Things to Know about Tax Audit
Before moving to Tax Audit, let’s understand basic of Audit. Dictionary meaning of Audit is official inspection of an organisation’s accounts, typically by an independent body.
What is Tax Audit?
As the name suggest, Tax Audit is conducted with a purpose to ensure proper reporting of Income, Deductions , Compliance with Income Tax Law from Income Tax point of view. Audit to be done by Chartered Accountant mandatorily in a prescribed format
Tax Audit: Applicable to Whom?
Following categories of Tax payers will be subject to Tax Audit:
- Person carrying on business (not opting for presumption Tax): Total Sales or Turnover exceeds Rs 1 Crore;
- Person carrying on business (opting for presumption Tax): Total Sales or Turnover exceeds Rs2 Crores;
- Person carrying on profession: Gross receipts exceeds Rs 50 Laksh;
- Persons applicable for presumptive taxations but their profit or gain is lower than the stipulated amount as per act.
What constitutes Tax Audit report?
Tax Audit report needs to be furnished in prescribed format:
- Persons mandated to get their accounts audited: Form No 3CA along with Form No 3CD
- Persons not required to get their accounts audited: Form No 3CB along with Form No 3CD
Due Date for Submission
- 30th September of the subsequent year: All taxpayers (except taxpayer with international transaction as mentioned below. For example, for the books of accounts closed on 31st March 2018 need to submit their tax audit report to income tax authority by 30th September 2018.
- 30th November the subsequent year: Taxpayer having entered into international transaction during the financial year
Consequence for non-compliance
In case of failure to comply with this law, taxpayer has to pay penalty as Lower of the followings:
- Amount calculated as 0.5% of the total sales, turnover or gross receipts;
- Rs 1,50,000/-
It’s pertinent to note that penalty will not be imposed in case of delay due to reasonable cause
Important points to remember:
- Definition of Turnover: since the value of turnover calculated basis income tax act may be not same as per your P&L Statement;
- Coverage of Business & profession under the presumptive tax
- Do consult us for more details on compliance
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