Income Tax Audit

What is an Income Tax Audit under Section 44AB?

An Income Tax Audit refers to the detailed examination and verification of financial records by a qualified auditor to ensure that the information provided in the income tax returns is accurate and in compliance with the tax laws. Section 44AB of the Income Tax Act mandates that taxpayers must get their accounts audited if their turnover, sales, or gross receipts exceed a specified threshold in a financial year.

The objective behind the audit is to ensure:

1. The accuracy of financial statements and tax returns.
2. Deductions and exemptions claimed are correct.
3. There are no discrepancies or tax evasion practices.

What is the turnover limit for Income Tax Audit?

Income tax audits are mandatory for certain taxpayers, based on their annual income and the type of business or profession they are engaged in.

Business Entities: If the total sales, turnover, or gross receipts exceed ₹1 crore in a financial year.

Professionals: If the gross receipts exceed ₹50 lakh in a financial year.

Individuals or Businesses opting for Presumptive Taxation: If the taxpayer declares profits less than those prescribed under the presumptive taxation scheme (Section 44AD, 44AE, 44ADA) and their income exceeds the basic exemption limit.

Who can help you with the Income Tax Audit?

A Chartered Accountant (CA) who holds a valid certificate of practice is authorized to conduct an income tax audit. The CA must audit the books of accounts, prepare an audit report, and submit it to the tax authorities using the specified forms.

At JKStartup360, we pride ourselves on delivering top-notch Chartered Accountant (CA) services, ensuring that your business stays compliant with the latest tax regulations. Our team of experienced CAs specializes in Income Tax Audits, making the entire process seamless, efficient, and stress-free for you.

How is the Income Tax Audit report furnished?

The Income Tax Audit Report is furnished electronically to the Income Tax Department in compliance with the provisions of the Income Tax Act. The audit process includes:

Compilation of Financial Records

The CA reviews and verifies the financial statements, including income statements, balance sheets, invoices, bank statements, and other relevant documents.

Preparation of the Audit Report

The CA prepares the audit report based on the findings. This includes certifying the correctness of the accounts and preparing Forms.

Forms Used for Filing the Audit Report

The report is submitted using specific forms, depending on the taxpayer’s category:

1. Form 3CA: Used when the taxpayer is already required by law to get their accounts audited (such as companies).

2. Form 3CB: Used when there is no mandatory audit requirement under any other law, but the taxpayer is required to undergo a tax audit as per Section 44AB.

3. Form 3CD: A detailed annexure that contains various particulars regarding the financial statements, such as income, deductions, expenditures, and compliance details.

Filing the Report on the Income Tax Portal

The CA must log in to the Income Tax E-filing portal using their credentials and upload the audit report under the taxpayer’s profile.

Acceptance by the Taxpayer

Once the report is uploaded, the taxpayer must log in to their own e-filing account and accept the audit report. This step is crucial to complete the filing process.

What is the penalty of non compliance or delay in filing of Income Tax Audit Report?

The income tax audit report has to be filed typically by 30th September of the assessment year. If a taxpayer fails to submit the audit report within the due date, the following penalties may apply:

Penalty under Section 271B: The greater of ₹1.5 lakh or 0.5% of the total sales, turnover, or gross receipts.

Further Consequences: Possible disallowance of deductions or increased scrutiny by the tax authorities.

Why Choose JKStartup360 for Expert CA Services and Income Tax Audit Assistance?

Thorough Review of Financial Records: We ensure that every entry is accurate, and all deductions, income, and expenses are properly documented.

Comprehensive Audit Report Preparation: We assist in preparing your audit reports, including Form 3CA/3CB and Form 3CD, which are mandatory for Income Tax Audits. These forms are meticulously filled out, ensuring full compliance with the provisions of the Income Tax Act.

Ensuring Tax Compliance and Minimizing Risks: At JKStartup360, we go beyond just auditing. We help you identify tax-saving opportunities and deductions, ensuring that your business maximizes tax efficiency.

Timely Filing and Support: We understand the importance of deadlines. Our team ensures that your audit report is filed on time. We also offer continuous support to answer any queries that may arise during or after the audit process.