Understand Tax Audit essentials: Applicability, Process, Forms (3CA-CD, 3CB-CD, 3CE-CD), Penalties for non-compliance, and ensure accurate tax reporting.
In tax audit, the Chartered Accountant reviews the financial records and statements of the person who is engaged in carrying out the business or profession to conclude that details reported in ITR reconciles with the financials. It confirms that the income, deductions, and credits claimed are correct and in accordance with the provisions of Income Tax Act, 1961.
Steps Involved in the Tax Audit
Forms to be filed in Tax Audit
3CA-CD
When a business or professional's accounts is already to be audited under any other law, they still need to get his accounts audited under section 44AB of the Income-tax Act, 1961. This includes a detailed statement of specific information required under this section of the tax law.
3CB-CD
If a person's business accounts need to be audited because they fall under a specific rule (clause (b) of sub-rule (1) of rule 6G), they must submit an audit report in accordance with section 44AB of the Income-tax Act, 1961. This includes providing specific details that the tax law requires.
3CE-CD
If a company incorporated in India or resident individual pays royalty or Fees for Professional and technical Services to the foreign company or non- residents then tax audit report must be submitted to tax authorities.
Due Date of Filling of Tax Audit Report
30th September
30th November (If Transferpricing Reporting is applicable)
Implications of Non-Filling of Tax Audit Report u/s 44AB before the due date
The penalty shall be levied lower of the following:
0.5% of total turnover or gross receipt
Rs. 1,50,000
The earlier allowed deduction shall be disallowed and interest will be paid on the amount of tax due. The legal proceedings may be initiated against the person by IT Authorities.
Why Choose HireYourCA?
Why Choose HireYourCA?
There are several reasons why HireYourCA stands out as your go-to partner for business registrations and compliance:
Experienced and Qualified Team: Our CAs possess extensive knowledge and expertise.
Seamless Service: We handle the entire process, keeping you informed at every step.
Cost-Effective Solutions: Competitive pricing ensures value for your money.
Client-Centric Approach: We prioritize your needs and offer personalized guidance.
Technology-Driven Platform: Our user-friendly online platform enables easy tracking and access to documents.
Transparency and Trust: We maintain complete transparency and adhere to the highest ethical standards.
Eligibility
Business entities: -
If the total sales, turnover, or gross receipts of a business exceed ₹1 crore in any previous year.
If the business opted to pay tax under section 44AD and shows his income from business below the threshold limit as prescribed in this section.
Professional Entities:
If gross receipt of professional exceeds ₹ 50 Lakhs.
Presumptive Taxation Scheme:
For professionals opting for the presumptive taxation scheme under Section 44ADA and declaring income below the prescribed limit, a tax audit is required if their gross receipts exceed ₹50 lakh.
Certain Assesses:
If an assesses has declared profits lower than the presumptive profit rates specified under Section 44AE, 44BB, or 44BBB and claims income to be lower than the prescribed limit.
Documents Required for TAX AUDIT
The documents required for conducting Tax Audit are mentioned below:
Financial statement i.e., B/S, P&L, Cash Flow Statement, Statement of changes in equity.
Bank Statement
Invoices and Receipts i.e., Sale, Purchase, Expenses
Tax Returns i.e., ITR’s, GST Return etc.
Record of stock
Books of account i.e. Journal Entry, Ledger, Trial Balance.
Salary slips of the employees.
Disclosure of Related Party Transaction in accordance with AS18.
Loan and Investment
Bank certificates for closing balance
Cash holding certificate
Any other supporting documents required by the tax auditor.
Benefits Of Getting Tax Audit
Detection of fraud: The tax auditor will detect the fraud and report the same in his report.
Verification of account and books
Effective & Efficient Financial Management
Ensures Financial Transparency
Helps to reflect the data accurately in the records.
Help in tax planning
Improve record keeping
Tax Audit Sample Document
Download Tax Audit Sample
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FAQs
A tax audit is a review or examination of an individual's or organization's financial records and accounts to ensure accuracy and compliance with tax laws.
Tax audits are mandatory for businesses with an annual turnover exceeding ₹1 crore, professionals with gross receipts exceeding ₹50 lakhs, and other specified categories under Section 44AB of the Income Tax Act.
The primary purpose of a tax audit is to verify the accuracy of financial statements, ensure compliance with tax laws, and detect any discrepancies or fraudulent activities.
A tax audit is conducted by a Chartered Accountant (CA) who reviews the financial records, reconciles accounts, and prepares a Tax Audit Report (TAR).
The duration of a tax audit can vary depending on the complexity of the financial records and the cooperation of the taxpayer. It typically takes a few weeks to a couple of months
The TAR is a document prepared by the auditor that summarizes the findings of the audit and certifies the accuracy of the financial statements.
