Prepare Clause44 Tax Audit Report in LedgerVision

What is Clause 44?
Clause44 is a disclosure requirement applicable to assesses who are subjected to Tax Audit u/s 44AB irrespective of the fact whether they are registered under GST or not.
In this blog, we will discuss about how Clause 44 can be easily prepare using LedgerVision software.

 

What are the Disclosure Requirements?
It requires a taxpayer to provide a break-up of expenditures made to GST registered entities/Non-GST registered entities as follows:
1. Exempted/ Nil rated expenses
2. Expenses transaction with GST Registered entities
3. Expenses transaction with GST Registered entities under Composition scheme
4. Expenses transaction with NON GST Registered entities

 

Format of Clause 44
Below tabulated information is required to be provided by the assessee to the Tax Auditor for verification and certification:

clause44 table

 

 

 

 

 

 

 

 

What are the difficulties faced in preparing Clause 44 Report?
Let’s discuss issues faced while preparing clause 44 report:
1. Huge Tally Data needs significant processing to be presentable in Clause 44 format
2. Sometimes there are combined entries like multiple expenses & single party, or single expenditure and multiple parties in Tally. In this situation, it adds to the data processing efforts.
3. Tally Ledger Masters are not properly maintained. For e.g. GST Number is not filled against Vendors. Details of Registration Type or Nature of Transaction is also not maintained in Tally in many cases. Hence it is difficult to get Clause 44 report from Tally.

 

Clause 44 Solution Provided by LedgerVision
1. LedgerVision bifurcates huge tally data in minutes
2. LedgerVision bifurcates data of combined entries on prorate basis
3. LedgerVision has an update tally feature which downloads all ledger master in excel format. User can update missing details in excel file and upload it back to LedgerVision. LedgerVision then updates all ledgers masters in tally at one go
4. LedgerVision has inbuilt feature to easily bifurcate data which is impossible to do manually

 

How Clause 44 Report is Provided by the LedgerVision?
LedgerVision provides Clause 44 report under Tax Audit Reports. There are 2 Clause 44 Reports provided:

1. Summary Report
Summary Report is expenditure wise and fixed assets wise Bifurcation of data. It covers following points:
• P&L/ Balance Sheet group (for Fixed assets)
• Ledger
• Total amount of expenditure
• Goods or Services Exempted
• Registered Entities
• Unregistered Entities
• Consumer Entities
• Unknown Entities

clause 44 report

Fig1: Clause 44 Summary Report

 

clause 44 summary

Fig2: Clause 44 Summary Report in Excel

 

2. Detailed Report
Detailed Report provides voucher level details where detailed report with Month, Voucher Number, Voucher Date, Voucher Type, Stock item, Party GST Number and Vendor Name wise bifurcation report of all expenses and fixed assets is provided.

Detailed Report is very useful in case of any discrepancy with tally data.

clause44 detailed

Fig3: Clause 44 Detailed Report in Excel
Note: Detailed Report is only available in excel and can be seen after you download Clause 44 report.