CBDT Updates Form 3CD: New Disclosure Rules for MSME Payments, Share Buybacks, and Loans [Read Notification]

The Ministry of Finance, through the Central Board of Direct Taxes (CBDT), has issued Notification No. 23/2025 dated 28th March 2025, announcing the Income-tax (Eighth Amendment) Rules, 2025. The amendments bring significant updates to Form 3CD, which forms part of the tax audit report filed under Section 44AB of the Income Tax Act, 1961.

The notification focuses on improving the quality of disclosures related to MSME payments, buyback of shares, and loan/deposit transactions, in line with recent legislative changes and compliance expectations.

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Key Changes

Clause/Section	Amendment Summary
Clause 22	Substituted to report MSME-related payments under the MSMED Act, including overdue amounts.
Clause 36B	Newly inserted to disclose share buyback receipts and corresponding cost of acquisition.
Clause 31	Modified to require nature codes for each loan, deposit, and repayment using a dropdown classification.
Clause 19	Deleted outdated entries: 32AC, 32AD, 35AC, and 35CCB.
Clause 21	Added a row to capture expenditure incurred to settle legal proceedings initiated under notified laws.
Clauses 28 & 29	Omitted entirely.
Clause 26	Language refined for consistency and clarity.

MSME Payment Disclosure - Clause 22

A key highlight is the revised reporting requirement for payments to Micro and Small Enterprises under the MSME Development Act, 2006. Auditors must now disclose:

• Interest disallowed under Section 23 of the MSMED Act.
• Total payments due during the previous year under Section 15.
• Breakup of:
  • Amounts paid within the allowable time (deductible).
  • Amounts not paid in time (inadmissible as per Section 43B(h)).

New Clause on Buyback of Shares - Clause 36B

The new clause requires disclosure if the assessee received any proceeds from the buyback of shares under Section 2(22)(f) of the Act. If applicable, the following must be reported:

• Amount received.
• Cost of acquisition of the bought-back shares.

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Standardised Reporting for Loans & Deposits - Clause 31

The format now includes dropdown-based codes to classify transactions such as:

Code	Nature of Amount
A	Cash payment
B	Cash receipt
C	Payment via non-account payee cheque
D	Receipt via non-account payee cheque
E	Transfer of asset
F	Transfer of liability
G	Conversion of asset
H	Conversion of liability
I	Journal entry – Debit
J	Journal entry – Credit
K	Any other mode – Debit
L	Any other mode – Credit

These codes aim to standardize audit reporting and reduce ambiguity.

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Effective Date

The amendments will be applicable from 1st April 2025 and will impact tax audit reports for the financial year 2024–25 (assessment year 2025–26).

To Read the full text of the Notification CLICK HERE

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