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What is a Tax Audit?
A Tax Audit is an independent review of financial transactions, such as income, expenses, and deductions, conducted by a CA firm. The goal is to verify the accuracy of the books of accounts, ensure tax provisions are followed, and that income tax returns are filed correctly. For instance, the due date for filing tax audits for FY 2019-20 (AY 2020-21) was September 30, 2020, with non-compliance resulting in penalties up to ₹1,50,000.
Objectives of a Tax Audit
Ensure compliance with tax laws and accounting standards.
Correctly report under Form 3CA, 3CB, and 3CD.
Verify the declared income of the taxpayer.
Prepare standardized reports required by tax authorities.
Applicability of Tax Audit
Tax Audits are mandatory for:
Businesses with turnover exceeding ₹1 Crore.
Professionals with gross receipts exceeding ₹50 Lakhs.
Individuals opting for presumptive taxation but declaring profits below specified limits.
Tax Audit Process at BizMantra
Our Tax Audit process follows a structured approach, ensuring every aspect of your financial records is thoroughly examined:
Initial Assessment:We evaluate your business and review financial records to determine audit requirements.
Document Collection: We gather key financial documents, including balance sheets and income statements.
Audit Verification: Our expert CAs verify transactions, ensuring correct reporting of income, expenses, and deductions.
Audit Report Preparation: We prepare the required reports (Form 3CA, 3CB, and 3CD) and file them accurately.
Filing & Submission: We file the audit report on time, ensuring compliance.
Post-Audit Support: We offer ongoing support to address any tax authority queries.
Tax Audit Due Date
For FY 2019-20 (AY 2020-21), the due date for tax audits was September 30, 2020. If your turnover or receipts exceed the specified limits under Section 44AB, you must complete your Tax Audit before the deadline.
Tax Audit Penalties
Failure to file a Tax Audit report on time can result in penalties under Section 271B of the Income Tax Act, 1961. The penalty may be the lower of:
0.5% of total sales, turnover, or gross receipts.
₹1,50,000.
Tax Audit Report
Form 3CA: Includes business details like name, address, PAN, and audit information.
Form 3CB: Part of the audit report as per Income Tax rules, including financial details.
Form 3CD: Consists of 32 clauses covering various aspects of the audit, essential for income tax return filing.
Difference Between Tax Audit & Statutory Audit
Difference Between Tax Audit & Statutory Audit Though both Tax Audits and statutory audits involve examining financial records, their purposes differ:
Tax Audits focus on compliance with tax laws, as per the Income Tax Act, 1961.
Statutory Audits, governed by the Companies Act, 2013, ensure that financial statements provide a true and fair view, irrespective of turnover.
