KCAS STUDY CIRCLE · SPECIMEN DRAFTING AID

Management Representation Letter

Complete Form No. 3CD — Tax Audit under Section 44AB

[Client Name] Pvt. Ltd.

[Registered Office Address, City, State, PIN]

Date:

To,

[Auditor Firm Name], Chartered Accountants

[Firm Address, City, State, PIN]

Dear Sir/Ma’am,

We are required to get our accounts audited under section 44AB of the Income-tax Act. We have prepared the particulars to be disclosed in Form No. 3CD (including the Annexures thereto) and submitted the same for the purpose of your tax audit. With reference to the financial statements of the entity for the year ended 31 March [____], as submitted to you for the purpose of audit under section 44AB, this representation letter is provided in connection with your tax audit for A.Y. [______].

We confirm, to the best of our knowledge and belief, the following representations:

[Items marked in red are drafted with additional, session-verified detail on Form 3CD clauses 21(d), 22, 26, 29–29B, 30 and 31(a)–(e) — covering sections 185–189, 102–106 and 37(2)(g) of the Income-tax Act, 2025 (erstwhile ss.269SS–269T, 68–69D and 43B(h)).]

GENERAL, REGISTRATION & BASIC PARTICULARS  ·  Clauses 1–8A

1.  Our Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) are [PAN] and [TAN] respectively. We do not hold any other PAN or TAN.
2.  We have not opted for taxation under section 115BAA/115BAB/115BAC/115BAD/115BAE of the Act, except as disclosed under Clause 8A of Form No. 3CD.
3.  There is no change in the nature of business or profession carried on by us since the last date of the preceding year, except as disclosed under Clause 10(b) of Form No. 3CD.
4.  Registration numbers or identification numbers allotted to us to pay indirect taxes have been disclosed under Clause 4 of Form No. 3CD; we confirm that we are not registered under any indirect-tax law other than as so disclosed.
5.  We are liable to pay indirect taxes to the extent specified under Clause 4 of Form No. 3CD, and we have taken registration under the relevant laws, the registration/identification numbers for which are mentioned thereunder.

BOOKS OF ACCOUNT, ACCOUNTING POLICIES & ICDS  ·  Clauses 11–15

6.  We have maintained books of account in respect of each of our business locations, kept at the registered/administrative office(s) as disclosed under Clause 11(b) of Form No. 3CD.
7.  There is no change in the method of accounting employed during the year as compared to the method employed in the immediately preceding year, except as disclosed under Clause 13(b).
8.  There is no effect on our profit on account of the Income Computation and Disclosure Standards (ICDS), except the adjustments reported under Clause 13(e); the disclosure furnished under Clause 13(f) is in accordance with the applicable ICDS and is true and correct.
9.  There is no deviation in the method of accounting employed from the accounting standards prescribed under section 145, except as mentioned under Clause 14(b); the amount so reported is true and correct.
10.  There is no deviation in the method of valuation of closing stock from the requirements of section 145A, other than as disclosed under Clause 14.
11.  No capital asset has been converted into stock-in-trade during the year, except as disclosed under Clause 15.

INCOME NOT CREDITED, PERSONAL EXPENDITURE & DEPRECIATION  ·  Clauses 16–20

12.  We have not received or earned any amount that is not credited to the profit and loss account, in respect of items within the scope of section 28, proforma credits/drawbacks/refunds admitted as due, escalation claims accepted during the year, any other item of income, or capital receipts, except as disclosed under Clause 16.
13.  No land or building has been transferred during the year for a consideration less than the value adopted or assessed by a State Government authority, except as disclosed under Clause 17.
14.  No personal expenditure has been debited to the profit and loss account; all expenditure charged is either on the basis of contractual obligation or generally accepted business practice, and is incurred wholly and exclusively for business purposes.
15.  The particulars of fixed assets and depreciation thereon disclosed under Clause 18 of Form No. 3CD are correct; the cost of acquisition stated is net of CENVAT/GST credit where such credit has been availed, and inclusive of taxes where it has not been availed.
16.  No amount has been paid to an employee as bonus or commission for services rendered where such sum was otherwise payable as profits or dividend, except as disclosed under Clause 18/32(a).
17.  No other contribution has been received from employees except as disclosed under Clause 20(b) of Form No. 3CD; the details so disclosed are true and correct.

DISALLOWANCES UNDER SECTIONS 40 & 40A  ·  Clause 21

18.  We have not debited any expenditure of a capital or personal nature to the profit and loss account, except as disclosed under Clause 21(a).
19.  No expenditure has been incurred on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party.
20.  No expenditure has been incurred at clubs by way of entrance fees, subscriptions, or cost of services and facilities used, except as disclosed under Clause 21(a).
21.  No expenditure has been incurred during the year by way of penalty or fine for violation of any law, or for any purpose which is an offence or is prohibited by law, except as disclosed under Clause 21(a).
22.  No amount is inadmissible under section 40 of the Income-tax Act, except as disclosed under Clause 21(a)/(b).

Section 40A(3) — Cash Payments Above the Prescribed Limit  ·  Clause 21(d)

[Session deep-dive — detailed representation]

23.  All payments relating to expenditure covered under section 40A(3), read with Rule 6DD, have been made either by an account-payee cheque drawn on a bank or by an account-payee bank draft; no payment has been made in cash, or otherwise than by such modes, in excess of Rs. 10,000 to any one person in a day (Rs. 35,000 in the case of plying, hiring or leasing of goods carriages), in contravention of section 40A(3), except as disclosed under Clause 21(d)(A) of Form No. 3CD.
24.  Where any such payment stands disclosed as a violation, the corresponding amount has been correctly identified as inadmissible and added back in the computation of income; we confirm that no payment falling within a Rule 6DD exception has been erroneously included in this disclosure.
25.  No sum has been paid which is inadmissible under section 40A(9); no provision for gratuity inadmissible under section 40A(7), and no liability of a contingent nature, has been debited to the profit and loss account, except as disclosed under Clause 21(e)/(f)/(g).
26.  No amount is inadmissible under the proviso to section 36(1)(iii), except as disclosed under Clause 21(i).

MSME Payment Compliance — Section 37(2)(g)  ·  Clause 22

(erstwhile section 43B(h), Income-tax Act 1961)

[Session deep-dive — detailed representation]

27.  We have identified all suppliers registered as micro or small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”), based on Udyam Registration certificates and/or self-declarations, and such identification has been applied prospectively from the date of each supplier’s registration.
28.  Amounts payable by us to such micro and small enterprises have been paid within the time limit specified under section 15 of the MSMED Act (15 days without a written agreement, or the agreed period capped at 45 days where a written agreement — including terms recorded in a purchase order or accepted invoice — exists), except for the amount disclosed as inadmissible under section 37(2)(g) in Clause 22(iii)(b).
29.  The disallowance under section 37(2)(g) has been correctly applied irrespective of whether the goods procured from such enterprises were sold during the year or remain in closing stock as at the year-end.
30.  no waiver or agreement with any supplier affects this position, since section 16 of the MSMED Act operates notwithstanding any contrary agreement.
31.  Dues to medium enterprises, traders, and suppliers not registered under the MSMED Act have not been treated as falling within section 37(2)(g)/Clause 22; supplier classification has been refreshed during the year against the investment and turnover limits in force.

Related Party, Deemed Profits & General Statutory Dues

Clauses 23–25

32.  There is no related party under section 40A(2)(b), and no payment has been made to any person specified thereunder, except as disclosed under Clause 23 of Form No. 3CD; all such payments have been fully disclosed.
33.  No amount is deemed to be profits and gains under section 32AC, 33AB, 33ABA or 33AC, except as disclosed under Clause 24.
34.  No amount of profit is chargeable to tax under section 41, except as disclosed under Clause 25; the amount so disclosed has already been credited to the profit and loss account and offered to tax.

Section 43B(a)–(f) — General Statutory Liabilities  ·  Clause 26

[Session deep-dive — detailed representation]

35.  There is no liability that pre-existed on the first day of the year but was not allowed as a deduction in any preceding year under clauses (a) to (f) of section 43B, except as disclosed under Clause 26(A).
36.  The amounts disclosed under clauses (a) to (f) of section 43B have been paid on or before the due date for furnishing the return of income, except as disclosed under Clause 26(B); we confirm that this disclosure under Clause 26 does not include, and is not intended to include, any sum falling within clause (g) of section 37(2), which is separately and exhaustively disclosed under Clause 22 above.
37.  Indirect taxes such as sales tax, service tax, customs duty, excise duty, etc. collected are passed through the profit and loss account in the manner disclosed under Clause 26.

Prior-Period Items, Deemed Income & Hundi/Negotiable Instruments

Clauses 27–30

38.  The amount of CENVAT/input tax credit/GST credit availed or utilised, as disclosed under Clause 27(a), is true and correct; there is no amount credited or debited to the profit and loss account as a prior-period item except as disclosed under Clause 27(b).
39.  No amount is received as an advance or otherwise in the course of negotiations for transfer of a capital asset that is forfeited and taxable under section 56(2)(ix); accordingly, no disclosure is required under Clause 29A, except as otherwise disclosed.

Section 56(2)(viib) — Share Premium in Excess of FMV  ·  Clause 29

[Session deep-dive — detailed representation]

40.  Where shares have been issued by us during the year at a premium to a resident subscriber, the consideration received does NOT / doesexceed the fair market value of such shares as determined under Rule 11UA [strike out whichever is inapplicable]; where it does, the excess has been disclosed under Clause 29 and offered to tax as income from other sources, except where a statutory exclusion applies (non-resident subscriber, venture capital fund/company, or notified class of person).
41.  No sum of money or property has been received without consideration, or for inadequate consideration, exceeding the limit specified in section 56(2)(x), and no disclosure is accordingly required under Clause 29B, except as separately disclosed, including in respect of any immovable property acquired for a consideration lower than its stamp-duty value.

Hundi / Negotiable Instrument Borrowings  ·  Clause 30

[Session deep-dive — detailed representation]

42.  We have not borrowed or repaid any amount (including interest thereon) through a negotiable instrument or on a hundi, otherwise than by an account-payee cheque or a mode specified by the Board, except as disclosed under Clause 30 of Form No. 3CD.
43.  No primary adjustment to transfer price has been made under section 92CE(1) during the year; no expenditure by way of interest or of a similar nature exceeding Rs. 1 crore, as referred to in section 94B(1), has been incurred during the year, except as disclosed under Clauses 30A/30B.

Cash Transactions — Loans, Deposits & Large Receipts/Payments

Sections 185–188, Income-tax Act 2025 (erstwhile ss.269SS/269ST/269T, Income-tax Act 1961)

[Session deep-dive — detailed representation]

44.  We have not taken or accepted any loan, deposit or specified sum of Rs. 20,000 or more, otherwise than by an account-payee cheque, an account-payee bank draft, electronic clearing system or a prescribed electronic mode, except as disclosed under Clause 31(a); any such transaction squared up during the year is included in this disclosure and has not been omitted.
45.  We have not repaid any loan, deposit or specified advance of Rs. 20,000 or more (including interest payable thereon), otherwise than by the modes stated above, except as disclosed under Clause 31(c).
46.  We have not received any repayment of a loan or deposit (in our capacity as lender/depositor) of Rs. 20,000 or more otherwise than by the modes stated above, except as disclosed under Clause 31(d)/(e).
47.  We have not received, in aggregate, Rs. 2,00,000 or more from any one person in a day, in respect of a single transaction, or relating to one event or occasion, otherwise than by a cheque, bank draft or electronic clearing system, except as disclosed under Clause 31(ba)/(bb).
48.  We have not made any payment, in aggregate, of Rs. 2,00,000 or more to any one person in a day, in respect of a single transaction, or relating to one event or occasion, otherwise than by a cheque, bank draft or electronic clearing system, except as disclosed under Clause 31(bc)/(bd).
49.  All cheques and bank drafts stated to be “account payee” in the above disclosures were, in fact, so drawn, and supporting instruments/bank narrations are available for verification.
50.  Our turnover/gross receipts did NOT / didexceed Rs. 50 crore during the immediately preceding tax year [strike out whichever is inapplicable]; where applicable, we have complied with the requirement under section 187 to offer the prescribed electronic modes of payment.

Unexplained Credits, Assets & Expenditure

Sections 102–106, Income-tax Act 2025 (erstwhile ss.68–69D, Income-tax Act 1961)

[Session deep-dive — detailed representation]

51.  All sums credited in our books during the year, whether by way of loan, deposit, share application money, share capital, share premium or any other credit, have been correctly and completely recorded; we have disclosed the identity, and where applicable the source, of every such creditor or subscriber to the best of our knowledge.
52.  For every loan or deposit accepted, and for every closely-held share capital/premium subscription from a resident, we have disclosed the source of funds represented to us by the lender/subscriber, together with such confirmation, PAN, return of income and bank statement as were available.
53.  All assets owned by the entity, including money, bullion, jewellery, virtual digital assets and other valuable articles, are duly recorded in our books; no such asset has been acquired otherwise than from disclosed and explained sources.
54.  We confirm that we do NOT hold / do holdany virtual digital assets as at the year-end [strike out whichever is inapplicable]; where held, a statement of holdings, cost of acquisition and source of funds has been furnished and disclosed in Schedule VDA of our return of income.
55.  All expenditure incurred during the year, including any large or unusual personal or family expenditure, is recorded in our books and explained by reference to disclosed income and other identified, lawful sources of funds.

TDS / TCS Compliance

Clause 34

56.  We have complied with the provisions of Chapter XVII-B/XVII-BB: all payments on which TDS provisions apply are disclosed under Clause 34(a); the amounts so reported are true and correct.
57.  Tax has been deducted/collected at source on all applicable expenditure/payments/receipts, and paid within the time allowed, except as disclosed under Clauses 21 and 34; statements of TDS/TCS have been submitted by the due dates, except as disclosed under Clause 34(b).
58.  The statements of tax deducted/collected contain information about all reportable transactions, except as disclosed under Clause 34(b); interest on TDS under Clause 34(c) has been correctly computed, provided for, and paid before finalisation of the tax audit, except as disclosed therein.
59.  Advances given to employees for expenditure on the company’s behalf are not in the nature of personal loans; accordingly, no interest perquisite is applicable for TDS under section 192.

Quantitative Details, Turnover & Other Compliance

Clauses 32, 33, 35–44

60.  There is no brought-forward loss or unabsorbed depreciation from previous years, except as disclosed under Clause 32(a); no speculation loss under section 73, and no loss under section 73A in respect of a specified business, has been incurred except as disclosed under Clause 32(c)/(d).
61.  Deductions admissible under Chapter VIA or Chapter III (ss.10A/10AA) are as disclosed under Clause 33, and fulfil the conditions specified under the applicable provisions.
62.  The quantitative details of principal items of goods traded/manufactured, as disclosed under Clause 35(a)/(b), are true and correct and are to be treated as certified by management.
63.  No trust has been created for the benefit of employees; tax on perquisites is not borne by the entity under section 192(1A) read with section 10(10CC).
64.  No cost audit, and no audit under Excise/Service Tax/VAT law, has been carried out during the year, except as disclosed under Clauses 37/38; no audit under section 72A of the Finance Act, 1994 was conducted, except as disclosed under Clause 39.
65.  We were not required to file Form 61, Form 61A or Form 61B for the year, except as disclosed under Clause 42; we are not liable to furnish the report referred to in section 286(2), except as disclosed under Clause 43.
66.  Details regarding turnover, gross profit, etc. for the year and the preceding year, as disclosed under Clause 40, are true and correct.
67.  No demand was raised on us, and no refund was issued to us, during the year under any law other than the Income-tax Act, except as disclosed under Clause 41.
68.  It is not practicable to bifurcate total expenditure under GST-registered and unregistered heads in view of the volume of transactions with different parties; we are accordingly unable to furnish the details required under Clause 44, except to the extent disclosed therein.

Closing Confirmation

69.  The information furnished by us in Form No. 3CD, and in this representation letter and its annexures, is true and correct to the best of our knowledge, information and belief.

For [Client Name] Pvt. Ltd.,

Name:

Designation (Director / Partner / Proprietor):

Place & Date:

Annexure I — Cash Transaction Compliance (ss.185–188)

This is to certify that during the year ended 31 March [____], loans, deposits and specified sums taken/accepted, and loans, deposits and specified advances repaid, were in each case through an account-payee cheque, an account-payee bank draft, electronic clearing system or a prescribed electronic mode, in accordance with sections 185 and 188 (erstwhile ss.269SS and 269T). No such amount was taken, accepted or repaid in cash or otherwise than by the modes stated above, except as otherwise disclosed under Clause 31.

We further certify that no amount of Rs. 2,00,000 or more was received or paid, in aggregate from/to any one person in a day, on a single transaction, or relating to one event or occasion, otherwise than through the modes prescribed under section 186 (erstwhile s.269ST), except as otherwise disclosed under Clause 31.

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure II — Physical Verification of Raw Material Stock

This is to certify that physical verification of raw material stock for the year ended 31 March [____] was carried out during the year. As per stock records and considering such physical verification, the principal items of raw material constituting 10% or more of total purchase value are certified as under:

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure III — Physical Verification of Finished Goods Stock

This is to certify that physical verification of finished goods stock for the year ended 31 March [____] was carried out during the year. As per stock records and considering such physical verification, the movement of principal finished goods is certified as under:

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure IV — Physical Verification of Traded Goods Stock

This is to certify that physical verification of stock of traded goods for the year ended 31 March [____] was carried out during the year. As per stock records and considering such physical verification, the movement of traded goods is certified as under:

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure V — Cash Balance Denomination Certificate

I/We hereby confirm that the cash balance as on 31 March [____] in our books of account is Rs. __________ (Amount in words: Rs. __________). The physical denomination of the aforementioned cash balance is as follows:

Total (in words): __________________________________________

I/We certify that the above particulars and the cash balance as per physical verification held as on 31 March [____] are true and correct, and reconcile with our books of account.

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure VI — MSME Supplier-wise Ageing & Disallowance

Party-wise particulars of amounts payable to micro and small enterprises, tested against the time limit specified under section 15 of the MSMED Act, are certified as under:

Total amount disallowed under section 37(2)(g) for the year: Rs. [____] (as disclosed in Clause 22(iii)(b)).

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure VII — Unsecured Loans & Share Capital: Source Declaration

Party-wise particulars of loans, deposits, share capital and share premium credited during the year, with evidence of identity, creditworthiness, genuineness and source-of-source, are certified as under:

For [Client Name] Pvt. Ltd.,

Name & Designation:

Annexure VIII — Virtual Digital Asset Holdings

This is to certify that as on 31 March [____], the entity held virtual digital assets as per the schedule below, acquired from the disclosed sources stated, and disclosed in Schedule VDA of the return of income. Where none are held, this annexure may be marked “Not Applicable.”

For [Client Name] Pvt. Ltd.,

Name & Designation: