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Tax Audit

The present tax audit provisions, which have been in effect since the evaluation year 1985–1986, are demonstrated by the establishment of a new section, "44AB," in the Finance Act of 1984. Its deployment is primarily motivated by the need to combat issues like tax evasion and avoidance. To support future tax evaluation litigation, the tax auditors offer their opinion on the reliability and appropriateness of certain factual information that the assessor gave to the indirect tax authorities.

According to the Income Tax Act of India, tax audits are required to be done when a professional's or a person's annual revenue exceeds Rs 25,000,000. The assessee's taxes are audited by the Chartered Accountant who was appointed. The Chartered Accountant gives the individual the tax audit report on form 3CD as required by the Income Tax Act. Relevant information and data from reports must be included in the income tax return when it is filed.

What we offer

Our goal is to lessen the tax burden by analyzing the disallowances and deductions that fall under different sections of the Income Tax Act of 1961. The data used to calculate the precise assessable income are taken into consideration while making the assessment. Several tax audit services are provided by our audit tax department. Provide a thorough tax report while adhering to high auditing and accounting standards and based on the extensive legislative and regulatory requirements of Income Tax 1961. To learn more about our tax audit services, you should email us.

Applicability of Tax Audit for FY 2022-23

Applicable Income tax audits for the financial years 2023–2024 on the basis of business revenue or salary. Section 44AB contains all necessary clauses relating to tax audits.

  • For businesses opting for Presumptive Taxation

businesses who are opting for presumptive taxation under section 44AD general turnover limit is increased to Rs. 2 crores for the financial year. And, For entities that are covered under sections 44AD, 44AE, 44AF, 44BB, and 44BBB (profit declared as turnover's particular percentage), if declared profit is below the prescribed limit and the basic exemption limit is exceeded by income then tax audit is applicable.

  • The limit of Rs. 10 crores tax audit is applicable to businesses 

If a person carries most of the transactions  (like 95% of the transactions) online then the threshold limit of Rs. 10 crores is applicable. In other words, for eligibility, the cash transactions shall not be more than 5%. Tax audits will be applied to businesses whose gross sales or turnover exceed Rs. 1 crore during the financial year and who do not elect presumptive taxation.

  • Professionals who don't opt for presumptive taxation

Tax audit becomes applicable when the gross receipts of a professional exceed Rs. 50 lacs for the financial year

  • Professionals who opt for Presumptive taxation

Professionals who choose presumptive taxation under section 44ADA and declare earnings below the required level but with income over the basic exemption limit are automatically subject to a tax audit.

Capabilities

Strategy

A business strategy is the means by which it sets out to achieve its desired ends.

Audit

If you have been selected for a business audit, here is what you need to know.

Restructuring

Restructuring your company could restore its viability and improve its liquidity position.

Is audit required if turnover is less than 1 crore?

If the turnover is equal to or less than Rs 1 crore and the profit under section 44AD is lower than 8% of the sales, then the person would not be required to get his or her accounts audited according to section 44AB but they are needed to maintain the records of accounts.

For which companies Tax Audit is compulsory?

In addition to compliance with statutory audits required by the Companies Act, income tax audits may also be applicable. Any business, including LLPs, whose turnover or gross receipts surpass the established level must undergo a tax audit. Companies are subject to the same restrictions that apply to other commercial organizations and professions. If a business's annual revenue reaches Rs. 10 crore and a professional's annual revenue surpasses Rs. 50 lakhs, a tax audit may be required.

How to calculate turnover for tax audit FY 2023-24

Turnover is a very essential crucial component when determining whether a tax audit is applicable. All Income Tax Assesses who are required to undergo a tax audit is covered under the idea of tax audit turnover. In general, turnover refers to the total amount of sales made by an entity over a particular period of time. However, when computing turnover for income tax audit purposes, it refers to the assessee's total sales after making the necessary adjustments for returned products, price changes, and trade discounts.

What should not be factored into the turnover estimate for a tax audit?
  • Sale or purchase of fixed assets
  • Rental / Interest income
  • Advances from customers 
  • Trade discounts, cash discounts
  • Returned goods
  • Sales proceeds of any share securities, etc., held as investment.
Tax Audit due date of FY 2023-24

Anybody who is subject to a tax audit must have their accounts audited and submit the audit report by the deadline of September 30 of that year. Hence, the deadline for the tax audit for the fiscal years 2022–23 is September 30, 2024. The CBDT has the authority to extend the audit's time limit as it sees suitable.

Penality for Tax Audit FY 2023-24

If an assessee for whom a tax audit is appropriate fails to complete their tax audit by the deadline, they will be penalized. And the amount of the fine will be the least of the following:

  • 5% of sales, turnover, and gross receipts.
  • 1,50,000
Restriction on the number of Tax Audits for Chartered Accountants

To sign a tax audit report in India, you must be a chartered accountant or work for a company of chartered accountants. Notwithstanding this, the CA is only allowed to file a certain number of tax audits. A Chartered Accountant is only permitted to conduct a total of 60 tax audits. Also, each member will be subject to this restriction separately in a partnership company.

Is there any penality waiver in Tax Audit or FY 2023-24?

Yes, it is possible to waive penalties for failing to submit a tax audit. if the Assessee gives a valid explanation. The penalty under section 271B will not be applied if the tax audit report is not filed on time or before the deadline. If the audit report is not delivered by the deadline, however, section 271B requirements must be followed.

In cases of reasonable causes supported by case law, there is no penalty for failing a tax audit under section 271B of the Income Tax Act of 1961.

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