Tax Audit
A tax audit is an audit of books of accounts conducted for ensuring compliance with the provisions of the Income Tax Act. In the case of corporates, the Companies Act already mandates that an audit should be performed.
Objectives of Tax Audit
To ensure accurate maintenance and correctness of the books of accounts by means of certification of the accounts by a CA and to facilitate the Income Tax Department to verify the truth and correctness of the information constituting the income tax returns filed by the taxpayer
To report observations and discrepancies noted by the auditor after conducting a systematic examination of the books of account
To make available to the Income Tax Department the relevant information required by the Act, including depreciation allowable under the Act and ensuring compliance with the various provisions of the Act
Filing Requirements
Form 3CA
This form should be used when the books of the assessee have already been submitted for audit under other laws. The books may have been audited as per the Companies Act or the Societies Registration Act. I
Form 3CB
This form is used when the books of the assessee are audited exclusively to satisfy the requirements of the Income Tax Act.
Is Tax Audit necessary?
Tax Audit is necessary if the total sales, turnover or gross receipts exceed one crore rupees.
Tax Audit is necessary if the assessee claims profits which are lower than the prescribed limit under the presumptive taxation scheme.
Tax Audit is necessary if the assessee has a total income which is in excess of the basic exemption limit.
Tax Audit is necessary in case the total gross receipts of the business exceed fifty lakh rupees.
Tax Audit is necessary if the total income of the assessee exceeds the basic exemption limit.
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