TAX AUDIT

As per section 44AB of the Income Tax Act, 1961, every person

• Carrying on business, if his total sales, turnover or gross receipts, as the case may be, exceeds Rupees One Crore or
• Carrying on profession, if his gross receipts in profession exceed Rupees 25 lakh (Rs. 50 lakh from AY 2017-18) or
• Carrying on the business, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.

shall mandatorily get his accounts of such financial year audited by a Chartered Accountant. The due date for filing the Tax Audit Report u/s 44AB is 30^th September of the Assessment year.

The purpose of Tax Audit is to ensure that books of Accounts have been maintained in accordance with the provisions of the Income Tax Act. Tax Audit also ensures that the Accounts are properly being presented to the Assessing Officers when called for. However there are cases when person is required to get his accounts audited even though his turnover is less than Rs. 1 Crore in case of business and less than Rs. 25 lakhs in case of profession.

Who Can Carry Out Tax Audit:

A Chartered Accountant within the meaning of Chartered Accountants Act, 1949, can conduct Tax Audit under Section 44AB of the Income Tax Act.

Penality for Failure to Get Accounts Audited:

If any person who is required to get his accounts audited by an Accountant as compliance provision of Section 44AB, before the specified date fails to do so shall be liable for penalty under Section 271B of the Income Tax Act. The amount of penalty shall be 1.5% of the turnover/ gross receipts or Rs. 1,50,000/- whichever is lower. This penalty shows the seriousness that the Government affixes towards Tax Audit under Section 44AB.

AuditNeeds can help you find a Tax Auditor for your Business with ease.