Tax Audit under Section 44AB of the Income Tax Act is the examination and review of the books of accounts of a taxpayer having income from a business or profession.
The tax auditor would ensure that books of accounts have been maintained correctly, report observations, and required information in the tax audit report.
The applicability of tax audit depends upon the turnover/sales/gross receipts of the business or profession along with few more conditions.
2. What is the Audit Limit?
A businessman is required to have his accounts audited if the total sales, turnover, or gross receipts from the business during the previous year (i.e. the financial year for which ITR has to be filed) exceeds Rs 1 crore.
However, this limit of Rs 1 crore shall be increased to Rs 10 crore if cash receipts and cash payments during the year do not exceed 5% of the total receipts or payments
3.Timelines for Filing Tax Audit Reports
The due date for filing tax audit reports is September 30 ‘23. And the last date for ITR filing along with audit report is October 31, 2023.
4.Documents or forms that auditor has to prepare/fill
Form 3CD: This is a common form for all those required to get their accounts audited to comply with any of the laws such as Income Tax Act, Companies Act etc.
Form 3CA: If a company is already mandated to get their books audited under any other law like the Companies Act, 2013, etc., then their audit report will be in Form 3CA.
Form 3CB: If an individual is only required to get an audit done for income tax purposes, then only Form ..
5.Checkpoints for conducting Audit
Last years closing balances of assets and liabilities are incorporated as opening balance of this year
Assure that there is no difference in closing and opening balance of any account.
Verify that opening balance is entered correctly.
Basic info like name, PAN,address ;. Registration details of business under any other law; Nature of business; Details of partner/director, voting power, profit sharing, partnership deed etc.
Following Accounts to be checked properly -Salaries & Wages, -Travelling expenses, -Repair & Maintenance, -Stores & spare parts consumption, -Depreciation
