for this fiscal year".

Clause 34 in detail. For each nature (TDS or TCS) and section, the detail rows show the tax deducted or collected, the amount deposited, the shortfall when the two differ, and the amount on which tax was deducted. Only rows with status Deposited, which a deposited TDS challan sets, count as deposited. The totals at the end repeat the three figures for all sections. Every TDS row of the year is counted as deducted, including rows that were later Reversed when a bill's TDS was re-posted, so a year with re-posted TDS shows a higher "deducted" figure and a shortfall that is not real. Check the shortfall against the register before you rely on it.

Clause 40 in detail. The rows are Total turnover / gross receipts (the P&L's total income, which includes other income), Total expenditure, Profit before tax, Net profit for the year and, when income is not zero, Net profit as % of turnover. Only the current year is shown; the preceding year's figures the clause also asks for are not in the report.

Clauses declared for a computation that does not exist yet. Clauses 21, 22, 23 and 44 carry computation keys that xMatix does not compute. They behave like manual clauses: they show the typed answer, or nothing.

Typed answers against computed ones. A computed answer always wins over a typed one, so the report cannot drift from the books. The one exception in the starter list is clause 4: because the company holds only a GSTIN, a typed answer replaces the computed one (to add excise, customs or other registrations), and the report adds "(entered, overriding the computed value)" after it.

Prerequisites

• The fiscal year belongs to a company. A fiscal year with no company gives "Fiscal year has no company; cannot generate the Form 3CD report."
• A Statement Data Entry record of type Form3CDAudit exists for that company and fiscal year, with its clause list saved. Without it the report has no clauses and shows No data for this period. See Step 2.
• The company record has its name, Billing Address, PAN and GSTIN.
• For clause 18: an Asset Block per block for the year, with Block Code, Label, Depreciation Rate and Opening Wdv. See Fixed assets.
• For clause 34: the year's TDS deductions posted and their challans deposited. See TDS & TCS.

Procedure

Step 1 — Open the report

1. In the Financials List app, which holds the Finance statement screens, open Form 3CD Tax Audit.
2. Choose the Fiscal year. Choose the Company too when your tenant has more than one; the report always uses the company the fiscal year belongs to.
3. The grid Form 3CD — Tax Audit Report shows Part A — Particulars of the assessee and Part B — Clause-wise particulars. Each row reads "clause number — title". The Answer column holds text answers and the Amount column holds figures. A clause with detail rows can be expanded; use Expand all or Collapse all for the whole report.

A clause with no answer has an empty Amount, not 0.00, so an unanswered clause never reads as "computed nil". The Period, Branch and search controls shown on the screen do not change the Form 3CD figures; the report always covers the whole fiscal year for the whole company. Clauses whose part is neither A nor B are listed under Unclassified clauses.

Step 2 — Create the clause list and enter answers

The Form 3CD screen itself is read-only: it has no button to enter answers. Answers are kept on a Statement Data Entry record. That entity is in no seeded app, so an administrator adds it to an app first (see Configuration).

1. Open Statement Data Entry and click New.
2. Set Statement Type to Form3CDAudit, then the Partner Account (the company) and the Fiscal Year. The fiscal year must belong to the same company.
3. Click the Answers field to open the Statement answers editor. With no clauses saved yet, the editor fills the clause list from the starter list.
4. On the Answers tab, each clause is a row with an input that matches its type: text, number, date, a Yes/No switch, a list, or a table. Clauses xMatix computes are tagged Computed; anything you type there is ignored by the report, except on clause 4. A table answer shows "No rows — edit on the JSON tab" and is entered on the JSON tab.
5. Click Apply, then save the record. The clause list is saved with the answers.
6. Refresh the Form 3CD screen. The typed answers appear against their clauses.

Leave Branch, Business Unit and the other narrowing fields empty. The report looks for a record that covers the whole company, and a record narrowed to a branch never answers it.

Step 3 — Add, reword or remove a clause

1. Open the Statement Data Entry record and click Edit, then open the Answers field.
2. On the Questions tab, change a clause's Label or Section (A or B), add one with Add question, or remove one with Delete this question (its answer goes with it). The Key is the clause number as printed, for example 29A. Keys must be unique.
3. Click Apply and save. The report shows the change on the next refresh, in clause-number order within each part.

A new clause you add has no computation key, so it is answered by typing.

Step 4 — Publish the agreed answers

1. Open the Statement Data Entry record and click Publish.
2. xMatix checks that every question marked Required has an answer, stamps who published and when, and locks the record. Its Status becomes Published.

A published record cannot be edited or deleted, and its answers keep feeding the report.

Step 5 — Amend after publishing

1. Open the published record and click Amend (supersede).
2. xMatix makes a new Draft copy with the same clauses and answers, named "… (amended)", and marks the original Superseded. Edit the draft, then publish it again.

The report always reads the live record: a Draft in preference to a Published one, never a Superseded one.

Step 6 — Print or export

Use Print, or Export › Export PDF or Export Excel (.xlsx), to give the auditor a copy. Where statement subscriptions are enabled, Subscribe emails the report as a PDF on a schedule. See Financial statements.

Fields

The Form 3CD grid:

The Statement Data Entry record:

Clause properties on the Questions tab: Key (clause number), Label (title), Section (A or B), Type (Text, Number, Date, Yes / No, Choice, Table (repeating rows)) and Required.

Business rules

• The report is recomputed on every open and refresh; nothing on it is saved.
• Clause order is part first, then the leading number of the clause key, so 29A follows 29 and 9 comes before 10.
• Each computation runs once, however many clauses carry its key.
• A computed answer beats a typed one unless the clause allows an override (clause 4 in the starter list).
• An answer key must match a clause on the record: "Unknown question key(s): … Add the question first, or correct the key."
• Deleting a clause deletes its answer.
• Publishing is refused while a required clause is unanswered. Publish and Amend (supersede) are the only ways to change a published record.

Example

A company's fiscal year 2026-27 ends on 31 Mar 2027. The finance lead creates a Statement Data Entry record: Statement Type Form3CDAudit, the company, FY 2026-27. In the answer editor they type answers for clause 5 (Status: Company), clause 8 (the clause of section 44AB) and clause 11 (books maintained), click Apply and save.

On Form 3CD Tax Audit for FY 2026-27, Part A shows the company name, address and PAN, "Yes — GSTIN: …" for clause 4, "01 Apr 2026 to 31 Mar 2027" for clause 6 and "2027-28" for clause 7, with the typed clause 5 and 8 answers between them. In Part B, clause 18 shows two blocks: Plant and machinery at 15% on an opening WDV of 20,00,000 (3,00,000) and Furniture at 10% on 4,00,000 (40,000). Income-tax total 3,40,000; books 2,90,000; difference 50,000. The company bought a machine in October, so the auditor adds its half-rate depreciation in the workpapers. Clause 34 shows 194C and 194J deducted and fully deposited. Clause 40 shows turnover, expenditure and net profit. After the auditor agrees the answers, the finance lead clicks Publish on the record and exports the report to PDF.

Training

Practice exercise

In a sandbox where Statement Data Entry is on an app menu:

1. Create a Statement Data Entry record for a company and its fiscal year with Statement Type Form3CDAudit. Type "Company" as the answer to clause 5, click Apply and save.
2. Open Form 3CD Tax Audit for that fiscal year.

Expected result: Part A lists clauses 1 to 8a, clause 5 reads "Company", and clauses 1 to 4, 6 and 7 are filled from the company and the year. Clear the company's PAN and refresh: clause 3 reads "Not recorded on the company master".

Quick reference

• No Statement Data Entry record for the company and year means an empty report.
• Computed clauses are 1, 2, 3, 4, 6, 7, 18, 34 and 40; the rest are typed.
• Clause 18 ignores the year's additions and the 180-day rule; adjust by hand.
• Clause 34 counts reversed TDS rows as deducted; check the shortfall.
• Clause 40 has no preceding-year column.
• Table answers are entered on the JSON tab.
• Publish locks the answers; Amend (supersede) starts a new draft.

Permissions

• The screen needs the Form 3CD Tax Audit page permission and the Form 3CD Tax Audit server action on Fiscal Year. The seeded standard profiles have both.
• Reading and saving answers from a report uses the Fiscal Year actions Get Statement Questions, Save Statement Answers and Save Statement Questions.
• On the record, New, Edit and Delete follow the profile's access to Statement Data Entry; Publish and Amend (supersede) are server actions granted on the profile's Actions tab.
• The report shows figures from the ledger, the asset blocks and the TDS register to anyone who can open it, so grant it to the people who prepare the audit. See Security profiles.

Configuration

• Make the answer records reachable. Statement Data Entry is in no seeded app. Go to Setup → Design Studio → Apps, open the Finance app and use Manage Items to add it (see Create an entity).
• Company particulars. Name, Billing Address, PAN and GSTIN on the company record feed clauses 1 to 4.
• Asset blocks. One Asset Block per Income-tax block for each fiscal year, with rate and opening WDV, feeds clause 18. The Asset Block entity is also in no seeded app; add it the same way.
• GL account types. Book depreciation for clause 18 reads GL accounts of type Accumulated Depreciation for the company. See GL accounts.
• The clause list. Each company and year keeps its own list. A clause is added, reworded or removed on the record's Questions tab, with no release needed.

Common problems

The report says "No data for this period"

No Statement Data Entry record of type Form3CDAudit with a saved clause list exists for the fiscal year's company and year, or the record is narrowed to a branch or another axis. Create the record as in Step 2 and leave the narrowing fields empty.

"Fiscal year has no company; cannot generate the Form 3CD report."

The fiscal year is shared rather than owned by a company. Pick the company's own fiscal year.

"This fiscal year belongs to a different company than the record."

On the Statement Data Entry record, the fiscal year and Partner Account disagree. Pick a fiscal year of the same company.

The answer I typed for clause 18, 34 or 40 does not appear

Computed clauses ignore typed answers. Correct the source data (asset blocks, TDS register or ledger) instead, or record the adjustment in the auditor's workpapers.

Clause 34 shows a shortfall although every challan is deposited

Rows reversed when a bill's TDS was re-posted still count as deducted. Compare the shortfall with the TDS register, leaving out Reversed rows.

"These answers are published and locked. Supersede the record to amend them."

The record is Published. Click Amend (supersede) and edit the new draft.

"Cannot publish — n required question(s) unanswered: …"

Answer the listed clauses, or clear Required on them on the Questions tab, then publish.

Common questions

Is the Form 3CD report saved anywhere?

No. The report is rebuilt from the clause list, the typed answers and the books every time you open it, so it never disagrees with the ledger. The parts that are your own work, the clause list and the typed answers, are saved on the Statement Data Entry record. When you need a fixed copy for the file, export the report to PDF after publishing the answers. Later postings into the year will change the computed clauses on screen, but your exported copy and published answers stay as they were.

Why is clause 36 missing?

Clause 36 asked about dividend distribution tax, which was abolished, and clause 36A took its place. The starter list therefore goes from 35 to 36A. If you need clause 36 for an older year, add it on the Questions tab with key 36 and section B, then type its answer.

Can xMatix fill clauses 21, 22, 23 or 44?

Not at present. They carry computation keys, but nothing computes them, so they behave like any typed clause. The MSME Delayed Payments and Related Party Disclosure statements in the Finance app hold much of what clauses 22 and 23 ask for, and the auditor can use them to type the answers.

What happened to the Form 3CD Clause records?

Earlier, the clause list was held as Form 3CD Clause records. Those records have been retired. Each company's clause list now lives on its Statement Data Entry record, so a change of law is an edit, not an upgrade. The Form 3CD Clause reference describes the retired entity.

Related topics

• Financial statements
• Fixed assets and Depreciation
• TDS & TCS and TDS challans
• Fiscal years
• Form 3CD Clause reference