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Article on Tax Audit – with Tax Audit Applicability Charts

What is tax audit? ​​​​​ The dictionary meaning of the term “audit” is check, review, inspection, etc. There are various types of audits prescribed under different laws (Income Tax, GST, Company) like company law requires a company audit, cost accounting law requires a cost audit,...

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What is tax audit? ​​​​​

The dictionary meaning of the term “audit” is check, review, inspection, etc. There are various types of audits prescribed under different laws (Income Tax, GST, Company) like company law requires a company audit, cost accounting law requires a cost audit, GST Law requires a GST Audit etc. The Income tax Act requires the Income taxpayer to get the Tax audit of the accounts of his business/profession from the view point of Income-tax Law.

Section 44AB of Income Tax Act: –

According to  Section 44AB  of this act gives the provisions relating to the class of Income taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB of Income tax Act aims to ascertain the compliance of various provisions of the Income-tax Act and the fulfilment of other requirements of the Income-tax Act. The Tax audit conducted by the chartered accountant of the accounts of the Income taxpayer in pursuance of the requirement of section 44AB of the act​ is called tax audit.

The chartered accountant conducting the tax audit is required to give his findings, observation, review of accounts etc., in the form of Tax Audit report in Form Nos. 3CA, Form Nos.3CB, and ​3CD.

Tax Audit Applicability Chart for Individual/HUF/firm engaged in Business

Turnover of Previous year Net profit (%) Condition of cash payment and cash receipts Tax Audit Applicability
Turnover More than 5 Crore NA NA Yes, 44 AB(a)
Turnover 2-5 crore NA If less than 5%

No

Turnover 2-5 crore NA If more than 5% Yes, 44 AB(a)
Turnover1-2 Crore Net Profit More than 8% or 6% of turnover- who opts for presumptive taxation scheme under section 44AD​  NA No
Turnover 1-2 Crore Net Profit Less than 8% or 6% of turnover NA Yes, 44 AB(a)
Turnover Up to 1 Crore Net Profit More than 8% or 6% of turnover NA No
Turnover Up to 1 Crore Net Profit Less than 8% or 6% of turnover-who opts for presumptive taxation scheme under section 44AD​  NA Yes, 44AD (e)

Note:- It is proposed by the Budget-2021 to amend the said provision so as to increase the threshold from “5 Crore” to “10 Crore rupees”

Income Tax Audit Due Date For AY 2021-22

Click on Below Image for more Magazine on GST Update

Extension of Tax Audit Due Date for AY 2021-22– For every year, the due date of furnishing the statutory tax audit report is 30th September of the subsequent year.

For A.Y 2021-22 due to the ongoing COVID-19 pandemic, the Income Tax Audit Due Date for AY 2021-22 has been extended by CBDT vide Circular no. 09/2021: dated 20th May 2021, to 31st October 2021.

Particulars Due date Extended Due date
Tax Audit A.Y 2021-22 30.09.2021 31st October 2021

Extension of time limits of -Income Tax Return, Audit Report, TDS Return and other Returns to provide relief to taxpayers in view of the severe pandemic Covid-19   Click Above for more..

Tax Audit Applicability Chart for Individual/HUF/firm engaged in Profession

Turnover of Previous year for Professionals Net profit (%) Tax Audit Applicability
Turnover More than 50 lakh NA Yes, 44 AB(b)
Turnover Less than 50 lakh Net Profit More than 50 % of turnover No
Turnover Less than 50 lakh Net Profit Less than 50 % of turnover Yes, 44 AB(b)

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Advocate Birbal Sharma

Education- M.Com, LL.B, DLL, LLM Practice Courts - Rajasthan High Court, Income Tax Appellate Tribunal and Intellectual Property Right Attorney Contact Number- 09785037216 Email [email protected]

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