The term audit is derived from the Latin word “audire” which means to hear, it is basically concerned with verification of data, determining the accuracy and reliability of reports. There are several types of audits that reveal the true and fair statement of the reports. Tax audit is compulsory for businesses under section 44AB of the Income Tax Act, 1961. Let us have a look below for deeper understanding.
Tax Audit as described under section 44AB of Income Tax Act 1961 deals in examining the books of accounts of business or profession from Income Tax point of view. It is done by a chartered accountant and a mandatory audit to be carried out. It reviews the incomes, deductions, compliances, procedure related to Income Tax Act.
Tax audit is applicable to certain classes of individuals which are mentioned under section 44AB of the I-T Act. Thus, as per the regulations of section 44AB of the Income Tax Act, 1961, following is the list which outlines the classes of people who have to compulsorily follow the income tax audit procedures and get their accounts audited:
The following forms are required to be used by the individual or person in question when an audit is conducted on their accounts. These forms are specifically mentioned in Rule 6G of the Income Tax Act with regards to income tax audits conducted as per section 44AB.
For persons or individuals carrying on a business or a profession whose accounts are to be audited as per the provisions stated under any kind of law, the following forms are applicable:
For persons or individuals whose accounts are not required to be audited as per the provisions stated under any kind of law, with the exception of income tax laws, then the forms mentioned below are applicable:
The Due date of filing tax audit report under section 44AB is 30th September of the assessment year. However, if the assessee is liable for transfer pricing audit, the due date for filing the tax audit is 30th November of the assessment year. Filing of tax audit report is mandatory from the AY 2013-14 onwards.
The non-compliance of the provision of this act can attract penalty under section 271B of the Income Tax Act. If the taxpayer who is required to get his books audited fails to do so then, he is liable for paying penalty of 0.5% of his turnover / gross receipts subject to a maximum of Rs 1,50,000. However, in case a reasonable cause is established, then no penalty will be imposed.
Chartered Accountants are like the back bones of the economic system and the burden of auditing financial accounts lies on them. There are several statutory rights enjoyed by them but there are certain limitation to everything. The maximum number of tax audits have increased from 45 to 60 by the ICAI Council in its 31st meeting in 2014.
In general it is not possible to conduct a revision of a tax audit report that has already been filed under this section. However, a revision can only take place if an amendment in the income tax law allows it. The audit report can then be revised by an authorised auditor, and a reason for the revision of the same must be stated.
It is better to ask question than to remain ignorant, Tax Audit is crucial requirement for individuals carrying out business or profession. Failure to comply with the compliances of Income Tax rules would lead to penalty so it’s better to avoid unwanted situation and reduce your burden.
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