Tax audit for AY 2026-27: Key changes in Form 3CD you should know before 30 September deadline

If you are filing an income tax return for AY 2026-27 and are covered by a tax audit, this must be completed by 30 September. However, the ITR filing deadline is 31 October 2026.

Here’s what you need to know about the key changes in the tax audit forms for AY 2026-27.

Siddharth Maurya, Managing Director, Vibhvangal Anukulara, mentioned that the main tax audit forms are Forms 3CA, 3CB and 3CD.

“Form 3CD is submitted along with either Form 3CA or Form 3CB and provides the required particulars of the tax audit,” he added.

Maurya said that an audit of an entity's accounts is required if the annual accounts exceed ₹ 1 crore. The limit is extended to ₹ 10 crore if cash receipts and cash payments are within 5% of the total. An audit is also required if gross receipts exceed ₹ 50 lakh.

For AY 2026-27, Maurya said the overall tax audit framework remains the same. Forms 3CA, 3CB and 3CD continue to apply. However, amendments to Form 3CD effective from April 2025 need to be complied with.

These cover reporting of MSME payments, Section 43B liabilities, loans and deposits, specified expenditure and share buy-backs.

The main modifications to Form 3CD concern Clauses 12, 19, 21, 22, 26 and 31. Clauses 28 and 29 have been removed. Clause 36 has been included for the first time to report buyback of shares/deemed dividend. Reporting under Clause 22 has also been expanded to include details of transactions with MSMEs, he explained.

Isha Sekhri, Founder, Isha Sekhri & Associates LLP, explained the key changes under different clauses and sections.

Clause 22 now requires a three-way bifurcation: the total amount payable to micro or small enterprises under Section 15 of the MSMED Act, the amount paid within the prescribed time, and the amount unpaid and therefore inadmissible for the year.

Clause 26 has also been modified. It excludes Clause (h) from the general Section 43B provisions and replaces “allowed” with “allowable”. MSME payments must fall within the MSMED Act’s 15/45-day window to be deductible in the year of accrual, unlike other Section 43B items that get relief if paid before the ITR due date.

Taxpayers need to track vendor-wise MSME status and payment dates and reconcile the MSME ledger with Form 3CD.

Clause 21(a) has been broadened so that expenditure for a purpose that is an offence or prohibited by law - whether Indian or foreign - must now be disclosed.

A new row also captures expenditure incurred specifically to settle proceedings for contravention of central Government-notified laws. This is particularly relevant for global companies.