TAX AUDIT is review of accounts of the business organization or an individual in respect of income and deductions. Section 44AB under Income tax contains the provision for conducting the TAX AUDIT which aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit is conducted by the chartered accountant and his observations are recorded in tax audit report.
Who are entitled to get tax audited?
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Any person carrying on a business whose total sales, turnover or gross receipts exceeds Rs.1 crorein previous year
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Any person carrying on whosegross receipts exceedsRs. 50 lakhs in previous year
Turnover Limit for Audit
(With effect from the finance act 2017)
Business Profession
opting Presumptive Not opting opting Presumptive Not opting
Income Scheme Presumptive Income Scheme Presumptive
Income Scheme Income Scheme
2 crores 1 crores 50 lakhs 50 Lakhs
Objectives of Tax Audit
Tax audit is being conducted to achieve the following:
i. A proper system ensures maintenance of its record of income, revenue, expense etc in a correct and verified manner.
ii. Tax audit minimize the risk of frauds and other illegal practices
iii. In case of discrepancies, there is an ease of methodical examination of the well-maintained record.
iv. It also facilitates the implementation of tax laws during routine verification since proper presentation of accounts saves time of the assessing officer
Due Date for Getting Account Audited
A person required to get audited should get its account audited on or before 30th September of relevant assessment year.
PENALTY FOR NON-COMPLIANCE
If any person who is required to comply with section 44AB, does not do so, as per the prescribed manner, a penalty may be imposed by the Assessing Officer which may be:
(a) 0.5% of the total turnover, sales or gross receipts, in business, or of the gross receipts in profession of an individual, in such year or years as under scrutiny, OR
(b) Rs. 1,50,000.
Whichever is lower
However, Income tax also contain the provision that if there is a reasonable and bonafide cause penalty may not be imposed.
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