Tax Audit Under Income Tax Act’ 1961

A tax audit is an examination of a taxpayer's financial records and tax returns by the tax authorities to verify that the tax reported and paid is accurate and compliant with tax laws.

Any business having a total sales turnover of over Rs. 1 crore must complete a compulsory tax audit by a Chartered Accountant (CA). And in the case of the profession, if the profession has total gross receipts of more than Rs. 50 lakhs, then it is mandatory to conduct a tax audit by a Chartered Accountant. Note: It is highly recommended to seek the guidance of our professional experts at Sure Tax Fincare, to ensure compliance with the regulations and laws for the tax audit.

The tax audit report must be filed on or before the due date of filing the tax return, which is typically 30th September of the relevant assessment year.

All records related to Sale , Purchase, Income, Expenses is required to be maintained. This includes receipts, invoices, bank statements, Cash book, ledgers and any other relevant documentation. Note:-It is recommended to consult with our expert team at Sure Tax Fincare, to understand the complete list of documents required for the tax audit.

A tax audit helps the taxpayer to comply with tax laws, improved record keeping, improve their financial reporting, and enhanced Decision-Making.

Assessees are required to preserve the specified books of account for a period of 8 previous years.

If a taxpayer fails to get a tax audit done, they may be subject to penalties and fines for non-compliance with tax audit requirements.

A tax audit and a company audit are two different types of audits that serve different purposes:Tax Audit: A tax audit is an examination of a person's or a company's financial records to verify that taxes have been correctly reported and paid to the tax authorities. The purpose of a tax audit is to ensure compliance with tax laws and regulations and to identify any underpayment or overpayment of taxes.Company Audit: A company audit (also known as Statutory Audit), is an examination of a company's financial statements and records by an independent auditor. The purpose of a company audit is to provide assurance to stakeholders, such as shareholders, lenders, and regulatory authorities, that the company's financial statements accurately reflect its financial position and performance. A company audit is usually required by law or by the company's articles of association.In summary, while both types of audits examine financial records, a tax audit focuses specifically on ensuring compliance with tax laws, while a company audit provides assurance on the accuracy of a company's financial statements.

If an assessee fails to get an tax audit of account or not able to furnish a report of the tax audit as required under Section 44AB, the penalty will be imposed under Section 271B. The Penalty is the lower of 1.5% of total sales /gross profit or turnover or Rs 150,000.