You must have your books of accounts audited by an independent chartered accountant if the turnover of your business or total receipts from any profession exceeds the thresholds outlined in The Income Tax Act for any prior year and you are a taxpayer. The Income Tax Act of 1961’s Section 44AB must be followed in the preparation of the Tax Audit report. The Tax Audit report must be submitted by September 30 of the Assessment Year.
The entire procedure of the tax audit is to ensure that the Income Tax compliances & other relevant laws are appropriately being adhered to.
An Income tax audit endeavors to verify the books of accounts of the assessee to ensure that the compliances mandated by the Income Tax Law are adequately obeyed.
Business
If a company’s annual gross sales, turnover, or gross receipts totaled more than Rs. 1 crore in any prior year.
As long as the total amount of cash received and paid during the prior year does not exceed 5% of such receipts and payments. The “Rs. 5 crores” limit will be used in place of the “Rs. 1 crore” limit. Beginning with the Assessment Year 2021–2022, the 5 crore revised limitations will be in effect.
Profession
In the case of the profession, if the gross receipts in business exceed Rs. 50 lakhs in any previous year;
Aforesaid are imperatively and compulsorily required to get their books of accounts audited by a Chartered Accountant.
Apart from this, under particular circumstances, even if the turnover is less than the above-specified limits, the books of accounts have to get audited by a practicing CA.
The applicable entities have to get their books of accounts audited by a CA before the date specified and furnish the report of such audit.
How Can Tax Audit Be Beneficial for Your Organization?
Apart from the fact that a tax audit will save your business from legal compliances and penalties. It also has various benefits that can drive your organization upwards & serve your business in diversified ways, such as: