Income Tax Audit

An Income Tax Audit is mandatory for businesses and professionals meeting specific criteria:

1. For Businesses:

• Turnover/ Gross Receipts: Exceeds Rs. 1 crore in a financial year.
   
• For businesses opting for presumptive taxation under Section 44AD, audit is required if turnover exceeds Rs. 5 crore.

2. For Professionals:

• Gross Receipts/Turnover: Exceeds Rs. 50 lakh in a financial year.

3. Other Cases:

• If the taxpayer is required to maintain books of accounts under the Income Tax Act (e.g., for specific business activities or professions).
   
• Presumptive Taxation Scheme: If opting for the scheme under Section 44ADA (for professionals), audit is required if income exceeds Rs. 50 lakh.

• Legal Compliance: Ensures compliance with tax laws, helping avoid penalties or legal issues.
   
• Accurate Financial Records: Validates that financial statements are accurate, aiding informed business decisions.
   
• Better Tax Planning: Helps identify tax-saving opportunities and improve financial management.
   
• Credibility with Stakeholders: A clean audit boosts trust among investors, lenders, and clients.
   
• Avoids Tax Disputes: Reduces the risk of discrepancies between reported income and actual earnings, preventing tax disputes.
   
• Reduces Risk of Scrutiny: A proper audit minimizes the chances of further investigation by the Income Tax Department.

• Notification: The Income Tax Department notifies the taxpayer about the audit requirement based on turnover, income, or other criteria.
   
• Appointment of an Auditor: The taxpayer hires a qualified Chartered Accountant (CA) to conduct the audit. The CA reviews financial records, books of accounts, and supporting documents.
   
• Preparation of Documents: The taxpayer provides the necessary documents to the auditor, including:
   
  • Financial statements (Balance Sheet, Profit & Loss Account)
  • Bank statements, vouchers, and invoices
  • Tax returns for previous years
  • Details of deductions, exemptions, and credits
  • Cash flow statements and ledgers
     
• Audit Review: The auditor evaluates the documents for accuracy, ensures compliance with tax laws, and checks for discrepancies. The auditor may ask for additional information if required.
   
• Audit Report: The auditor prepares an audit report (Form 3CA/3CB), certifying that the financial statements are accurate and comply with the provisions of the Income Tax Act.
   
• Submission to Income Tax Department: The audit report is submitted to the Income Tax Department, along with the taxpayer’s income tax return, within the prescribed deadline (usually September 30th of the assessment year).
   
• Follow-up: The taxpayer may be required to address queries or clarifications raised by the Income Tax Department. In case of any issues or non-compliance, corrective actions or penalties may be applied.

 

1. Financial Statements:

• Balance Sheet
• Profit & Loss Account
• Cash Flow Statements
• Statement of Changes in Equity

2. Books of Accounts:

• Sales and purchase registers
• Cash and bank book
• Journal and ledger entries

3.Tax Returns and Related Documents:

• Previous year's Income Tax Return (ITR) and acknowledgment receipts
• Form 26AS (Tax Credit Statement)
• GST Returns (if applicable)

4. Bank Statements:

• Statements of business accounts for the entire year
• Any fixed deposit or loan account statements

5. Invoices and Vouchers:

• Copies of purchase and sale invoices
• Receipts of payments made or received
• Expense vouchers

6. Details of Deductions:

• Investment details for claiming deductions under sections like 80C, 80D, etc.
• Breakup of any income exemptions, such as house rent allowance (HRA) or leave travel allowance (LTA)

7. Other Supporting Documents:

• Agreement or contracts related to income or expenses
• Details of stock, fixed assets, or liabilities, if applicable.

 

 

At SS Auditors & Tax Consultants, we provide complete support throughout the Income Tax Audit process;

• Audit Preparation: We help organize and prepare all necessary documents and records for the audit.
   
• Expert Guidance: Our Chartered Accountants offer expert advice to ensure compliance and accuracy in your financial statements.
   
• Audit Representation: We handle all communication with the Income Tax Department, addressing queries and disputes on your behalf.
   
• Tax Filing Assistance: We assist with filing your tax returns and submitting the audit report on time.
   
• Ongoing Support: We provide continued support for any post-audit issues, assessments, or appeals, ensuring ongoing compliance.

A Tax Audit under Section 44AB is performed by a chartered accountant to examine the financial records and other documents of the taxpayer. This audit applies to individuals, Hindu Undivided Families (HUFs), firms, and similar entities with gross receipts exceeding Rs 1 crore in business or Rs 50 lakhs in profession. The main objectives are to validate the accounts, ensure compliance with income tax regulations, and provide a tax audit report alongside the Income Tax Return.

If a taxpayer is required to furnish a transfer pricing report under Section 92E, the due date for submitting the tax audit report is October 31st of the relevant assessment year.

If the tax audit report is not submitted by the due date, a penalty will be levied. The penalty amount will be the lower of the following:

• 0.5% of the total turnover or gross receipts, or
• Rs. 1.5 lakh.

The Chartered Accountant reviews financial records such as the cash book, ledger, journals, bank statements, stock records, and sales/purchase invoices. They verify the business's financial position as of the end of the financial year.

Tax audits are typically not required for salaried individuals. However, if a person has income from other sources, such as professional fees exceeding Rs 50 lakhs or business income over Rs 1 crore, a tax audit may be necessary. Exceeding these thresholds in turnover or gross receipts from business or profession makes the individual liable for a tax audit.

Form 3CA is the tax audit report prepared by the Chartered Accountant, certifying that the audit was conducted in accordance with Section 44AB. Form 3CD is a statement of particulars that must be submitted alongside the Return and Form 3CA. It includes information on claimed deductions, compliance, and other relevant details.

The threshold for tax audit requirements for businesses is set at Rs. 1 crore. However, this limit can be raised to Rs. 10 crores if cash receipts or cash payments do not exceed 5% of the total receipts or total payments.

Legal Disclaimer

 

The information on this website is provided for general informational purposes only. It does not constitute legal or professional advice. We do not guarantee the accuracy, timeliness, or completeness of the information provided. You should always seek the advice of a professional consultant or attorney regarding your specific situation. Use of this website is at your own risk and subject to our Terms of Use.

 

SS Auditors understands the importance of client satisfaction and strives to provide high-quality auditing services. However, it is important to note the following refund policy:

​                                       

Cancellation & Refund Policy

 

S S AUDITORS AND TAX CONSULTANTS believes in helping its customers as far as possible, and has therefore a liberal cancellation policy. Under this policy:

• Cancellations will be considered only if the request is made immediately after placing the order. However, the cancellation request may not be entertained if the orders have been communicated to the vendors/merchants and they have initiated the process of shipping them.

 • S S AUDITORS AND TAX CONSULTANTS does not accept cancellation requests for perishable items like flowers, eatables etc. However, refund/replacement can be made if the customer establishes that the quality of product delivered is not good.
 

 • In case of receipt of damaged or defective items please report the same to our Customer Service team. The request will, however, be entertained once the merchant has checked and determined the same at his own end. This should be reported within only same day days of receipt of the products. In case you feel that the product received is not as shown on the site or as per your expectations, you must bring it to the notice of our customer service within only same day days of receiving the product. The Customer Service Team after looking into your complaint will take an appropriate decision.

• In case of complaints regarding products that come with a warranty from manufacturers, please refer the issue to them. In case of any Refunds approved by the S S AUDITORS AND TAX CONSULTANTS, it’ll take 3-5 Days for the refund to be processed to the end customer.

 

Legal Disclaimer

 

The explanations and information provided on this page are general and high-level guidelines on how to write your own Shipping Policy. This article should not be relied upon as legal advice or specific recommendations, as we cannot foresee the exact shipping policies you wish to establish between your business and your customers. We recommend seeking legal advice to assist you in understanding and creating your own Shipping Policy.

 

Shipping Policy - The Basics

 

A Shipping Policy is a legally binding document that establishes the legal relations between you and your customers. It provides a framework for outlining your obligations and addressing various potential issues that may arise, and what happens in each case.

 

A Shipping Policy is good practice and benefits both sides—you and your customers. Customers benefit from being informed about what to expect from your service, while you benefit because clear Shipping Policies can attract more customers by eliminating uncertainties about shipping timeframes or processes.