Do you want to consult us? Click Here
Take the first step towards your
goal by filling out the form above.
Get a call from our
certified expert.
Get the job done and
receive a certification.
The Section 44AB of the Income Tax Act, 1961 defines the provisions related to an income tax audit. The motive was to bring transparency to the financial records of all income taxpayers. Abiding by the provisions of this section, all income taxpayers must regularly maintain an Income Tax audit report that furnishes assessment and evaluation of accounts records of a company. A Chartered Accountant briefly scrutinizes the report to objectively verify the transactions related to income, expenses, deductions, and taxes for the purpose of filing taxes.
1. Verification of information like income, tax, and deductions filed in IT return
2. The Auditor evaluates if the company is involved in fraud practise.
3. For reporting inconsistencies in the books of accounts.
4. Compliance with the provision of IT Act
5. Reporting crucial verticals like tax depreciation
6. Calculation of tax and deductions.
According to Rule 6G of the Income Tax Rules
1. The audit report of the accounts of a person, prepared under section 44AB, shall be in either:
(a) Form No. 3CA- For a person who carries on business or profession and who is required by or under any other law to get his accounts audited;
(b) Form No. 3CB - For a person who carries on business or profession, but not being a person referred to in clause (a).
2. In Form No. 3CD, the prescribe details must be reported as required by section 44AB
Note -: For all citizens, the due date is 30th September of the assessment year. For an international transaction, the due date is 31st October of the assessment year.
Penalty under Section 271B –
If the taxpayer commits a default under this Section, the assessee shall be penalized with a penalty which is equal to 0.5% of the total sales, turnover or gross receipts in business or of the gross receipts in the profession of the particular previous year; or a sum of Rs 1,50,000, whichever is lesser.
An income tax audit is a process where the income tax department examines the financial records and tax returns of an individual or business to ensure compliance with tax laws and regulations. It is important as it helps to ensure accuracy and fairness in the tax system and can help to identify potential tax evasion or errors.
Individuals or businesses whose turnover or income exceeds a certain threshold as per the laws and regulations of the Indian government, or those who opt for it voluntarily, are typically required to undergo an income tax audit.
Not undergoing an income tax audit can result in penalties and fines, as well as the potential cancellation of business registration.
"Law Samadhan" provides expert guidance on Income Tax Audit to ensure compliance with Indian tax laws and regulations, and assist with tax planning and tax consultancy.