Section 44AB: Tax Audit Criteria, Limit, Due Date [AY 2018-19] - Meteorio

Section 44AB: Tax Audit Criteria, Limit, Due Date [AY 2018-19]

| 5 years ago

Return filing

Tax audit is a systematic and independent examination of books of accounts to ascertain a correct picture of tax liability and to provide disclosures as per taxation law.

Under Income Tax, only specified persons are required to have a tax audit. [Under section 44AB]

In this article, we will cover every aspect of tax audit as per income tax act.

Advertisement

Limit / Criteria

For a financial year, a person is required to have a tax audit if he is:

Sl noParticularCondition
1Carrying Business and NOT using section 44ADTotal sales or turnover exceeds Rs.1 crore
2Carrying Business and using section 44ADTotal sales or turnover exceeds Rs.2 crore
3Carrying Profession and NOT using section 44ADAGross Receipt exceeds Rs.50 lakh 
4Carrying Profession and using section 44ADAClaim income below the 50% of Gross Receipt. Further his income exceeds non-taxable threshold
5Carrying Business and using section 44ADFalls under section 44AD(4) and
income exceeds non-taxable threshold. For clarity refer our previous article on Presumptive taxation.
6Carrying Business and using section 44AE, 44BB, 44BBBClaim income below the deemed income

 

Meaning of Turnover or Sales for Tax Audit

Turnover shall exclude:

  1. GST or Service Tax
  2. Trade discount
  3. Goods returned
  4. Price Adjustment
  5. Cancellation of bill
  6. Composite charges like a good’s price include delivery charges

Turnover shall not exclude:

  1. Bad debt or its provision
  2. Royalty

A taxpayer has an option to either include or exclude excise duty from the turnover.

[Source: ICAI Guidelines- Tax Audit]

 

Tax Audit by a Chartered Accountant (CA) 

A tax audit comprises of 2 components:

  1. Audit of Books of Account and
  2. Disclosure of prescribed Information by a Chartered Accountant only

Before commencing the tax audit, a CA should first choose the correct form for the audit.

There are 3 type of form for a tax audit. The selection of form depends on the circumstance of a taxpayer.

Sl NoTaxpayerTo Be filled and signed by a Chartered Accountant (CA) in Practice
Audit Report FormDisclosure Form
1If a taxpayer is required by any other law to get his accounts audited
Example: Under Companies Act, every Company is required to have a statutory audit by a CA.
3CA3CD
2If the taxpayer is NOT required by any other law to get his accounts audited, the tax auditor should first conduct an audit of the books of accounts then file the prescribed forms.
Example:  A Proprietary Business
3CB3CD
Advertisement

 

Due Date or Last Date to File Tax Audit 

Tax audit report should be filed up to 30th September of the assessment year.

For example Tax audit of the financial year, 2017-18 [AY 2018-19] should be filled on or before 30th September 2018.

In case of delay or non-compliance of section 44AB, a taxpayer shall be liable to pay a penalty @ 0.5% of turnover or gross receipt which may extend to Rs. 1.5 lakh [section 271B]. This penalty will be levied by the Assessing Officer at his discretion.

Recommended to Read: Fees for late filing of ITR under section 234F. [From AY 2018-19]

Advertisement

How to File Tax Audit Report

Follow the below steps to file tax audit report:

Step 1:

A Taxpayer should first add his chartered accountant on the income tax website using his own login credential.

how to add CA

Step 2:

After the 1st step, a chartered accountant is eligible to upload form 3CA/CB and 3CD through his CA Login credential.

Step 3:

 After the CA’s upload, the taxpayer should check the correctness of the form (not mandatory) and after checking he can either accept or reject the CA’s submission. On acceptance, the process of tax audit comes to an end.

 

Note:

  1. Tax Audit report can’t be revised unless there is any change law with retrospective effect or change in the interpretation of the law or change in accounts after adoption at AGM.
  2. An Individual Chartered Accountant (CA) can accept up to 60 tax audit assignment. For example, a firm of 3 CA as a partner can accept up to a maximum of 180 tax audit assignment (60 x 3).

Happy Filing!

Adverts *