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Income Tax Audit - Canest

Canest > Income Tax Audit

Overview

If you are a taxpayer and turnover of your business or total receipts from any profession exceeds limits as prescribed by The Income Tax Act, in any previous year then, you are obligated to get your books of accounts audited by an Independent Chartered Accountant. The Tax Audit report shall be prepared as per Section 44AB of the Income Tax Act, 1961. The due date for the submission of the Tax Audit report is 30th September of Assessment Year.

The entire procedure of the tax audit is to ensure that the Income Tax compliances & other relevant laws are appropriately being adhered.

A tax audit endeavours to verify the books of accounts of the assessee to ensure that the compliances mandated by the Income Tax Law are adequately obeyed.

Who is mandatorily subject to the Tax Audit?
  • Section 44AB of Income Tax Act, 1961 states that certain persons are carrying on the business or profession, have to get their books of accounts audited by a practising Chartered Accountant (CA).

    Business

    In case of any business, if the total amount of sales, turnover or the gross receipts exceed(s) Rs. 1 crore in any previous year.
    Provided that if the aggregate of all receipts & payments in cash during the previous year does not exceed 5% of such receipts & payments. The limit of “Rs. 1 crore” will be substituted by “Rs.5 crore”. The revised limits of 5 crore are applicable from Assessment Year 2021-22.

    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 practising 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 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:
    • Government authorities accept audited statements as true & fair for the purpose of taxation. It will help you in getting loans and licences for your organization.
    • Adds reliability to your organization for customers, suppliers, investors, employees & tax authorities. It raises the trustworthiness of the organization.
    • It will reduce the chances of fraudulent activities in your organization.
    • We, Manish Anil Gupta & co, will give you concrete suggestions regarding improvements of business based on findings in your records.

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