Audit
is all about review. Tax audit involves the process of reviewing or examining
of the books of accounts of a business entity to confirm the income tax
computations, deductions and other such financial calculations have been done
in compliance with Income Tax laws of the country. Tax audit enables easy income tax computation
as well as Income Tax Return filing easy. The Tax Audit limit is regulated by Section 44D of the Income Tax
Act. Person carrying business or in a
profession have to be get their books of accounts audited compulsorily under
Section 44AB pertaining to certain tax audit
applicability.
The
tax audit applicability categories
the following persons who have to undergo the audit process on a mandatory
basis:-
1.
Persons carrying on business
with a turnover or aggregate sales exceeding 1 crore, but have not opted for
Presumptive Taxation Scheme.
2.
Persons carrying out business
with total or aggregate sales or turnover exceeding 2 crore and have opted for
the Presumptive Taxation scheme
3.
Professionals whose gross
receipts exceed Rs. 50 lakh annually
The
presumptive taxation scheme under Section 44AD mentions that tax audit is not
required for persons who are enrolled for the scheme and have a turnover of
less than INR 2 crore annually.
Purpose of Tax Audit
·
The tax audit process ensures
that the books of accounts have been maintained correctly and as per Income Tax
provisions.
·
Tax audit brings out
discrepancies as pointed out by the tax auditor after a thorough examination of
the books.
·
Since the tax audit report follows a
prescribed format, it saves time of tax authorities in checking out minute
details and correctness of the information as filed in ITR.
Tax Audit Report Format
The
audit report is required to be furnished either through –
1.
Form 3CA – this report is
applicable for persons carrying out business or profession who need to get
their books of accounts mandatorily audited as per the Act.
2.
Form 3CB – this form is
required to be furnished by persons carrying out business or profession for
whom it is not compulsory to get their books audited under the Act.
3.
Form 3CE – is applicable for
Non-residents and foreign companies that receive any form of payment or fees
for technical services or royalty from the Government of India.
Tax audit applicability
has a legal validation only if submitted by a Chartered Accountant or a firm of
Chartered Accountants or a Statutory Auditor. The tax audit report needs to be signed by the accountant or the
auditor who has performed the audit.
For
e-filing the online tax audit form,
the report needs to be signed by the accountant or the auditor as well as his
membership number needs to be mentioned alongside. The audit report first needs
to be submitted to the concerned person or taxpayer digitally to get his approval
before the online tax audit is filed
electronically.
There
is a tax audit limit for Chartered
Accountants too. They cannot undertake more than 60 tax audits in a year.
The
penalty for not getting the books of accounts audited for persons who are
compulsorily required to get the audit done is 0.5% of the turnover or gross
receipts, with a maximum limit of Rs. 1.5 lakh. The penalty is levied under Section
271B of the IT Act. However, the person is given a chance to give reasons for
non-compliance, and if found acceptable, no penalty is imposed.
The
audit report needs to be obtained before or by 30th September of the
said assessment year. Only the 3CE report has a due date of 30th
November of the said assessment year. More info visit http://enterslice.over-blog.com/2018/10/things-to-know-about-the-tax-audit.html
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