What is a tax audit report?
The person conducting a tax audit has to provide the findings in a report using specified audit forms prescribed by the income tax department.
Are you applicable under section 44AB of tax audit?
Tax audit is applicable for the following businesses and professionals:
- Businesses where the total sales, turnover or gross receipts exceeds Rs 10 crore in the previous year.
- Cash receipts are below 5% of the gross receipts or turnover
- Cash payments are below 5% of the aggregate payments
- Professionals whose gross receipts from profession exceed Rs 50 lakh in the previous year
For more details on the applicability of tax audit for businesses opting presumptive taxation click here.
Purpose of Tax Audit
- The main purpose of tax audits is to check the errors, mishaps in tax returns and carelessness. This can help to confirm that the taxpayers have paid the accurate number of amounts of tax owed.
- The process includes a complete analysis of financial records. This can be easily understood with an example like invoices and receipts available to the taxpayer.
Documents Required for Tax Audit Filing
- Financial statements of a company that acts as the balance sheet of a company.
- Details of the profit and loss account or any change in a statement for the respective financial year.
- Documents of income tax returns submitted for a financial year.
- Complete data on business transactions, disposal of fixed assets; for example- the different agreements, invoices and depreciation schedules.
- Complete information on the advance payment, loans, and investments done at the time of the respective financial year.
- All the information on expenses done during the financial year.
- A copy of TDS certificates and a copy of TDS during the financial year.
Information about prescribed audit forms
The mentioned forms are income tax forms that are specifically utilised for tax audits under the Indian Income Tax Act, of 1961.
- A Chartered Accountant is responsible for carrying out the audit report under Form 3CA. In such a process, the business accounts of a taxpayer are audited under other laws like the Companies Act, of 2013.
- Another Form 3CB is important and filled up by the Chartered Accountant. But in this process, the business accounts of a taxpayer are not audited under other laws like the Income Tax Act, of 1961.
- At last, Form 3CD is required to be filled under section 44AB law of the Income Tax Act, 1961.
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How can StartUp Tax Suvidha help you?
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