Key Amendments in Form 3CD
for AY 2025-26

The Central Board of Direct Taxes has introduced amendments to some clauses of Form 3CD in the Eighth Amendment Rules, 2025. These amendments will come into effect from 1 April 2025 and are discussed below:

Clause 12: Addition of Section 44BBC

•  Section 44BBC is a presumptive taxation scheme that applies to non-resident cruise ships to calculate their taxable profit.

•  This section says that 20% of the profit cruise ships make by carrying passengers to and from India will be considered as their taxable profit in India.

Clause 19: Omission of Section 32AC, 32AD, 35AC,35CCB

•   Section 32AC: Deduction for Investment in New plant and machinery

•   Section 32AD: Deduction for investment in underdeveloped areas

•  Section 35AC: Deduction for expenditure related to health, education, infrastructure and environmental sustainability

•   Section 35CCB: Deduction for expenditure on agro-based program

    The reason for the omission of these sections is that the availability period has expired for these sections.

Clause 21: Reporting of expenses for settling legal issues for non-compliance with the law

The amendment states that the business needs to report the expenses related to resolving legal cases, which will help the Income Tax department determine whether the business is complying with the tax notified by the government, like FEMA, SEBI, etc.

Clause 22

The amendment to this clause ensures that small and micro enterprises receive timely payments from big enterprises. According to Section 15 of the MSMED Act, if there exists a written agreement between the two, payment must be made to the micro and small enterprises within 45 days. If there is no written agreement, payment must be made within 15 days.

According to the recent amendment in clause 22, the company must report detailed disclosure of payments made to micro and small enterprises in the manner discussed below:

•   Total amount payable to MSME under Section 15

•    Breakup of timely and delayed payments

•   Interest inadmissible under Section 23

Similar to the previous year`s amendment, the inadmissibility deduction of interest paid on delayed payments to MSMEs under section 23 of the MSMED Act remains the same.

Clause 26

•   The words, brackets and letters " clause (a), (b), (c), (d), (e), (f) ,(g) of" shall be omitted. The expenses covered under these clauses are as follows:

1.  Taxes, duties, cess or fees to be submitted to the government

2.  Employer contribution to the Employee Funds, like Provident Fund, Superannuation, gratuity, etc.

3.  Certain allowances for bad debts

4. Interest on loans (from Public financial institutions, State financial institutions or State industrial investment corporation)

5.  Interest on loan from Non-Banking and Financial Companies (NBFC)

6.  Payments for leave encashment

7.  Payment to the Indian railway for the use of its assets

The Eighth Amendment rules omit the letter codes only. The auditor still checks if the expenses under these letter codes are allowable for deduction.

•   In sub clause A, the word `allowed` shall be substituted with the word, `allowable`.

This means that earlier, the auditor checks if the above-said expenses have been claimed in the previous year. But now, the auditor will check if the payments are paid until the return filing deadline and therefore, eligible for deduction.

•   In sub clause B, for the words, "and was", the words, brackets, letters and figures, "and (for clauses other than clause (h) of section 43B) was", shall be substituted.

Earlier, the auditor checked whether the expenses were paid by the return filing deadline to be claimed as a deduction in the earlier year. But now, this part excludes payments to micro and small businesses covered under clause (h) of section 43B.

Clauses 28 and 29

In the Eighth Amendment Rules, 2025, clauses 28 and 29 have been omitted.