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Tax Audit under Income Tax Act
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Tax Audit under Income Tax Act
If a taxpayer’s turnover exceeds ₹1 crore from business or ₹50 lakhs from professional income—regardless of the taxpayer’s category—then a Tax Audit is mandatory under Section 44AB of the Income Tax Act, 1961. This audit must be conducted by a practicing Chartered Accountant (CA), and the resulting Tax Audit Report is required to be filed online on the Income Tax Department’s portal before the prescribed due date.
Turnover or Gross Receipt Limit for Tax Audit for AY 2020-2021
| Sr.No. | Type of Taxpayer | Turnover |
|---|---|---|
| 1 | Company | ₹1 Crore |
| 2 | LLP - Business Income | ₹1 Crore |
| 3 | LLP - Income from Profession | ₹50 Lakhs |
| 4 | Partnership Firm - Business Income | ₹1 Crore |
| 5 | Partnership Firm - Income from Profession | ₹50 Lakhs |
| 6 | Individual - Business Income | ₹1 Crore |
| 7 | Individual - Income from Profession | ₹50 Lakhs |
| 8 | Presumptive Business Income u/s 44AD | ₹2 Crore |
| 9 | Presumptive Profession Income u/s 44ADA | ₹50 Lakhs |
Procedure
Fill Simple Online Form
Our executive will call back in 30 Minutes
Send the required documents over e-mail or whatsapp
We will do the calculation and send tax challan (if any)
After Approval and challan received, we will file return.
FAQ's
1. What is objective of Tax Audit?
A proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they truly reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not. The time of the Assessing Officers saved could be utilised for attending to more important and investigational aspects of a case.
2. What are Form Nos. 3CA/3CB and 3CD?
The report of the tax audit conducted by the chartered accountant is to be furnished in the prescribed form. The form prescribed for 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 covered under previous FAQ, i.e., who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA/3CB and the prescribed particulars are to be reported in Form No. 3CD.
3. What is the due date by which a taxpayer should get his accounts audited?
"A person covered by section 44AB should get his accounts audited and should obtain the audit report on or before 30th September of the relevant assessment year, e.g., Tax audit report for the financial year 2019-20 corresponding to the assessment year 2020-21 should be obtained on or before 30th September, 2020.The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. After filing of report by the chartered accountant, the taxpayer has to approve the report from his e-fling account with Income-tax Department"
4. What is the penalty for not getting the accounts audited?
"According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB or furnish such report as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts: (a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years. (b) Rs. 1,50,000. However, according to section 271B, no penalty shall be imposed if reasonable cause for such failure is proved."