The audit of the accounts of the income taxpayer in pursuance of the requirement of section 44AB of Income Tax Act, 1961 by a chartered accountant is called tax audit.
As per section 44AB, it is compulsorily required for the following persons to compile with provisions for Tax Audits:
Businesses whose total sales turnover or gross receipts in business exceed INR 2 crores.
Any person carrying a profession (like CA, CS, Doctor, etc.), if his gross receipts for the year exceed INR 50 lakhs.
Any person whose turnover is less than the above-prescribed limits and the income declaration is less than 8% of the turnover; then, there is a requirement to get his books audited by a Chartered Accountant.
The due date for filing tax audit report under section 44AB is September 30 of the assessment year (i.e. next September, after the end of the financial/ accounting/ reporting year).
However, a taxpayer may be required to furnish the report in Form No 3CEB under Section 92 with respect to an international transaction or specified domestic transaction (refer our publication on Transfer Pricing in Knowledge Bank). In this case, the due date for filing the return of income is November 30, of the relevant assessment year (i.e. next September, after the end of the financial/ accounting/ reporting year.)
According to section 271B, the assessing officer may impose a penalty if the assessee fails to file tax audit report as required under section 44AB. The penalty shall be lower for the following amounts:
5% of total sales, turnover, or gross receipts (as the case may be) in business in such year or years.
5% of the gross receipts in a profession, in such year or years.
If you’re in Bangalore and looking for help with tax audit for your company or other business entity, contact us today!