Things you must know about tax audit
1. As per the provisions of section 44AB/44AD of the Income Tax Act, 1961, every person carrying a business whose turnover exceeds Rs.1 Cr./ 2 Cr. (as the case may be) or carrying a profession whose receipts exceeds Rs. 50 Lakhs in the financial year 2017-2018,Must get his tax audit of accounts before filing Income Tax Return.
2. Penalty for non compliance of the same is Rs. 1,50,000 or one-half % of the total turnover or receipts, as the case may be.
3. A trust/association/institution/NGO carrying on business may enjoy exemptions as the case may be under sections 10(21), 10(23A), 10(23B) or section 10(23BB) or section 10(23C) or section 11. A cooperative society carrying on business may enjoy deduction under section 80P.Such institutions/associations of persons are also required to get their accounts audited and to furnish such audit report for purposes of section 44AB if their turnover in business exceeds Rs.1 Crore
4. Section 44AB does not make any distinction between a resident or non-resident.Therefore, a non-resident assessee is also required to get his accounts audited and to furnish such report under section 44AB if his turnover/sales/gross receipts exceeds Rs. 1 Cr./2 Cr. or Rs. 50 Lakhs, as the case may be.This audit, however, would be confined only to the Indian operations carried out by the non-resident assessee since he is chargeable to income-tax in India only in respect of income accruing or arising or received in India.
5. Apart from the above, persons who claim to have net income below the specified percentage (6% (transactions through banking system), 8% (business) or 50% (professionals), as the case may be, also need to get tax audit done before filing income tax return.
6. The following have been listed out as professions in section 44AA and notified there under (Notifications No. SO-17(E) dated 12.1.77, No. SO 2675 dated 25.9.1992 and No. SO 385(E), dated 4.5.2001):
(iii) Authorized Representative
(iv) Company Secretary
(vi) Film Artists/Actors, Cameraman, Director, Singer, Story-writer, etc.
(vii) Interior Decoration
(x) Technical Consultancy
(xi) Information Technology
The following activities have been held to be business:
(i) Advertising agent
(ii) Clearing, forwarding and shipping agents
(iv) Insurance agent
(v) Nursing home
(vi) Stock and share broking and dealing in shares and securities
(vii) Travel agent.
Disclaimer- This write up is only for awareness purpose and professional opinion may be required in specific cases depending upon the particular facts.