Tax Audit Process - enterslice

11 Feb

11Feb

TAX AUDIT is review of accounts of the business organization or an individual in respect of income and deductions. Section 44AB under Income tax contains the provision for conducting the TAX AUDIT which aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit is conducted by the chartered accountant and his observations are recorded in tax audit report.

Who are entitled to get tax audited?

AUDIT FOR BUSINESSES

Any person carrying on a business whose total sales, turnover or gross receipts exceeds Rs.1 crorein previous year

AUDIT FOR PROFESSION

Any person carrying on whose gross receipts exceeds Rs. 50 lakhs in previous year

Turnover Limit for Audit

(With effect from the finance act 2017)

S.No	Business		Profession
	opting Presumptive Income Scheme	Not opting Presumptive Income Scheme	opting Presumptive Income Scheme	Not opting Presumptive Income Scheme
	2 crores	1 crores	50 lakhs	50 lakhs

Objectives of Tax Audit

Tax audit is being conducted to achieve the following:

A proper system ensures maintenance of its record of income, revenue, expense etc in a correct and verified manner.
Tax audit minimize the risk of frauds and other illegal practices
In case of discrepancies, there is an ease of methodical examination of the well-maintained record.
It also facilitates the implementation of tax laws during routine verification since proper presentation of accounts saves time of the assessing officer

Due Date for Getting Account Audited

A person required to get audited should get its account audited on or before 30^th September of relevant assessment year.

PENALTY FOR NON-COMPLIANCE

If any person who is required to comply with section 44AB, does not do so, as per the prescribed manner, a penalty may be imposed by the Assessing Officer which may be:

(a) 0.5% of the total turnover, sales or gross receipts, in business, or of the gross receipts in profession of an individual, in such year or years as under scrutiny, OR

(b) Rs. 1,50,000.

Whichever is lower

However, Income tax also contain the provision that if there is a reasonable and bonafide cause penalty may not be imposed.

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