What is Tax Audit undersection 44AB What happens in case the turnover exceeds 50 Lakhs
Tax Audit under section 44AB
the term audit means check, inspection, verification and review. Different laws require different types of audits like companies act require company audit, cost accounting law require cost audit. Similarly as per section 44AB income tax act require tax audit if gross receipts from bossiness or profession exceeds prescribed limit.
Who are required to get their accounts audited
as per section 44AB of Income Tax act 1961, every person shall get his books audited by a chartered accountant if his gross receipts in the previous year exceeds
1. In case of person carrying on business – Turnover exceeds Rs 1 crore
2. In case of person carrying on profession – Gross receipts exceeds Rs 50 lakhs
3. Person carrying on business or profession under section 44AD, 44ADA, 44AE claims income lower than limits specified under respective sections.
The due date for filing of Tax audit report is 30th September for all other assesees due date for filing of return is 31st July.
What are form no 3CA, 3CB and form 3CD
As per rule 6G, tax audit report shall be furnished by recognized chartered accountant in form 3CA and form 3CB. Other particulars to be disclosed in form 3CD as notified by income tax department time to time.
1. Form 3CA and Form 3CD – These form are used when books of accounts are audited under any other law
2. Form 3CB and form 3CD - These form are used when books of accounts are not audited under any other law
Penalty under section 44AB
If a person has failed to audit his books of accounts as per the provisions of act then he shall be liable to pay penalty under section 271B of income tax act. As per section 271B penalty is ½% of turnover to the maximum of Rs 1, 50,000. However there is no penalty if there is reasonable cause for such failure.
Some of the accepted causes are
1. Resignation of tax auditor
2. Death of partner in charge of accounts
3. Strikes, lockouts for a long period
4. Loss of accounts on cause of fire or theft
5. Other Natural calamities
In order to ensure the correctness of accounts income tax act framed section 44AB and placed greater responsibilities on chartered accountants to verify the fairness of books of accounts. Our filing mantra team can help you contact best chartered accountant nearby you in order to help you in meeting the compliance's place by income tax act.