Income Tax Audit Services

    • Overview of Tax Audit service
    • Introduction
    • The submission process for tax audit
    • Permissible reasons for tax audit
    • Considerations and need for tax audit
    • Frequently asked Questions
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Tax Audit Services by Especia

In India, many laws have been enacted to regulate different types of tests, including B. Income tax audits, expense audits, stock audits, corporate audits, or statutory audits under the Companies Act 2013. 


An income tax audit assesses whether an individual or company has properly filed a tax return for the assessment year. Section 44AB of the Income Tax Act of 1961 regulates the rules for income tax audits. 


In this case, accounting audited in accordance with other laws can be presented as a tax audit report on an income tax return. The audit report must be submitted within the deadline.


Section 44BB: For non-resident Indians (NRIs) engaged in businesses specializing in oil, such as exploration. 

Section 44 BBB: International companies working on construction and other or specific energy projects.  

Section 44AD: All transactions except those listed in Section 44AE.  

Section 44 ADA: This section describes regulations related to income tax audits by qualified professionals.

Section 44AE: This section focuses on companies that specialize in freight car leasing, rental, and operation. 

What is a tax audit? 


A tax audit is an audit of a taxpayer's account. The auditor examines or reviews the books to make decisions about matters related to tax compliance being enforced by the assessment. AuthorisedAuthorised representatives are required to comply with the provisions of the Income Tax Act of 1961.


The provisions contained in these sections relate to income from taxable companies or occupations, income calculation, eligibility, various tax exemptions or tax exemptions. Tax audits also ensure that bookkeeping is properly stored in accordance with tax law. 


It also ensures that tax obligations are paid on time, and agents do not withhold their income. The main purpose of the audit is to ensure that the audited company properly produces information about income, expenses, and tax-deductible expenses.  


Carefully analyze the accuracy or inaccuracies of the tax return filed and then report the tax auditor's investigation results. Tax audits check for all fraud and abuse in filing income tax returns.


Please report basic matters such as compliance and depreciation in accordance with the Income Tax Act. They streamline the income tax authorities' calculation process and also assess the accuracy of income tax returns filed by individuals or businesses. 


Who needs to perform a tax audit?


If a business's sales, income, or total income exceeds Rs, taxpayers must undergo a tax audit. The fiscal year is $ 1 billion. However, taxpayers will need to audit their accounts in other specific situations. 


What is the process of submitting a tax audit report? 


The procedure for submitting a tax audit report is as follows. The tax audit report must be submitted by the designated deadline for the income tax return. The deadline for filing an income tax return is as follows. 


As soon as the auditor uploads the tax audit report, the taxpayer must accept or reject it in the login portal. If the taxpayer rejects the tax audit report, the entire process must be repeated until the taxpayer accepts the tax audit report. Taxpayers must also provide relevant information about the auditor on the login platform. Auditors or auditors hired to perform tax audits for individuals or organizations must submit tax audit reports online using their official login credentials. 


a)  November 30 of the next assessment year for taxpayers conducting international business. 

b) September 30 of the next assessment year of other taxpayers.


What should be considered during a tax audit?


The following points should be noted in tax audits: 


If an individual operates both trade and profession, tax audits are not based on total sales from both. If the total income of all occupations cumulatively exceeds Rs, the ledger should be audited. 


500,000 rupees if you have multiple jobs. If the total sales of all transactions exceed rupees, you need to verify your account. 1 roll if involved in multiple transactions.


a) If the business sales exceed 100 million rupees, the business account needs to be reviewed. 

b) If your total income from your profession exceeds 500,000 rupees, you will need to confirm your vocational account. 

c) However, the sales of the business are Rs. It's 90 easy, and the receipt of the expert is Rs. If it's 40 lakhs, no account needs an audit. 


Sales of your profession or business are Rs. 50 lakhs or Rs. If you sell less than one crore but sell your fixed assets, the amount you receive will be considered part of your professional interests or business. 


The following sales items are excluded from the calculation of total revenue or sales of freelancers or traders. 


a) Assets held as investments (stocks, securities, stocks, etc.). 

b) Fixed assets. 

c) Rental income. 

d) Income from the interest that is not part of operating profit. 

e) All costs reimbursed by the customer. 

f) Once the tax audit report is submitted online, it cannot be revised. 


What is the penalty for violating a tax audit? 


You will be penalized if you do not follow the tax audit rules. The penalty will be one of the following, whichever is less. 


Some of the permissible reasons are: 


No penalties will be imposed under Section 273B if the taxpayer proves that there is a real reason for the delay or failure to submit the audit report.


  • a) Default due to death or physical incompetence of the account holder. 
  • b) Delays caused by labor issues such as strikes and lockouts. 
  • c) Delay due to loss of account due to theft, fire, or another event beyond the taxpayer's control. 
  • d) Natural disaster. 


Which form do I need for a tax audit? 


Rule 6G of the Income Tax Act of 1961 lists all the forms that must be used to submit a corporate or occupational income tax audit under Section 44AB. 


If an entrepreneur or freelancer only needs to verify their account under the Income Tax Act, they should use Form 3CB (Examination Form) and Form 3CD.  


If a taxpayer needs to conduct a tax audit under multiple laws, such as the Stock Corporation Act and the Income Tax Act, it is not necessary to conduct the audit twice a year. 


Taxpayers can submit the same audit report for proper auditing. However, if you want to conduct a tax audit on different laws in different fiscal years, you will need to perform the tax audit again in accordance with the Income Tax Act of that year. 


When will tax audits be ordered?


Section 44AB of the Income Tax Act of 1961 defines a group of income taxpayers who must take an income tax test. These groups include: 


A self-employed person who runs a business with annual sales of 1 rupee or more. A self-employed trader whose income is Rs. Over 500,000 rupees in the fiscal year.


A person who is subject to estimated taxation under Section 44AD but claims that the calculated profit is less than the total tax paid in the fiscal year. 


Self-employed persons whose reported income for the fiscal year is higher than the tax-exempt or tax-exempt amount.


Suppose a taxpayer subject to estimated taxation decides to oppose this for a period of time. In that case, the taxpayer must waive the estimated taxation and then choose estimated taxation for a duration of five valuations. 


Alleged Section 44 AE Individuals who are eligible for the tax system but claim that their profits are less than those calculated under the alleged tax system. 


Those subject to estimated taxation based on Section 44BB claim that their profits are less than those calculated based on estimated taxation.


Companies with total sales of more than 100 million rupees must pass a compulsory tax audit by a Certified Accountant (CA). Also, in the case of the profession, if the total income of the profession exceeds 50 lakhs, a tax audit by the auditor is obligatory.

During a tax audit, the auditor can see financial records such as income proofs, bank accounts, loan records, receipts, monthly and annual expenses.

  • The corporate tax audit limit is 1 rupee. 
  • The tax audit limit for occupations is 50 rupees.

The main purpose of tax audits is to ensure bookkeeping according to the Income Tax Act provisions. Tax audits also ensure that your account is properly presented to the appraiser.

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