The Tax Audit is an examination or review of accounts of any business or profession carried out by taxpayers. Thus, It makes the process of income computation for filing of return of income easier. Furthermore, the taxpayers are required to appoint a practicing Chartered Accountant to carry out the income tax audit of the books of accounts and file the tax audit report within the due date. Moreover, conducting the tax audit helps the taxpayer to achieve the following:
- Ensure proper maintenance and correctness of books of accounts and also, the certification of the same by a tax auditor
- Reporting observations/discrepancies noted by tax auditor after a methodical examination of the books of account
- To report prescribed information such as tax depreciation, details of loans and advances, deductions claimed under chapter VI-A, brought forward loss, etc.
Therefore, all these enable tax authorities in verifying the correctness of income tax returns filed by the taxpayer. Calculation and verification of total income, claim for deductions, etc. also becomes easier
Income Tax Audit Due Date
Therefore, the following table explains the due date to file the tax audit report of business for the different Financial Years:
|Category of Taxpayer||Original Due Date||Extended Due Date|
|Businesses Requiring Tax Audit||30th September 2019||31st October 2019|
|Category of Taxpayer||Original Due Date||Extended Due date|
|Businesses Requiring Tax Audit||31st August 2020||31st October 2020|
Categories of Taxpayers for Whom Tax Audit is Mandatory
|Taxpayer||Condition for Tax Audit|
Income Tax Audit Report
Tax auditor shall furnish reports in a prescribed form which could be in the following Forms:
- Form 3CA-3CD: It is furnished when a person carrying on business or profession is already mandated to get the accounts audited under any other law. For example – a Private Limited Company is required to get the Statutory Audit under Companies Act, 2013.
- Form 3CB-3CD: It is furnished when a person carrying on business or profession is not required to get the accounts audited under any other law. For example – Sole Proprietorship business having turnover of more than INR 2 Cr.
As per Section 44AB of the Income Tax Act, 1961, tax audit limit for professionals, businesses and presumptive taxation scheme are:
– Business: Tax audit for businesses pertains to those whose gross receipts or total business sales turnover exceeds INR 1 Crore in the previous assessment year.
– Profession: Tax audit is applicable if gross receipt in the concerned profession is more than INR 50 Lakhs in any of the previous assessment years.
– Presumptive Taxation Scheme: Individuals enlisted under the presumptive taxation scheme under Section 44AD and total sales or turnover exceeds INR 2 Crores.
Also, any individual enlisted under the presumptive taxation scheme claiming that the gains of the business are lower than the gains calculated as per the presumptive taxation scheme.
Non-compliance of tax audit regulations by taxpayers attracts a penalty of whichever is lower from the following:
– 0.5% of total sales or
– Turnover or
– Gross receipts or
– INR 1,50,000
The Central Board of Direct Taxes (CBDT) has extended the date of filing returns of income tax cases that need to be audited by a month to 31 October. The earlier deadline was 30 September.