Table of Contents
1. What is tax audit?
- The Income-tax Law requires taxpayers whose turnover/ gross receipts exceed a certain limit to get their books of accounts audited by a chartered accountant.
- The limits are given in Section 44AB of the Income tax act, 1961
2. Who are required to get their books of accounts audited under section 44AB?
- A person carrying on business, Where the turnover/gross receipts in the PY exceeds Rs. 1 crore.
Note: The threshold limit is Rs. 10 crore in the following cases- Cash receipts during the year does not exceed 5% of total receipts. (and)
- Cash payments made during the year does not exceed 5% of total payments.
- A person carrying on profession, Where the gross receipts in the PY exceeds Rs. 50 lakhs.
- Any person who has opted for presumptive scheme of taxation under section 44AD and has declared income less than the amount specified in that section (6% or 8% as the case maybe) and his income exceeds the maximum amount which is not chargeable to tax.
- Any person who has opted for presumptive scheme of taxation under section 44ADA and has declared income less than the amount specified in that section (50%) and his income exceeds the maximum amount which is not chargeable to tax.
- Any person who has opted for presumptive scheme of taxation under section 44AE and has declared income less than the amount specified in that section.
3. Am I required to get my accounts audited under income tax law if it is already audited under any other law?
- Section 44AB provides that, if a person is required under any other law to get his accounts audited, then he is not required to get his accounts audited once again under the Income tax act.
- Is such a case, it shall be sufficient, if such person gets the accounts of such business or profession audited under such law and obtains the report of the audit as required under such other law and also a report by the chartered accountant in the form prescribed under section 44AB, i.e., Form No. 3CA and Form 3CD.
4. What are Form Nos. 3CA/3CB and 3CD?
- The form prescribed for Tax audit report in respect of audit conducted under section 44AB is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.
- In case of persons who are required to get their accounts audited under any other law, the form prescribed for tax audit report is Form No. 3CA and the prescribed particulars are to be reported in Form No. 3CD.
5. What is the due date for tax audit?
One month prior to the due date of furnishing the return of income of the previous year.
6. Is there any penalty for failure to get the books of accounts audited?
- 0.5% of turnover/ gross receipts, (or)
- Rs. 1, 50,000. (whichever is lower)
However, no penalty shall be imposed if reasonable cause for such failure is proved to the appropriate officer.