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What is Income Tax Audit?

Under the Income Tax Act of 1961, a tax audit is a cross-examination of the taxpayer’s books of accounts by a chartered accountant who holds a full-time Certificate of Practice.

The circumstances under which a tax audit becomes required for some taxpayers are covered by Section 44AB. A tax audit’s primary goal is to ensure that the financial records are accurate and to prevent fraud and tax evasion.

Numerous audits are performed under various regulations, such as the statutory audit required by company law and the audits of costs and inventory. A similar audit, known as “Tax Audit,” is mandated under income tax law as well.

Tax audits come in a wide variety of forms, but they always revolve around an income tax perspective, and this is what the name implies. It simplifies the process of calculating income for the purpose of submitting a tax return. If a company’s sales, turnover, or gross receipts surpass Rs 1 crore in the financial year, a tax audit must be conducted. However, in some cases, a taxpayer may be forced to undergo an audit of their financial records.

Independent auditors, usually chartered accountants, are employed for the purpose of undertaking tax audits. As part of the corporate planning process, every company must undergo a tax audit. Organizations and businesses can reduce business risks and liabilities by conducting a tax audit. A tax audit might be beneficial to the individual taxpayer as well. Individuals who are audited by the IRS may find it difficult to maintain track of their tax payments. Thus, tax audit services are needed to ensure that all tax-related concerns are handled properly. Tax auditors can also work with tax authorities to help businesses and individuals get tax relief. This is a regular practise where businesses and individuals can truly benefit from a thorough tax audit. Lex N Tax Associates is known for the Best Tax Audit Servicesin delhi, Best Tax audit Consultants services in delhi.

Tax Audit Report

Using particular “Audit Forms” that have been prescribed by the income tax department, the individual performing the audit must record their findings in a report.

Forms 3CA and 3CB are mandated by Section 44AB. The auditor must also provide a form 3CD in addition to these two forms. Let’s go over these forms in greater depth.

Form 3CA or Form 3CB may be used by a tax auditor to submit his or her report where:

A person conducting business or practising a profession is required to submit Form No. 3CA if an audit of their accounts is required by another law.
Form No. 3CB is used when a business or profession is not required to be audited by any other law.

Best Tax audit consultants services in delhi at Lex N Tax Associates

Tax Audit Limit

Section 44B of the Income Tax Act requires the submission of accounts for a tax audit in some particular circumstances. In the case of business, if the total sales, turnover or receipts for the previous year is more than INR 1 Crore then there is a requirement to submit the account for a tax audit. Moreover, in the case of presumptive taxation, which is covered by Sections 44AD, 44E, 44AF, 44BB OR 44BBB; the requirement to submit the accounts for a tax audit arises if it is claimed that the profits and gains from the business are lesser as compared to the same calculated under the relevant sections.

In the audit report, there is Form No. 3CD, must be filled out by the tax auditor in the case of either of the audit reports.

In order to submit a tax audit report online, the tax auditor must log in as a Chartered Accountant using his credentials. CA data should be added to the login portal for taxpayers.

The taxpayer should be able to accept or reject the audit report when it has been uploaded by the tax auditor via their login site. If the audit report is denied for any reason, all the steps must be repeated until the taxpayer accepts it.

To avoid penalties, you must submit your tax audit report by the deadline for completing your income tax return. 30 September (extended to 15 February) for other taxpayers, and 30 November (extended to 28 February 2022) for those who have engaged in an international transaction, respectively, are the deadlines. Tax audit services limit for ay 2022-23.

Tax Audit Applicability

The following people, with the assistance of a chartered accountant, must perform a tax audit:

Whoever makes more than Rs. 2 crore in annual gross revenue or total turnover in a business.
any person who is actively seeking employment and whose annual gross income exceeded fifty lakh rupees (For those who use the presumptive taxation system, however, this clause does not apply).

Someone qualified for the presumptive taxation system who claims that the earnings and gains of a certain firm are lower than what is computed in accordance with the presumptive taxation system and that their income is more than the amount that is taxable. Taxpayers with sales or turnover under Rs 2 crores who employ a presumptive taxation scheme other than the one stated in Section 44AD are covered by this provision.

Companies and cooperative societies are required by law to have their books audited by an independent auditor. Further tax audits of such organisations are prohibited by Section 44AB of the Code. Taxpayers in this position should just request and present the relevant audit report, along with a chartered accountant’s report on Form 3CA or 3CB only. It is necessary to complete Form 3CD with the necessary details, Best Tax Audit Services in delhi.

Last Date for Tax Audit

The submission of reports and the auditing of the accounts must be finished by September 30th of the specific financial year. The deadline for submitting the report relies on the deadline for submitting the income tax return, which is March 15. Due date of income tax return must be met in order to file report. Taxpayers who conduct an international transaction during the fiscal year must file an ITR by the 30th of November of the following assessment year. For other taxpayers, the filing deadline is 30 September of the next assessment year, Lex N Tax Associates file your tax audit before due date of tax audit Services for ay 2022-23.

Tax Audit Limit for Professionals.

If in a profession, the receipt for the previous year is more than INR 50 Lakhs then submission of account is necessary.

What is 3CA 3CB 3CD ?

These are basically some particular forms in which the audit report has to be furnished. 3CA and 3CB are the two forms in which the audit report can be submitted.

Form 3CA

Taxpayers who run a business or profession and already have their accounts audited under another law are exempt from this requirement (i.e., law other than income tax law). For instance, the Companies Act of 2013 mandates that a corporation have its accounts audited on a regular basis. It will therefore provide Form 3CA. Here are the particulars of Form 3CA:

Point 1

Name, address, and Permanent Account Number are included in the information provided to authorities.
Name of the Auditor, either an individual or a firm, as appropriate.
Law that was used to audit the accounts (eg: Companies Act).
The report’s audit date.
During this time period, the company’s revenue, expenses, and profits and losses are tracked. (Starting Date and Ending Date).
The balance sheet’s date.

Point 2

Assurance that Form 3CD will be included with the audit report.

Point 3

In the information pertaining to Form 3CD, audit observations and qualifications were discovered.
Place and date of audit report signature.
The auditor’s name, address, and membership number.
The auditor’s signature or seal.

Form 3CB

Regarding a taxpayer who engages in business or profession but is not obligated by any other law to have his accounts audited. With the exception of income tax, a proprietorship entity or partnership firm with a turnover of more than 1 crore who does not choose the presumptive income plan is not needed to have its records audited. It will therefore provide Form 3CB. The tax auditor must also provide Form 3CD, which is a section of the audit report and contains the required information, together with one of the forms indicated above.

Let us now see the particulars of Form 3CB:

Point 1

The balance sheet’s date.
Period of the income and expense accounts and the profit and loss accounts. (Starting Date and Ending Date).
The taxpayer’s name, address, and Permanent Account Number are included.

Point 2

Address of the location where the accounts are held.
Location of branches (if books are kept at branches also).

Point 3 (a)

Observations, qualifications, comments, and discrepancies from the audit.

Point 3 (b)

The auditor’s declaration relates to: Getting all the data and justifications required for the audit.
Assurance that the company (including its branches) keeps accurate financial records.
With the financial statements, you get an accurate picture of your company’s financial situation.

Point 4

Assurance that the audit report will include Form 3CD.

Point 5

Audit findings/differences in the information pertaining to Form 3CD.

Point 6

Place and date of audit report signature.
Auditors’ seal or signet ring.

Form 3CD

Form 3CD is a lengthy description of particulars with 41 points. All information pertaining to various commercial and transactional issues must be filled out in the proper locations. Each point on Form 3CD is explained in great depth here.

Remotely Audit

An audit that is partially or entirely performed off site is referred to as a remote audit. Everything that is typically addressed on site will be included in the audit, but when a site visit is not feasible or suitable, the Assessor will be assisted by technology.

On-Site Audit

On-site audit refers to an inspection of a company’s records conducted on-site in order to confirm the accuracy of the information used to support a permit and assess compliance with state standard programme requirements.

Best Tax Audit Services

Auditing your company can feel like a time-consuming, costly exercise that primarily serves the statutory authorities. Our ultimate goal is to make certain that all of your onerous reporting needs are satisfied as easily as possible in order to satisfy the banks, creditors, financial institutions, and even tax authorities in your area.

In addition, look for a service in India that seeks to provide you with the kind of business advise that will help you manage your company more efficiently and cost-effectively. In addition to this, we provide professional assistance in the planning of company taxes in order to ensure that you have the lowest possible tax liability.

The performance of your company can be tested against industry norms and even against your direct competitors by auditing firms. During our audit, we’ll look at your present accounting procedures and offer methods to make them more efficient. We may notice that your competitors are getting paid faster, your stock levels are higher than the industry norm, or perhaps your organisation takes longer to complete orders and sell finished goods. Alternatively, you may be able to enhance your cash flow by carefully arranging your tax obligations.

Because we only hire the finest, and they’re not afraid to get their hands filthy if it means they can really get to know your organisation, we’re able to give you the greatest audit possible. It is important to us that all of our employees how to anticipate their clients’ needs, communicate effectively, and take responsibility for their own work. Because we rely on the combined expertise of our senior partners from a variety of fields, we’re always on the lookout for novel approaches to assist your company in expanding, Lex N Tax Associates is know for the Best Income Tax Audit Services in delhi.