TAX AUDIT AND ITS IMPORTANCE

TAX AUDIT AND ITS IMPORTANCE 

Tax audit - which is well know term for businessmen and for professional's. Because this is what they have to do compulsory when there income reach at a specific level as per income tax act 1961 .But what actually meaning of tax audit  and to whom it is applicable and for whom it is compulsory to do .We will going to discuss about this in our article .So those who are doing article ship ,businessmen and professional's  they can take benefit through this article. So here are some key points which we are going to discuss about

WHAT IS TAX AUDIT .

TO WHOM TAX AUDIT IS APPLICABLE.

WHAT IS REQUIREMENT FOR TAX AUDIT.

WHAT KIND OF FORMS/DOCUMENT NEED TO FILE WHILE TAX AUDIT.

WHAT IS TAX AUDIT .

Tax audit is conduct under section  44AB of the income tax act 1961.Tax audit comes under centre government .Tax audit is term which is used for examination of an individual's and or organization's Book's of Account. Under tax audit Income Tax Department determine that, is tax payer paying correct amount of tax. Basically tax audit is conducted if some one reported their income suspiciously low ,or if  they have turnover more than a limit which is specified by Income Tax Department. Main purpose is to verify financial information and correct turnover in business and there earning sources.  

TO WHOM TAX AUDIT IS APPLICABLE!

Tax audit is applicable to  two persons and if these people come into the condition which is specified by Income Tax Department  then for them its become compulsory to do tax audit.

AUDIT IS COMPULSORY IF

FOR BUSINESSMEN'S

Businessmen come under tax audit if there yearly turnover (gross-receipt)  is more than 1crore. If there turnover is not more than Rs 1crore than there is no need to do tax audit.

SECOND THING----If businessmen  show there turnover suspiciously low means they have net profit which is below 8% then its become compulsory to be audited through any chartered accountant.

FOR EXAMPLE -- if a business have gross receipt of Rs 500000 and they show there net profit below 8% which is 35000 of gross receipt of  Rs 500000 which is 7%. In this case income tax make it compulsory for business to be audited through chartered accountant.

FOR PROFESSIONAL

Professional's whose turnover or gross receipt if more than Rs 25,00,000 then tax audit become compulsory for them .Professional are different than businessmen and there receipts also different so they do not come under criteria of Rs 1crore.

SECOND-===If net profit is less than 8% then also he should be audited through chartered accountant.

For example -- if a business have gross receipt of Rs 500000 and they show there net profit below 8% which is 35000 of gross receipt of  Rs 500000 which is 7%. In this case income tax make it compulsory for business to be audited through chartered accountant.

WHAT IS REQUIREMENT FOR TAX AUDIT?

If you are come under these conditions which are given above then its become compulsory for you to do tax audit under section 44AB of income tax act 1961.its not only keep you safe from scrutiny of assessing officer but also save you from losing your money.

If you tries to escape from tax audit which is compulsory for you or you are fail to get your account audited within due date and not filed your return under section 139(1) as required under the provision of section 44AB of income tax act 1961 in that case Assessing Officer of income tax may impose penalty of 0.5 % of your turnover or subject to maximum Rs 1,00,000.   

 For example---- Case 1. If your turnover is Rs 10crore and you do not file your tax audit return before due date then penalty for  is 0.5% of Rs 10crore which is RS 50,000 or Rs 1,00,000. So, in this case assessee may pay the penalty of Rs 50,000.

Case 2.  If your turnover is Rs 100crore and you do not file your return within time limit then penalty is 0.5% of Rs 100crore which is 50,00,00 or Rs 1,00,000. So, in this case assessee may pay the penalty of   Rs 1,00,000 because subject to maximum Rs 1,00,000.

So file your tax audit return in time and stay safe from scrutiny.

 WHAT KIND OF FORMS/DOCUMENT NEED TO FILE WHILE TAX AUDIT.

When you do tax audit then there is different kind of forms and procedure  is done like

REQUIREMENTS

3CB -3CD form must be compulsory to upload.

ITR-4 for filling return.

Return  must be filed electronic only.

Digital signature certificate is compulsory for both ( Assesses  and Chartered Accountant).

Books of account must be maintain u/s 44AE of income tax act 1961.

 IMPORTANCE OF TAX AUDIT, TO WHOM TAX AUDIT IS COMPULSORY, WHAT IS LIMIT FOR TAX AUDIT, UNDER SECTION 44AB OF INCOME TAX ACT 1961,WHAT IS PENALTY FOR NOT FILING TAX AUDIT REPORT, BENEFITS OF TAX AUDIT, WHO REQUIRED TO TAX AUDIT, WHAT IS 3CB ,WHAT IS 3CD.HOW TO FILE TAX AUDIT REPORT,UNDER WHICH SECTION TAX AUDIT IS DONE ,PEOPLE WHO HAVE TO TAX AUDITED