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Tax Audit

Tax Audit

Section 44AB was introduced in the Income-tax Act, 1961, by the Finance Act, 1984. This section provides for the audit, commonly referred to as ‘Tax Audit’, of accounts, of the assessees having total sales, turnover, or gross receipts exceeding the limits specified in the said section. The said audit is conducted to ensure that the assessees have maintained proper books of accounts and complied with the provisions of the Act. 

While maintaining the books of accounts for the purpose of the return of income, the various provisions of the Act, inter alia, section 28 to 44DB are required to be complied with. The provisions in these sections deal with the income from business or profession which is chargeable to tax, how much incomes are computed, chargeability, various allowances or disallowances and the rate of depreciation on various assets owned and used by the assessee, deduction for making investments, deductions for making donations, treatment and tax compliances on borrowed capital, treatment and tax incidence on bad debts, statutory funds, accounting methods, etc. 

As per section 44AB, the following persons are compulsorily required to get their accounts audited:

  • The person carrying on a business where his total sales, turnover or gross receipts exceeds INR 1 crore;
  • The person carrying on a profession where his gross receipts exceed INR 50 lakhs;
  • The person carrying on business and opted for the presumptive scheme under section 44AE, 44BB, and 44BBB and claiming income lower than the deemed profits;
  • The person carrying on the profession and opted for a presumptive scheme under section 44ADA and claiming income lower than deemed profits but income exceeds the minimum threshold. 

The report of the tax audit conducted by a chartered accountant is to be furnished in Form 3CB/Form 3CA and Form 3CD. The report in the said forms is filed electronically on or before the due date of filing of return of income. 
Our team of professionals is well equipped to handle tax audit systematically and in a time-bound manner. 

How ASC helps?

  • Advising the clients on maintenance of books of accounts as per the provisions of the Act;
  • Advising on the admissibility of expenditure under the provisions of the Act;
  • Computation of the disallowances to be reported in the tax audit report and also in the return of income;
  • Conducting tax audit under the provisions of the Income-tax Act and preparing the report in Form 3CD in compliance with various provisions of the Act and also applicable guidance notes;
  • Furnishing the report in Form 3CD to the income-tax department
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