Income Tax Audit
- Under different laws, several types of audits are conducted such as cost audit, stock audit, company audit, statutory audit, etc.
- In the same way, Income Tax Audit is an assessment that is mandated by income tax law.
- An income tax audit is an examination or inspection of the accounts of any company or business by a Chartered Accountant.
- It simplifies the process of calculating income for the purpose of filing a tax return.
Objectives of Income Tax Audit
The purpose of a tax audit is to achieve the following goals:
- Making sure that the books of accounts are properly maintained and are correct.
- Reporting vital information such as tax compliance, tax depreciation, and so on.
- Tax authorities can use all of these to check the accuracy of taxpayers’ income tax returns.
- In a nutshell, its primary goal is to ensure that a company or an organisation is following the Income Tax Regulations.
What constitutes an audit report?
The report should be furnished by the tax auditor in a specified form that can be either Form 3CA or Form 3CB. The details of these forms are as follows:
Form No. 3CA- This form is provided when a person engaged in a profession or business is already required to have his or her accounts audited under another law.
Form No. 3CB- In case someone carrying on a profession or business doesn’t need to get his/her accounts audited under any other law, then this form is furnished.
The tax auditor is required to furnish the prescribed particulars in Form No. 3CD in case of either of the aforementioned audit reports.
Fine for non-compliance in duly filing tax audit report
The least of the following may be levied as a fine if a taxpayer fails to get the tax audit done:
- ? 1,50,000
- 0.5% of the entire sales, gross receipts or turnover
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