facebook

11 Sep 2018Posted By: Mudit Handa


Who is required to have Tax Audit as per Income Tax Act, 1961?

As a evident truth, every individual who is engaged in some or the other form of economic activity in India; a business, a profession or a job; and generates a certain income from it, exceeding the threshold limit or the slab rate is subject to payment of the income tax to the government and filing of income tax return.

 

As per the section 139(1) of Income Tax Act, 1961 all taxpayers whose income in the previous year is beyond the minimum slab rate, are subject to income tax return filing.

 

Now, there is a very interesting scenario that arises during the process of ITR filing known as Tax Audit. Before we go into the crux of this concept we must understand the meaning of audit. Basically, audit refers to the official inspection of financial records and statements of an organisation and to check the suppression and misstatements.

 

#1. What is Tax audit?

The tax audit is an essential aspect defined under the Income Tax Act, 1961. Tax audit is a thorough inspection or review of financial accounts of a business or profession with regard to essential aspects of income tax viz. Check on tax evasion, tax deductions, compliance with the provisions on income tax law, etc.

 

The process of tax audit prepares the computation of income simple and transparent for efiling of income tax return.

 

#2. Why conduct a Tax Audit?

The main objectives behind conducting Tax audit are:

  • Ensuring proper compliance and precision of books of accounts.
  • Tracing and Reporting mismatches after a methodical inspection of books of account.
  • Reporting of relevant details such as depreciation, TDS deduction, 26 AS reconciliation, various compliances under income tax law etc. This saves much time for the tax authorities in verification of income tax return filed by the tax assessee.

 

#3. Who conducts Tax audit?

Under income tax act, 1961, Qualified Chartered Accountant in practice is authorized and eligible to conduct tax audit of any business entity under the Income Tax Act,1961.

 

#4. Which law or provision is applicable for the Tax audit?

The requirement for the Tax audit is laid down under 2 provisions of sections of Income Tax Act, 1961:

  • Section 44AB: Tax audit of individuals involved in business or profession.
  • Section 44AD: Provisions for computation of business income under the presumptive income scheme.

 

#5. Who is mandatory liable for a Tax Audit?

The different categories of the taxpayers who mandatorily require the tax audit as per Income Tax Act are discussed below in detail-

Category of individuals     

Threshold limit

Business

Annual sales, turnover or gross receipts > ₹ 1 crore

Business

If business declares profit or gain less than 8% of annual turnover for any of the last five assessment years

AND

Current Year Business Income > Non-Taxable slab rate.

*However Tax Audit not required who declares profit under presumptive taxation scheme as per section 44AD(1) of the Income Tax Act and annual turnover does not exceed INR 2 crores.

Profession

Annual gross receipts > ₹ 50 lakhs

Profession


 

If profession declare, profits or gains less than 50% of gross receipts under the presumptive taxation scheme

AND

Current Year Business income > Non-Taxable slab rate.

A business eligible for presumptive scheme u/s 44AE*, 44BB* & 44BBB*

If Business claims, profits or gains less than the prescribed limit under presumptive taxation scheme

Reference to Sections of the Income Tax Act,1961-

  • 44BB (non-resident taxpayer doing business in the exploration of mineral oils etc.)
  • 44BBB (foreign companies engaged in the civil engineering and certain turnkey power projects)
  • 44ADA (Eligible professionals)
  • 44AE (a business of hiring or leasing of goods carriages)

 

In case you need other guidance regarding Income Tax Return filing, feel free to contact us at 8881-069-069.



 

Give a Reply

Fill up the form

x
E-startupIndia Mobile App

GET E-STARTUP INDIA IN YOUR
pocket!

Download our free Android App and get realtime update on your order status.
Easily connect with our professionals handling your order over chat & mobile.
Never miss business compliances due date with advance notifications.

Get E-startupIndia in your mobile

Why Choose Us

e-startupindia member of GOOGLE

Serving business owners with an Average 4.8+ Google Rating.

e-startupindia certified #AxixBank

Trusted by Axis bank to cater its clients all licensing & compliance needs.

e-startupindia NG Alliance Partner

Providing lending solutions for business needs with NeoGrowth.

e-startupindia Google Partner

Open Neo bank account worldwide & provides cross-border remittance solutions.

e-startupindia member of CII

E-startupindia is a Proudly Member of Confederation of Indian Industry.The CII is a premier business association in India which works to create an environment.

e-startupindia certified #Etstartupindia

E-Startup India is duly certified under GOI's Startup India scheme and is renowned for our tech-driven solutions for business & legal services requirements for MSMEs.

e-startupindia Google Partner

E-Startup India is a Google Partner, which implies we are rigorously involved in assisting SME businesses to market their presence in the digital world.

Popular Services

Private Limited Company | Public Limited Company | One Person Company | Limited Liability Partnership | Partnership Firm | Sole Proprietorship Firm | Section 8 Company Registration | USA Company Registration | UK Company Registration | UAE Company Registration | Singapore Company Registration | Company Registration Hong Kong | Import Export Code | IEC Modification | AD Code Registration | Spice Board Registration | US FDA Certification | ISO 9001 2015 | ISO 14001 EMS | ISO 22000 FSMS | ISO 27001 ISMS | ISO 50001 Energy Management | ISO 45001 | ISO Surveillance | ISO Certification | MSME Registration | FSSAI Registration | Shop Establishment Registration | Barcode Registration | Coffee Board Registration | Startup India Certificate | ZED Certification | Trademark | Trademark Objection Reply | Trademark Opposition | Trademark Hearing | Trademark Formality Check Fail | Website Development | Patent | Copyright | Design Registration | Business Name Suggestion | Logo Designing | Trademark Assignment Service | GST Registration | GST Modification | GST Cancellation | GST Return Filing | GST Invoice Software | UIN Registration | Income Tax Return | Income Tax Notice | Income Tax Refund | Income Tax Assessment | TDS Return Filing | Form 15CA / CB | Professional Tax Registration | 12A and 80G Registration | FCRA Registration | CSR Registration | Project Report | Pitch Deck | Seed Fund Startup India | Accounting for Ecommerce | Virtual cfo services in india | Bookkeeping & Accounting | Private limited Company Annual Compliance | Form INC-22A | Form 15CA / CB | Company Strike Off | Commencement of Business | Fssai annual return | Online CA Consultancy | Income Tax Return Filling | LLP Annual Compliances | Form DIR-3 KYC | Virtual Office for Company Registration | Dubai Company Registration | Business registration for USA | Business registration for UAE |

IN THE MEDIA

  • e-startupindia South Asia's Leading Multimedia News Agency
  • Business Standard
  • e-startupindia Outlook
  • e-startupindia Htmedia
  • e-startupindia Yahoo News
  • e-startupindia New Delhi Times
  • e-startupindia India.com
  • e-startupindia IBTN9

CONNECT WITH US