September 20, 2018

Tax audit under section 44AB - Applicability and Audit Report Forms

As the calendars mark the commencement of September Month, tax audits are going on in full swing. Before we delve into the audit report and reporting requirements, let's apprehend the meaning of tax audit.


Under tax audit, the auditor examines the books of accounts, records and transactions to check if they comply with the provisions of income tax act. Auditor also reports some specific transactions as required by the law, apart from reporting about tax depreciation. The audit is conducted under section 44AB of the Income Tax Act.


What is the due date of filing tax audit report?

Taxpayers, who are required to get their accounts audited, have to file the income tax return till 30th September of the relevant Assessment Year.


Before filing the return, they are required to submit the audit report and the audited financial statements. For the FY 2017-18, the due date of filing tax audit report is 30th September 2018.


Who is required to get audited under section 44AB?
  1. A person carrying on a business (not opting for presumptive taxation scheme under section 44AD), if his total sales, turnover or gross receipts exceed Rs 1 crore, or
  2. A person carrying on a business (opting for presumptive taxation scheme under section 44AD), if his total sales, turnover or gross receipts exceed Rs 2 crore, or
  3. A person carrying on a profession, if his gross receipts exceed Rs 50 lakhs, or
  4. A person carrying on a business and eligible for presumptive taxation under section 44AE, 44BB and 44BBB, declares profits or gains lower than the prescribed limit under the respective taxation scheme, or
  5. A person carrying on a profession and eligible for presumptive taxation under section 44ADA, declares profits or gains lower than the prescribed limit under the respective taxation scheme and the income exceeds maximum amount not chargeable to tax (Rs. 2,50,000 for FY 2017-18), or
  6. A person carrying on a business, but not eligible for Section 44AD presumptive taxation scheme because of opting for presumptive taxation scheme in one tax year but not opting for the presumptive taxation scheme in any of the subsequent 5 consecutive years, if the income exceeds the maximum amount not chargeable to tax.

A person is not required to get his accounts re-audited if he gets his accounts audited under any other law before the due date. He has to submit the audit report and a certificate from the Chartered Accountant.


What is the format of the tax audit report?

Auditor has to submit the tax audit report in -

  1. Form 3CA, if the taxpayer is required to get his accounts audited under any other law,
  2. Form 3CB, in all other cases.
  3. Along with Form 3CA or 3CB, the auditor has to furnish the prescribed particulars in Form 3CD. Form 3CD is a 44-points report related to various accounting and tax aspects.

What is the penalty for not filing tax audit report?

If any person fails to file the tax audit report, he has to pay the penalty, which is lower of 0.5% of the total sales, turnover or gross receipts or Rs. 1,50,000.

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