What is Tax Audit Due Date ?
The central government governs various laws in India, different kinds of audit like an audit of income tax, auditing of stock, cost audit, and company law auditing of the company or statutory. By the Income Tax Act, 1961, section 44AB has been laid down the provisions for an income tax audit.
As evident from the name, an income tax audit aims to evaluate whether an individual or a company is filing the income tax returns of an assessment year accurately. An external agency must assess returns filed from income, deductions and expenditures and other rules that the Income Tax Act, 1961 mentions. The tax audit process makes the computation of tax returns simple. The Chartered Accountant of the concerned agency should perform the tax auditing by submitting Form 3CA or 3CB and 3CD as an audit report by comprising other observations.
Income Tax Audit for companies whose tax auditing has not been conducted under Section 44AB of the Income Tax Act, 1961.
For instance, stock audit or statutory audit those taxpayers for whom it is necessary for auditing their accounts other than the Section 44AB under any law of the Income Tax Act, 1961 don’t have to get their accounts audited for an income tax audit repeatedly. In such cases, audited statements under other laws can be represented as a tax audit report for income tax filing, which is also provided by getting submitted before the respected due date.
The following are the other sections of the Income Tax Act, 1961, under which it also lays down regulations related to the income tax audit in India. These are considered as presumptive taxation schemes, wherein a pre-determined percentage of income which is assumed to be the gain or profit which is meant for taxation purposes.
For NRIs (Non-Resident Indians) who is basically involved in a business specializing in a mineral oils industry, which is like exploration
International Company engaged in the business of civil construction etc. in specific power projects
Any business except those businesses which are mentioned under the Section 44AE
This section is focused on the regulations which are regarding the income tax audits for those professionals who are eligible.
Businesses which are specializing in leasing, hiring and plying of goods carriages
Objectives of Tax Audit
Here’s is the reason that why a tax audit is important:
- A research of the accuracy of the filed income tax returns in an assessment year by individuals and companies and also the maintenance of records by the Chartered Accountant.
- They are reporting findings by the tax auditor after a detailed analysis of accuracies/inaccuracies in tax returns filed.
- It reported essential details regarding compliance, tax depreciation, etc., as per the laws for income tax. It streamlines the process for the income tax authorities for calculating and assessing the accuracy of the income tax return which is filed by the individual or company.
Type of Taxpayers for Whom Tax Audit is compulsory and Tax Audit Due Date.
Tax audit is mandatory for the following categories of taxpayers:
- A business owner has not opted for a presumptive taxation scheme, with gross receipts or turnover or total sales exceeding 1 Crore INR.
- A business owner has opted for a presumptive taxation scheme under the Section 44AD of the Income Tax Act, 1961, with total receipts or turnover or total sales exceeding 2 Crore INR.
- A taxpayer whose business, eligible for presumptive taxation which is under Section 44BB , 44AE, and 44BBB, which is claims profits is lesser than prescribed limit under the respective presumptive taxation scheme.
- A business owner cannot claim presumptive taxation under Section 44AD because they have opted for it in a particular assessment year and not for any of the five consecutive years subsequently. It is applicable when their annual income is more than the maximum amount not chargeable to tax in the following 5 successive assessment years from the tax year.
- An employee of an organization whose gross receipts are more than 50 lakhs INR.
- An employee of an organization who is eligible for presumptive taxation under the Section 44ADA and also claiming profits that are lesser than the prescribed limit under the presumptive taxation scheme and income which is more than the maximum amount which is not chargeable to tax.
Tax Audit Report Filing Process
The following are the procedure laid down for filing a tax audit report:
- The CA (Chartered Accountant) who is assigned for conducting tax audit of an individual or an organization has to present the tax audit report online, using their official logging in.
- Mainly a taxpayer also have to mention for the relevant information of their C.A. a Chartered Accountant in a platform of income tax were it is login.
- Once the auditor have uploaded the tax audit report, it has to be either rejected or accepted by the taxpayer on their login portal. If the taxpayer refuses the tax audit report, the entire process must be repeated until they receive the tax audit report.
- The report of tax audit is required to be filed on or before the pre-determined due date of filing income return, i.e., November 30 of the subsequent assessment year for those taxpayers who have engaged in a multi-national transaction and September 30 of the following assessment year for other taxpayers.
Rules Governing Tax Audit
The following is the procedure for filing a tax audit report:
- The CA (Chartered Accountant) assigned for conducting tax audit of an individual or an organization have to present the tax audit report online, by using their credential for official login.
- The taxpayer also have to mention the relevant information about their Chartered Accountant in their login platform.
- Once the auditor have uploaded the tax audit report, it have to be either accepted or rejected by the taxpayer on their portal for login. If the taxpayer refuses the tax audit report, the entire process must be repeated until they receive the tax audit report.
- The tax audit report is needed to be filed on or before the pre-determined due date of filing income return, i.e., November 30 of the subsequent assessment year for taxpayers who have engaged in an international transaction and September 30 of the following assessment year for other taxpayers. Rules Governing the Tax Audit.
The following points have to be noted with regards to Tax Audit and filling before Tax Audit Due Date.
- If you have involved yourself in more than 1 business, you would be liable for auditing your accounts if the complete turnover of all your companies is more than 1 Crore INR.
- If you are operating more than 1 profession, you have to audit your account books if the gross receipts of all the occupations cumulatively cross 50 lakhs INR.
- If you run a business and a profession, then tax audit is not based on total turnover from both. If your business turnover is more than 1 Crore INR, then an audit is necessary for the business accounts, and if all the gross receipts from your profession are more than 50 lakhs INR, then an audit of the professional accounts is needed. But if your business turnover is 90 lakhs INR and your professional receipts are 40 lakhs INR, then no audit is required for either charge.
- If the total earnings of your business or profession is below 1 Crore INR or 50 lakhs INR, but you have sold a fixed asset (such as a vehicle or immovable property), the amount which you have gained from the sale will not be considered as part of your business or professional profits.
- Deal of the following items are excluded from calculation into total turnover/gross receipts of a businessperson or professional:
- Assets which are held as an investment (e.g., shares, stocks, securities)
- Fixed assets
- Rental income
- Income from the interest that is not considered as the part of the business income
- Any expenses which are reimbursed by the client
- Once the tax audit report have been filed online, then it cannot be revised. But if the accounts have been altered – for example, a company account revision after acceptance at the Annual General Meeting, changes in law or change in interpretation of the law – then the audit report can also be changed, which is have been already filed. The difference in the audit report has to be explicitly mentioned while filing the revised notice.
Non-compliance with tax audit regulations by taxpayers attracts a penalty of whichever is lower from the following:
- 5% of total sales or
- Turnover or
- Gross receipts or
- 1,50,000 INR
A penalty is charged only when a taxpayer can show a genuine reason for the cause of non-compliance. If the book of account of a business or profession are not audited as per Section 44AB, the assessee has to pay the penalty per Section 271B of the Income Tax Act. If there is a delay in completion of the auditing and submission of the report on time which is before or on September 30, then 0.5% of the turnover, a maximum of 1.5 lakh INR, has to be paid as a fine. If there is a genuine reason which is acceptable for delaying or non-filing of audit report, then no liability will be applicable as per Section 273B. Among the legal grounds are:
- Delay caused by the tax auditor’s resignation.
- Delay caused by any natural cause like death or physical inability of the partner responsible for accounts
- Delay caused by labor issues such as strikes or lock-outs
- Delay caused by loss of funds due to stealing or any other unfortunate events that are not under the control of the assessee.
- Unfortunate natural causes.
Forms that are necessary for the Tax Audit
Tax Audit reports can be presented in two different ways by tax auditors, differing based on the laws under which the accounts have been audited.
- Form 3CB and Form 3CD: For tax audit reports presented under Section 44AB of the Income Tax Act, 1961, Form 3CB and the prescribed details must be reported in the Form 3CD.
- Form 3CA and Form 3CD: When a taxpayer who prefers to mainly get his accounts audited under any of a law other than mention a Section 44AB, then it is relevant form to Form 3CA, while it is prescribed complete details must be reported in the Form 3CD. To fill the form and file before the Tax Audit Due Date.
My Name is Nadeem Shaikh the founder of nadeemacademy.com. I am a Qualified Chartered Accountant, B. com and M.Com. having professional and specialize experience in field of Account, Finance, and Taxation. Total experience of 20 years in providing businesses solution in Taxation, Accounting, and Finance with all statutory compliance with timely business performance Financials reports. You can contact me on [email protected] or [email protected]