Tax Audit Under Income Tax

Objective of Tax Audit

• Ensuring that books of accounts are in line with tax laws and accounting policies
• Reporting under Form 3 CA / 3 CB / 3 CD
• Ensuring that books of accounts shows correct income tax payer
• Preparation of reports in standard way for tax authorities

Applicability of Tax Audit

• An individual who in engaged in business turnover > Rs. 100 Lac
• An individual who in engaged in profession turnover > Rs. 50 Lac
• An individual who qualifies for the presumptive taxation claims profit lower than limit

Turnover or Gross Receipt Limit For Tax Audit For 2019-20 ( A Y 2020-21)

Due Date of Tax Audit

Due date for tax audit for assesse for FY 2019-20 ( AY 2020-21 ) is 30 September 2020. If assesse who’s turnover/gross receipts crosses specified limit of section 44AB of Income Tax Act 1961, need to get books of account audited with in due date.

Tax Audit Penalty

Any taxpayer where tax audit is applicable & fails in tax audit filing in due date invites penalty under section 271B of Income Tax Act 1961. Penalty for non filing of tax audit shall be as below , penalty may be levied i.e lower of

• 0.5% of the total sales, turnover or gross receipts
• Rs 1,50,000

Difference between Tax Audit & Statutory Audit

Tax Audit & statutory audit is governed by different law. For Companies under the companies act 2013 the audit is applicable irrespective of turnover of Company. Even in case of loss statutory audit is applicable. Statutory auditor required to do detail verification of books of account of company and express written true or fair view opinion. In case of LLP where turnover exceed Rs. 40 lac or contribution exceeds Rs. 25 Lakhs then it need to appoint CA firm for LLP audit. Tax audit is governed by Income Tax Act 1961 it have different objective , scope of work , applicability , due date & audit format. Auditor need to prepare audit report in specified format, ie. 3CA/ 3CB and 3CD about findings during the audit & trace for any revenue loss if any. Its like a health checkup of assesse by CA firm on behalf of Income Tax department. Scope of Tax audit is more related to compliance with income tax Act.