Tax Audit in India if Turnover above Rs. 50 Lakhs/ 1 Crore

An Assessee is liable to get his Tax Audit completed by a Chartered Accountant mandatorily, if within the earlier yr,

  1. The Individual is carrying on enterprise and his Whole Gross sales/Turnover exceeds Rs. 1 Crore (Restrict elevated wef 1st April 2012) or
  2. The Individual is carrying on Career, and his Gross Receipts exceed Rs. 50 Lakhs (Relevant from Monetary 12 months 2016-17 onwards) or
  3. The Individual is carrying on enterprise or career and is roofed below the provisions of part 44AD, 44ADA, 44AE, 44AF, 44BB or 44BBB and claims that his earnings from the mentioned enterprise is decrease than the deemed earnings and features computed below the related part

The Due Date of submitting the Tax Audit Report below Part 44AB  is thirtieth Sept.  The due date for the monetary yr 2016-17 has been prolonged to thirty first Oct 2017.

For all different assessee’s who usually are not liable to get their Tax Audit completed below Part 44 AB – the Due Date of submitting of Revenue Tax Return is 31st July.

  • Advisable Learn: Revenue Tax Slabs

A number of modifications in Tax Audit Report have been launched vide Revenue Tax (seventh Modification) Guidelines 2014 are relevant from this AY 2014-15 onwards. CBDT has amended Kind 3CA, Kind 3CB & Kind 3CD and the amended Varieties now require express point out of the observations/{qualifications} if any, by the auditor whereas issuing the true and proper audit report.

With the introduction of those modifications, the tax auditor’s obligations to report detailed info below the brand new/amended clauses has elevated considerably.

In case an Assessee is liable to get his Accounts audited by an Accountant below another Legislation for a similar accounting interval, the assessee isn’t mandatorily required to get his audit completed once more and is barely required to submit a report within the kind talked about under. Nonetheless, if the Accounting 12 months is completely different from the Accounting 12 months for which the Audit was completed below another Act, the Tax Audit can be required to be performed once more as per the Revenue Tax Act (Round No. 561 dated 22-05-1990 issued by CBDT)

Tax Audit efiling

As per Notification No. 34 dated 1st Might 2013, efiling of Tax Audit report is now obligatory from the evaluation yr 2013-14 onwards. As per Rule 6G, tax audit report is to be furnished in Kind 3CA & Kind 3CB and the particulars required to be furnished together with these tax experiences needs to be in Kind 3CD.

  1. Kind 3CA & Kind 3CD- These Varieties are utilized in case the place the Accounts of the enterprise or career of an individual have already been audited below another Legislation.
  2. Kind 3CB & Kind 3CD– These Varieties are utilized in case the place the Accounts of the enterprise or career haven’t been audited earlier.

Computation of Whole Turnover for the aim of Tax Audit

ICAI has by way of a Steerage Be aware clarified the next factors:-

  1. The place an individual is carrying on 2 Enterprise/2 Professions – the full turnover of each the companies shall be clubbed collectively and tax audit shall be liable to be performed if the Whole Turnover exceeds Rs. 1 Crore/ Rs. 25 Lakhs because the case could also be.
  2. The place an individual is carrying on enterprise in addition to career and the Turnover of the enterprise is Rs. 1.2 Crore and the Gross Receipts of the career is Rs 22 Lakhs. In such a case, ICAI has clarified by way of a Steerage Be aware that the Assessee is liable to get the Tax Audit completed of each the enterprise in addition to career as a result of the Gross Receipts from the enterprise exceed the restrict of Rs. 1 Crore. Nonetheless, if his Whole Turnover was Rs. 95 Lakhs and Gross Receipts from enterprise was Rs. 22 Lakhs, he wouldn’t be required to get his Tax Audit completed.
  3. In case the place an individual has a complete turnover of Rs. 98 Lakhs and has offered a Automotive for Rs. 8 Lakhs. In such a case, the full quantity on including up turns into Rs. 1.06 Lakhs i.e. above Rs. 1 Crore. Confusion arose whether or not the particular person is liable to get an audit completed on this case and ICAI has clarified that the turnover won’t embody any quantity on the sale of the mounted asset because it was held by the particular person for enterprise use and never for the aim of sale.

ICAI has additional clarified that the quantity obtained from the next gadgets shall not be included whereas computing the Whole Gross sales/Whole Turnover/ Gross Receipts:-

  • Sale Proceeds of Fastened Belongings
  • Sale Proceeds of Belongings held as Investments
  • Rental Revenue
  • Revenue by the use of Curiosity until assessable as Enterprise Revenue
  • Any expense which is reimbursable to the Agent by the Shopper

Penalty for Non Compliance of Part 44AB

Non Compliance of the provisions of this act shall appeal to Penalty below part 271B of the Revenue Tax Act. If any particular person required to get his audit completed below part 44AB fails to take action earlier than the desired date shall be chargeable for penalty of ½% of the turnover/gross receipts topic to a most penalty of Rs. 1,50,000

Nonetheless, Part 273B states that no penalty shall be levied below part 271B if there’s a affordable trigger for such failure. Some cases which have been accepted by the Tribunals/Courts as “Cheap Trigger” are:-

  1. Resignation of the Tax Auditor and Consequent Delay
  2. Demise or bodily lack of ability of the associate answerable for the Accounts
  3. Labour Issues comparable to strikes, lock-outs for an extended interval
  4. Lack of Accounts due to Hearth/Theft and so forth. past the management of the Assessee
  5. Pure Calamities

Revision of Tax Audit Report

Tax Audit Report efiled can’t be revised below regular circumstances. Nonetheless, in case the Accounts are revised within the following circumstances, the Audit Report efiled may also be revised:-

  1. Revision of Accounts of a Firm after its adoption within the Annual Normal Assembly
  2. Change in Legislation with Retrospective impact
  3. Change in Interpretation of Legislation (Eg: CBDT Round, Notifications, Judgements and so forth.)

In case the Tax Audit report efiled is revised, the Auditor shall state that it’s a Revised Report and shall additionally state the explanations for a similar.

Limitation on CA’s for the variety of Tax Audits

The Most no. of Tax Audit Assignments below Part 44AB which may be taken by a CA has been elevated from 45 to 60 by the ICAI Council in its 331st assembly held from tenth to twelfth Feb 2014. (Refer: Official Announcement)

Thus if a agency has 4 companions, the utmost no. of Tax Audits that may be taken by a agency in an evaluation yr can be 60*4=240. If the Agency undertakes all of the 240 Tax Audit Assignments, the companions wouldn’t be ready to undertake any tax audit task of their private capability. Now that tax audit efiling is obligatory, the chartered accountant conducting the tax audit would even be required to organize the tax audit report in digital format.

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