Income Tax audit under section 44AB

Articles deals with Tax Audit Provisions in India. It explains what’s tax audit, goal of tax audit, who is compulsorily required to get his money owed audited, What are form Nos. 3CA/3CB and 3CD, Due Date for Tax Audit, penalty for now not getting the accounts audited as required by section 44AB.

what’s tax audit?

The dictionary that means of the time period “audit” is check, review, inspection, and many others. there are numerous varieties of audits prescribed below unique laws like employer law requires a company audit, value accounting law calls for a cost audit, and many others. The earnings-tax law calls for the taxpayer to get the audit of the accounts of his business/career from the view factor of profits-tax regulation.

Section 44AB offers the provisions regarding the elegance of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under Section 44AB aims to envision the compliance of various provisions of the profits-tax regulation and the success of other requirements of the earnings-tax law. The audit conducted by means of the chartered accountant of the money owed of the taxpayer in pursuance of the requirement of Section  44AB is referred to as tax audit.

The chartered accountant engaging in the tax audit is required to give his findings, remark, and so on., within the form of audit record. The file of tax audit is to accept via the chartered accountant in shape Nos. 3CA/3CB and 3CD.

what’s the objective of tax audit?

one of the goals of tax audit is to envision/derive/record the necessities of shape Nos. 3CA/3CB and 3CD. aside from reporting requirements of shape Nos. 3CA/3CB and 3CD, a right audit for tax functions could ensure that the books of account and other records are nicely maintained, that they faithfully mirror the profits of the taxpayer and claims for deduction are effectively made through him. Such audit might additionally assist in checking fraudulent practices. it could also facilitate the management of tax laws by way of a proper presentation of money owed earlier than the tax authorities and notably shop the time of Assessing officials in carrying out ordinary verifications, like checking correctness of totals and verifying whether purchases and sales are well vouched for or not. The time of the Assessing officers saved will be utilised for attending to extra essential and investigational factors of a case.

As in line with section 44AB, who is compulsorily required to get his money owed audited, i.e., who’s included by means of tax audit?

As consistent with section 44AB, following humans are compulsorily required to get their bills audited :

a person carrying on commercial enterprise, if his overall sales, turnover or gross receipts (because the case may be) in business for the year exceed or exceeds Rs. 1 crore.
a person carrying on career, if his gross receipts in career for the yr exceed Rs. 50 lakhs.
a person who’s eligible to opt for the presumptive taxation scheme of segment 44AD (*) however claims the income or profits for such commercial enterprise to be lower than the income and gains computed as in keeping with the presumptive taxation scheme of segment 44AD and his profits exceeds the quantity which is not chargeable to tax.
If an eligible assessee opts out of the presumptive taxation scheme, after specific period, he can not select to revert lower back to the presumptive taxation scheme for a length of 5 assessment years thereafter.

someone who is eligible to choose the presumptive taxation scheme of section 44ADA (*) however he claims the income or gains for such career to be lower than the profit and profits computed as in keeping with the presumptive taxation scheme and his income exceeds the amount which isn’t chargeable to tax.
someone who is eligible to opt for the presumptive taxation scheme of sections 44AE (*) however he claims the profits or gains for such business to be decrease than the earnings and gains computed as consistent with the presumptive taxation scheme of sections 44AE.
a person who’s eligible to choose the taxation scheme prescribed beneath section 44BB (*) or phase 44BBB (*) but he claims the profits or profits for such business to be lower than the profits and gains computed as in line with the taxation scheme of those sections.
(*) section 44BB is applicable to non-resident taxpayers engaged within the enterprise of offering services or facilities in reference to, or supplying plant and equipment on rent basis to be used in exploration of mineral oils. segment 44BBB is applicable to foreign companies engaged within the commercial enterprise of civil construction or erection of plant or machinery or trying out or commissioning thereof, in reference to a turnkey electricity challenge.

If someone is needed by or underneath any other law to get his debts audited, then is it obligatory for him to all over again get his accounts audited to conform with the requirement of section 44AB?

folks like agency or co-operative society are required to get their debts audited underneath their respective law. section 44AB provides that, if someone is needed by way of or beneath any other law to get his money owed audited, then he want not once more get his bills audited to conform with the requirement of segment 44AB. Is any such case, it shall be sufficient if such character receives the debts of such commercial enterprise or profession audited beneath such law and obtains the report of the audit as required under such other regulation and additionally a file via the chartered accountant within the form prescribed below section 44AB, i.e., shape No. 3CA and shape 3CD.

What are shape Nos. 3CA/3CB and 3CD?

The record of the tax audit performed via the chartered accountant is to be provided in the prescribed form. The shape prescribed for audit file in respect of audit performed below segment 44AB is shape No. 3CB and the prescribed details are to be stated in form No. 3CD.

In case of men and women covered below previous FAQ, i.e., who’re required to get their money owed audited by means of or underneath some other regulation, the form prescribed for audit document is form No. 3CA and the prescribed particulars are to be stated in form No. 3CD.

what is the due date by way of which a taxpayer have to get his money owed audited?

someone protected with the aid of section 44AB ought to get his debts audited and have to achieve the audit report on or before the due date of submitting of the go back of profits, i.e., on or before thirtieth September (*) of the relevant assessment 12 months, e.g., Tax audit file for the economic year 2013-14 corresponding to the assessment year 2014-15 have to be received on or before 30th September, 2014.

(*) In case of a taxpayer who’s required to provide a report in form No. 3CEB underneath phase ninety two in admire of any worldwide transaction or specified domestic transaction, the due date of submitting the go back of earnings is thirtieth November of the relevant evaluation yr.

The tax audit record is to be electronically filed with the aid of the chartered accountant to the income-tax branch. After filing of file by means of the chartered accountant, the taxpayer has to approve the file from his e-fling account with profits-tax department (i.e., at www.incometaxindiaefiling.gov.in).

what is the penalty for not getting the bills audited as required by using section 44AB?

consistent with section 271B, if any man or woman who’s required to conform with section 44AB fails to get his accounts audited in recognize of any 12 months or years as required underneath section 44AB, the Assessing Officer may additionally impose a penalty. The penalty will be lower of the subsequent amounts:

(a) zero.5% of the total sales, turnover or gross receipts, as the case may be, in commercial enterprise, or of the gross receipts in career, in such year or years.

(b) Rs. 1,50,000.

but, according to section 273B, no penalty shall be imposed if reasonable purpose for such failure is proved.