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Tax Audit – (Tax Audit Limit, Tax Audit due Date, and Section 44AB) | Company Vakil


What is tax audit?

A tax audit is the approval of the notes of reports of an assessee to replace the income tax compliance as well as computation by means of the rules of Income Tax. Many ask ‘what is tax audit? But the little explanation will be able to tell them the answer to their question. The auditing of notes of reports must surely be carried out via a qualified Chartered Accountant. So in this write-up, we tackled and digested the prior arrangement of a tax auditor, tax audit limit, what is tax audit, as well as section 44AB of ITA which is called Income Tax Act and tax audit limit for ay 2017 18.

Tax Audit Limit

The guide associated with tax audit is offered under the Income Tax Act’s (ITA) Section 44AD. In accordance with Section 44AB, the term ‘tax audit’ is needed for the persons listed below;

Production and Business

In business and production, tax audit will be needed when the whole sales gross or turnover receipts within the industry goes beyond Rs. 1 crore during any prior year. Beneath the (ITA) Income Tax Act, ‘Production and Business’ just signifies any financial exercise kept on for producing profits. In addition to this, the definition of production and business as an exchange, production activity, commerce, adventure or regard in the world of business, products, and commerce was stated by Section 2(3).

Line of Work

When it comes to the line of work or profession, tax audit could be needed if the gross proof of payment in the career goes beyond Rs. 50 lakhs within any of the previously gone year. A line of work, career, or profession may possibly be any of the listed as per Law 6F of the ITA or Income Tax Law, 1962:

  • Accountant
  • Architect
  • Authorized Agency
  • Engineering
  • Films and Movie Artist such as Actor, Director, Cameraman, Editor, Music Director, etc.
  • Internal decorator
  • Officially permitted Line of work such as Lawyer or Advocate
  • Medical line of work such as Doctor, Optometrist, psychologist, physiotherapist, dentist, etc.
  • And Technical Consultant

The Presumptive System of Taxation

If an individual is signed up beneath the presumptive system of taxation less than Section 44AD and overall sales or gross is greater than Rs. 2 crores, this is the case where tax audit will be needed.

Also, any individual signed up below the presumptive system of taxation who alleges that the benefits of the production are less than the benefits computed in agreement with the presumptive system of taxation will be needed to get a tax audit account or report.

Maximum value for tax below, under Income Tax

Tax Audit Due Date for Filing the Tax Audit Report

The appropriate date for accomplishing and heading the tax audit report below Section 44AB of (ITA) Income Tax Act is on the 30th of September, during the year of assessment. For this reason, if any taxpayer is needed to get tax audit, then he/she may possibly be needed for the heading of the income tax profits within or prior to 30th of September together, having the tax audit account or report. In this case, the taxpayer is as well, responsible for audit pricing transfer, which the tax audit due date for filing is 30th of November of the year of assessment. In addition to this, we call it a tax audit limit for ay 2017 18.

Form 3CA – The Audit Form

Form 3CD – Report displaying Appropriate Details

Tax audit limit for ay 2017 18 and Chartered Accountants

Any tax audit could be carried out by ay 2017 18 or a company of Chartered Accountants or even Chartered Accountant. If it is carried out by the final, the name of the participant that has signed the particulars for the company must be acknowledged within the audit account or report. The participant must present his or her membership digit when signing up in the e-filing platform. Tax audits could be carried out by the Constitutional Auditor as well.

It’s vital to pinpoint that, ay 2017 18 or chartered accountants own a maximum value on the figure of tax audit accounts that could be filed. The maximum value of tax audits which could be carried out by a chartered accountant or ay 2017 18 is restricted to 60. In the case of a company, the limit on tax audit restriction will be appropriate for every partner.

Consequence for not accomplishing tax audit

If any taxpayer that is needed to get a tax audit doesn’t obtain the report audited, then consequence could be fined below Section 271B of the (ITA) Income Tax Act. The consequence or fine for not accomplishing tax audit is 0.5% of the gross or turnover receipts, issue to a limit of Rs. 1, 50,000.

The Appointment of a Tax Auditor within a Firm

The liability of assigning tax auditors within a firm is vested by means of the BOD- (Board of Directors). The Board may possibly hand over this liability to another officer such as CFO or CEO. Auditors within a company or firm can be assigned by an affiliate, proprietor or an individual officially authorized with the assessee.

Furthermore, any taxpayer may also assign ay 2017 18 or more chartered accountants as cooperative auditors for carrying out the tax audit. In this state, the audit particular has to be signed via the entire cooperative auditors, when each of them agrees with the particulars or report. For fear of any divergences outlook, the auditors have got to put across their opinion individually via any other report.

Note this: cooperative tax auditors would bear the particular liabilities like that of the other auditors.

Note of Assignment for Tax Audit

The active or present tax auditor has to get a letter of assignment from the apprehensive assessee prior to forwarding the tax audit. The letter of assignment has to be signed accordingly by the individual capable of signing the income return. The note ought to mention the repayment provided to the auditor.

In addition, the letter of assignment ought to indicate that no additional auditor is delegated with the work for the specific economical year, and may surround details of the earlier auditor. The final is stated to smooth the progress of contact between the assigned auditor and his antecedent.

Who is not qualified to become a tax auditor?

There are some prohibitions on the assignment of tax auditors that are been enumerated below:

  • Any participant in part-time training is not qualified to carry out tax audit.
  • Chartered accountants cannot audit the reports of an individual to whom they are obliged for over Rs. 10,000.
  • Constitutional auditor would be considered to be accountable for professional delinquency if he or she agrees to the assignment of Listed Company or Government Company or Public Company and other Public Sector Undertaking containing the turnover of Rs. 50 crores or additionally within a year and admits any other task, appointment or facilities in concern to the same company/undertaking on a payment which in whole goes beyond the fee allocated for performing the constitutional audit of the same company/undertaking.
  • A chartered accountant that is appointed with the work of maintaining and writing the notes of the report of the assessee shouldn’t audit such reports.
  • The audits of reports of a proficient company of chartered accountants can’t be carried out by any associate or working belonging to such company.
  • Any internal auditor of assessee can’t be assigned as a tax auditor.
  • Any auditor is not capable of accepting more than 45 tax audit appointments with a specific economical year.

The Taking away of a tax auditor

The administration is given the right to take away a tax auditor when he or she has wasted time in submitting the account to such a level that it’s no more possible to obtain the audit account uploaded prior to the particular tax audit due date. Tax auditors cannot be taken away because he or she has submitted an unpleasant audit account or on the apprehension of the assessee that the tax auditor is expected to present an unpleasant audit account or report.

When a chartered accountant is taken away on behalf of misconducts, the ESB (Ethical Standards Board) that was developed by the ICAI (Institute of Chartered Accountants of India) is given the right to intercede. In addition, if any chartered accountant is taken away on an untrue basis, no other chartered accountant will be accepted to function as a substitute to the antecedent.





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