Tax Audit Programme AY16-17

Name of the Assessee:Date of Commencement:________ Address:Date of Completion:____________ PAN: Status/Type of Assessee:Reviewed by: _________________ Form of Audit Report:Audit Team:___________________ StepsAudit AreaAudit ProcedureArea Checked by and Remark 1Understandthebusinessof the Assessee. Obtaintheknowledgeofthebusinessfromlastyear Audit File and working folders. 2 BooksandRecordsreceived fromtheclientandwork allotment. TotakenoteoftheBooksofAccountsandvarious Recordsreceivedfromtheclient.Basedonthevolume ofdata,appropriatelyalloteachAuditareaamongthe Audit Team. 3 Check opening balances.TaketheprintoutofTrialBalanceandtakethe financialstatementsoftheLastYearwhichisAudited and Tick the opening balances. 4Vouching/Verificationand checktheprocessof recordingtheentriesinthe books of accounts. Simultaneouslynotedown allthequeriesinquery sheet. ThisisoneofthemostimportantstepsindoingaTax Audit.Vouchinginvolvesthecompletecheckingofall thevouchersoftheenterprise.Detectingthe possibilityofanymisrepresentationorfrauddoneby theclientisveryprobableatthisstep.Utmostcare shouldbetaken&allthevouchersshouldbe thoroughlychecked.Commonlywedocashexpenses vouching,bankexpensesvouching,purchasevouching, sales vouching, etc. AuditteamisrequiredtoVouchandverifyeachand everybooksofaccountsmaintainedbytheassessee. AspertheSec.2(12A)oftheI.T.Act“booksorbooks ofaccount”includessalesbook,purchasebook, ledgers,day-books,cashbooks,account-books,bank books and other books. Theauditorisrequiredtoexaminenotonlythebooks ofaccountsbutalsootherrelevantdocumentsdirectly relatedtotransactionsreflectedinthebooksof accountslikeoriginalpurchaseinvoice,copyofbank statements,bills,vouchers,variousagreements/ contractsoranyotherdocumentonthebasisofwhich preliminaryentriesarepassedinthebooksof accounts. Tax Audit Programme for AY 2016-17 (PY 2015-16) PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark 5Scrutinyofbooksand preparationofFinancial StatementsBalancesheet andprofitandlossaccount alongwithComparative statement of profit and loss. ItisthemostImportantStage,herefollowingsteps are required to be followed for Ledger Scrutiny; -BalancesandentriesinalltheLedgersmustbe reconciled.Fore.g.Balancesandentriesinthe Debtor'sLedgermustbeascertainableagainstspecific salesentries,creditnotesandcollectionreceivedfrom the debtors. -JournalentriespassedintheLedgersmustbetraced and ascertain the reasons for such JVs. - TDS properly deducted and paid wherever applicable. -WhetherallIndirectTaxeslikeVAT,ServiceTax, Excise and customer duty etc paid on timely basis. IdentifypaymentmadeincashformorethanRs. 20,000. -Loans/depositacceptedandrepaidduringthe previousyearformorethanRs.20,000withoutan account payee cheque. -Revenueandcapitalnatureofexpenditureare properlysegregatedandrecordedundertheproper head. -Anypenaltypaidanddonationmadeshallbe disallowed. - Any prior period exp. needs to be identified. - All required provisions shall be done. 6 BankStatementsand Reconciliations Inordertoverifywhetherallthetransactionsrelated tobankhavebeendulyaccounted,weverifythebank bookwiththebankstatements.Ifthereisamismatch ofsometransactions,weprepareaBRSi.e.,aBank Reconciliation Statement. 7 StartreportingunderForm 3CAincaseofCompaniesor Form3CBforothersand prepareallrequired annexures of Form 3CD. Auditteamisrequiredtofillupthecompleteform 3CAor3CBalongwithform3CD.Allinformation furnishedinTaxAuditreportmustbeTrueand Correct.ThereaftergeneratetheXmlfileandupload theAuditReportwithscancopyofFinancial Statements. No. ICDS 1Accounting PolicyICDSprovidesthatexpectedlossesormarktomarket losses shall not be recognised. ICDS 2Valuation of InventoriesValue of Service Inventory to be lower of Cost OR NRV. CosttoIncludeLabourandotherCostofpersonnel directly engaged in providing services. Income Tax Computation & Disclosure Standards (ICDS) PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark ICDS 4Revenue RecognitionICDSprovidesonlyforpercentagecompletionmethod forrecognitionofservicetransactions.Norecognition is done as per Completed service contract method. ICDS 6Foreign exchange gain/lossExchangedifferencearisingonsettlementthereofor onconversionofmonetaryitemsatthelastdayof previousyearshallberecognisedasincomeor expenseinthatpreviousyearbyconvertinginto reporting currency using closing rate. ICDS 10 Provision,contingent liabilityandcontingent assets. Provisionshallberecognisedifitisreasonablycertain thatoutflowofeconomicresourceswillberequired. Criteriaforrecognitionofprovisiononbasisof ‘probable’replacedwithrequirementof‘reasonably certain’. Clause No. 4 Whethertheassesseeisliable topayindirecttaxlikeexcise duty,servicetax,salestax, customsduty,etc.ifyes, pleasefurnishtheregistration numberoranyother identificationnumberallotted for the same. · Obtain the list of indirect taxes applicable to the Assessee. ·Obtaincopyofregistrationcertificatesmentioningthe Regn. No. under relevant law. ·Iftaxauditoropinesindirecttaxesapplicablebutassessee hasnotregistered,heshouldreportthesame appropriately. 9 (a) IffirmorAssociationof Persons,indicatenamesof partners/membersandtheir, profit sharing ratios. ·Namesofpartners,membersofAOP/BOI&profitsharing ratios in % to be stated. ·Obtainpartnershipdeedoragreementfromtheassessee and check for any amendment in the deed. (b) Ifthereisanychangeinthe partners/membersortheir profitsharingratios,Sincethe lastdateofprecedingyear, the particulars of such change. ·Ifanychangeinpartners/membersofAOP/BOIortheir profitsharingratiosincelastdateofprecedingyear, particulars of such change must be stated. ·Shouldobtaincertifiedcopiesofdeeds,documents,notice of changes etc. 10 (a) Natureofbusinessor profession.[Ifmorethanone businessorprofessionis carriedonduringtheprevious yearnatureofeverybusiness or profession] ·Principallineofeachbusinesstobedeterminedand stated i.e. Sector in which business falls. ·Informationtobefurnishedinrespectofeachbusiness. Thecodetobementionedagainstthenatureofbusiness pertains to the main area of business activity. (b) Ifthereisanychangeinthe natureofbusinessor profession,theparticularsof such change. ·Anymaterialchangeinthenatureofbusinessshouldbe precisely set out. Tax Audit Reporting ie Form 3CD PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark 11 (a) Whetherbooksofaccountare prescribedundersection 44AA,ifyes,listofbooksso prescribed. ·AsperRule6Fbooksofaccounttobekeptand maintainedbypersoncarryingoncertainprofessions specified in sub-sec (1) of S.44AA. ·Legal,Medical,Engineer,Architect,Accountancy, Technicalconsultancy,Interiordecorator,Authorised Representative,Filmartist,CompanySecretary,IT professional. (b) Listofbooksofaccount maintainedandtheaddressat whichthebooksofaccounts arekept.(Incasebooksof accountaremaintainedina computersystem,mentionthe booksofaccountgeneratedby suchcomputersystem.Ifthe booksofaccountsarenotkept atonelocation,pleasefurnish theaddressesoflocations alongwiththedetailsofbooks ofaccountsmaintainedat each location.) ·Shouldobtaincompletelistofbooksofaccountandother documentsmaintained(bothfinancialandnon-financial records)andmakeappropriatemarksofidentificationto ensuretheidentificationofthebooksandrecords produced before him for audit. ·Incaseofcompany,Verifywhetheranyformfiledunder CompaniesActformaintenanceofbooksataplaceother than the registered office. -Cashbook/bankbook,sales/purchaseregisterand ledger.Quantitativedetailstobemaintainedbyassessees engaged in trading/manufacturing activities. Whethertherehasbeenany changeinthemethodof accountingemployedvis-a-vis themethodemployedinthe immediatelypreceding previous year. ·Identifyanychangeinthemethodofaccountingand disclose impact of the same. 14 (a) Methodofvaluationofclosing stockemployedinthe previous year. ·Shouldobtaintheinventoryofclosingstock,indicatingthe basisofvaluationthereof,forreportingonthemethodof valuationofclosingstockunderthisclause.Shouldexamine thebasisadoptedforascertainingthecostandthisbasis shouldbeconsistentlyfollowed.Itisnecessarytoensure thatthemethodfollowedforvaluationofstockresultsin disclosure of correct profit and gains. (b) Detailsofdeviation,ifany, fromthemethodofvaluation prescribedundersection 145A,andtheeffectthereof on the profit or loss. ·Thedetailsofdeviation,ifany,fromthemethodof valuationprescribedundersection145A,andtheeffect thereofontheprofitorlosshavetobestatedunderclause 14(b). 16 AnyAmountsnotcreditedto theprofitandlossAccount, being,Theitemsfallingwithin the scope section 28. ·Underthisclausevariousamountsfallingwithinthescope ofsection28whicharenotcreditedtotheprofitandloss account are to be stated. For e.g. (a)· Profits & gains of business PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark · Compensation on termination · Income from trade, professional association · Profit on sale of licence under Import control order · Cash assistance against exports · Customs or excise repayable · Profit on DEPB , DFRC · Benefit or perquisite ·Interest,salary,bonusreceivedbyapartnerfromsuch firm · Sum received for not carrying out any activity · Sum received under a Keyman insurance ·Anysumreceivedonanycapitalassets(demolished, destroyed,discarded)ifsuchexpenditurewasallowedu/s 35AD (b) Theproformacredits, drawbacks,refundsofdutyof customsorexciseorservice taxorrefundsofsalestax valuedaddedtax,wheresuch credits,drawbacksorrefunds areadmittedasduebythe authorities concerned; ·Thedetailsofthefollowingclaims,ifadmittedasdueby theconcernedauthoritiesbutnotcreditedtotheprofitand lossaccount,aretobestatedProformaCredits,Drawback, Refundofcustomsduty,exciseduty,servicetax,salestax orvalueaddedtax.Itmay,therefore,benecessaryforthe taxauditortoscrutinisetherelevantfilesorsubsequent records relating to such refunds and obtain MRL. (C.) AnyEscalationclaimsaccepted during the previous year; ·Undersub-clause(c),theescalationclaimsaccepted duringthepreviousyearbutnotcreditedtotheprofitand loss account are to be stated. (e) Whetheranycapitalreceipt receivedbytheassesseebut not credited to the PnL. ·Eg:Capitalsubsidyofpromoter’scontribution,Govt.Grant inrelationtospecificfixedasset,profitonsaleoffixed assets,Compensationforsurrenderingcertainrights, Loss/expenditure/liability recovered u/s 41(1)). 17 Whereanylandorbuildingor bothistransferredduringthe previousyearfora considerationlessthanvalue adoptedorassessedor assessablebyanyauthorityof aStateGovernmentreferred toinsection43CAor50C, please furnish: ·Forreportingthevalueadopted,theauditorshouldobtain acopyoftheregisteredsaledeed.Incasethepropertyis notregistered,theauditormayverifyrelevantdocuments fromrelevantauthoritiesorobtainthirdpartyexpertlike lawyer,solicitorrepresentationtosatisfythecomplianceof section43CA/section50CoftheAct.Inexceptionalcases wheretheauditorisnotabletoobtainrelevantdocuments, hemaystatethesamethroughanobservationinhisreport 3CA/CB. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark 18 Particularsofdepreciation allowableaspertheIncome- taxAct,1961inrespectof eachassetorblockofassets, asthecasemaybe,inthe following form :-- Descriptionofasset/blockof assets. Rate of depreciation. Additions/deductionsduring theyearwithdates;inthe caseofanyadditionofan asset,dateputtouse; includingadjustmentson account of-- · Examine the classification of the assets into various blocks. Thepurposeforwhichtheassetisusedisalsovery material.Checkwhethertheclassificationmadebythe assessee is in consonance with legal principles. ·Onceclassificationascertainedandcheckedproperly, check rates applicable as permit. Rules. ·TheprovisionsofSection36(1)(iii)andExplanation8to section43(1)oftheAct,shouldbekeptinmindfor capitalization of interest to the cost of assets. ·Sincedeterminationofactualcosthasgotaccounting implications,hecanrelyontherelevantaccounting StandardsandGuidanceNotes.Duetotheamendments madebytheFinance(No.2)Act,1998,depreciationis allowable on intangible assets. ·Theadditions/deductionsduringtheyearhavetobe reported,withdates.Thetaxauditorisadvisedtogetthe detailsofeachassetorblockofassetaddedduringtheyear ordisposedofduringtheyearwiththedatesof acquisition/disposal.Whereanyadditionwasmade,the date on which the asset was put to use is to be reported. ·Section32(1)(iia)provideforadditionaldepreciationtoa concern engaged in the business of manufacturing concern. ·TheFinanceAct,2001hadinsertedExplanation5below sub-section(1)ofsection32,totheeffectthatthe provisionsofsection32(1)regardingallowingof depreciationshallapplywhetherornottheassesseehas claimed the depreciation. 19 Deductionallowedunder followingsectionsneedstobe reported. Section32AC,33AB,33ABA,35(1),35(2AA),35AC,35AD, 35D and 35CCA ect are required to be read by Audit Team. (b) Detailsofcontributions receivedfromemployeesfor variousfundsasreferredtoin section 36(1)(va): ·Underthisclause,detailsoftheamountdeducted,due dateforpaymentandactualdateofpaymentinrespectof providentfund,ESIfundorotherstaffwelfarefundhaveto bestated.ItmaybenotedthatEmployees’P.F.manual providesfor5daysofgraceperiodforpaymentof contribution.Thiscanbetakenintoconsiderationfor determining the due date of payment. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark Pleasefurnishthedetailsof amountsdebitedtotheprofit andlossaccount,beinginthe nature of (i)Expenditureofcapital nature (ii)Expenditureofpersonal nature (iii)Expenditureon advertisementinanysouvenir, brochure,tract,pamphletor thelike,publishedbya political party (iv)Expenditureincurredat clubsasentrancefeesand subscriptions (v)Expenditureincurredat clubsbeingcostforclub services and facilities used (vi)Expenditurebywayof penaltyorfineforviolationof anylawforthetimebeing force. ·Thedetailsofcapitalexpenditure,ifany,debitedtothe P&Laccountshouldbemaintainedinaclassifiedmanner stating the amount under various heads separately. ·Personalexpensesdebitedtotheprofitandlossaccount aretobespecifiedunderthissub-clauseastheyarenot deductibleinthecomputationoftotalincomeunder section.Thetaxauditorwillhavetoreportinrespectof personal expenses debited in the profit and loss account. ·Section37(2B)providesthatnoallowanceshallbemade inrespectofexpenditureincurredbyanassesseeon advertisementinanysouvenir,brochure,tract,pamphlet orthelikepublishedbyapoliticalparty.Therefore,the expenditureofthisnatureshouldbesegregatedand reported under this clause. (vii)Expenditureincurredfor anypurposewhichisan offenceorwhichisprohibited by law ·Theamountofpaymentsmadetoclubsbytheassessee duringtheyearshouldbeindicatedunderthisclause.The paymentsmaybeforentrancefeesaswellasmembership subscriptionandforcateringandotherservicesbytheclub, bothinrespectofdirectorsandotheremployeesincaseof companiesandforpartnersorproprietorsinothercases. Thefactwhethersuchexpensesareincurredinthecourse ofbusinessorwhethertheyareofpersonalnatureshould beascertained.Iftheyarepersonalinnature,theyareto be shown separately. ·Wherethepenaltyorfineisinthenatureofpenaltyor fineonly,theentireamountthereofwillhavetobestated. Asdiscussedabove,withreferencetocertainpenalty/penal interestcourtshaveheldthatitispartiallycompensatory paymentandpartiallyinthenatureofpenalty.Insucha case,onthebasisofappropriatecriteria,theamount chargedwillhavetobebifurcatedandonlytheamount relatingtopenaltymaybestated.Violationoflawisnota normal incidence of business. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark Amountsinadmissibleunder section40(a):whenTDSisnot deductedonpaymentmadeto Non-residents. Theauditorisrequiredtoreportpaymentstononresidents onwhichtaxisrequiredtobedeductedbutnotdeducted inrespectofinterest,royalty,feesfortechnicalservices andothersuchchargeableamountundertheIncometax Act.TheAuditorisadvisedtogivedetailsunderthisclause for each individual payee. Detailsofpaymentonwhich taxhasbeendeductedbuthas notbeenpaidduringtheinthe previousyearorsubsequent yearbeforeexpiryoftime prescribedu/s200(1)(I)Date of payment. ·Similarlytheauditorisrequiredtoreportpaymentson whichtaxisdeductedbutisnotdepositedwithinthetime prescribed during the previous year or in subsequent year. ·Underthissub-clausethetaxauditorisrequiredtoreport thedetailsofpaymentonwhichtaxisnotdeductedat sourceandalsothedetailsofpaymentonwhichtaxhas beendeductedbutnotpaidduringthepreviousyearorin thesubsequentyearbeforetheexpiryoftimeprescribed undersection200(1)/139(1).Thetaxauditorshould maintainthefollowingdatainhisworkingpapersforthe purpose of reporting under this sub-clause: Amountsdebitedtoprofitand lossaccountbeing,interest, salary,bonus,commissionor remunerationinadmissible undersection40(b)/40(ba) and computation thereof; ·Salary,bonus,commissionorremunerationorinterestare notadmissible,unlessthefollowingconditionsare satisfied: (a) Remuneration is paid to working partner(s). (b)Remunerationorinterestisauthorisedbythe partnershipdeedandisinaccordancewiththepartnership deed.(c)Remunerationorinterestdoesnotpertaintoa period prior to the date of partnership deed. Onthebasisofthe examinationofbooksof accountandotherrelevant documents/evidence, whethertheexpenditure coveredundersection40A(3) readwithrule6DDweremade byaccountpayeecheque drawnonabankoraccount payeebankdraft.Ifnot,please furnish the details: ·Thetaxauditorshouldobtainalistofallcashpaymentsin respectofexpenditureexceedingRs.20,000orRs.35000 madebytheassesseeduringtherelevantyearwhich shouldincludethelistofpaymentsexemptedintermsof Rule 6DD with reasons. ·Wheretheassesseeincursanyexpenditureinrespectofa paymentoraggregateofpaymentsmadetoapersonina day,otherwisethanbyanaccountpayeechequedrawnon abankoraccountpayeebankdraft,exceedingrupees twentythousand,nodeductionwouldbeallowedin respectofsuchexpenditure.Incaseofpaymentmadefor plying,hiringorleasingofgoodscarriage,limitis Rs.35,000/- instead of Rs.20,000/-. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark Provisionforpaymentof gratuitynotallowableunder section 40A(7) ·Aspersection40A(7),thedeductionshallbeallowedin relationtoanyprovisionmadebytheassesseeforthe purposeofpaymentofasumbywayofanycontribution towardsanapprovedgratuityfund,orforthepurposeof paymentofanygratuity,thathasbecomepayableduring the previous year. ·Thetaxauditorshouldcallfortheorderofthe CommissionerofIncometaxgrantingapprovaltothe gratuityfund,verifythedatefromwhichitiseffectiveand alsoverifywhethertheprovisionhasbeenmadeas providedinthetrustdeed.Incasenotallowable,thesame is to be stated under this sub-clause. anysumpaidbytheassessee asanemployernotallowable under section 40A(9); ·Anypaymentmadebyanemployertowardsthesetting uporformationoforascontributiontoanyfund,trust, company,AOP,BOI,Society(otherthancontributionsto recognisedprovidentfundorapprovedsuperannuation fundornotifiedpensionschemeorapprovedgratuityfund) isnotallowable.Thetaxauditorshouldfurnishthedetails of payments which are not allowable under this section. Amountofdeduction inadmissibleintermsof section14Ainrespectofthe expenditureincurredin relationtoincomewhichdoes notformpartofthetotal income; ·Ingeneralanassesseemayhavebesideshisbusiness income,incomefromagriculturewhichisexemptunder sub-section(1),shareofprofitinapartnershipfirmwhichis exemptundersub-section(2A),incomefromdividends referred to in section 115-O which is exempt. ·under2(34),longtermcapitalgainsonthetransferof equityshareswhichisexemptunder2(38)etc.Inallsuch casestheexpenditurerelatingtotheincomewhichisnot includedintotalincomeisinadmissibleundersection14A. Incaseofaninvestmentinapartnershipfirm,whilethe interestandthesalaryreceivedbythepartneraretaxable, theshareofprofitisexempt.Theamountofinadmissible expendituredependsonthefactsandcircumstancesof eachcase.ComputationtobemadeasperRule8Dof Income Tax Rules. AmountofInterest inadmissibleundersection23 oftheMicro,Smalland MediumEnterprise Development Act, 2006. ·Obtainafulllistofsuppliersoftheassesseewhichfall withinthepurviewofthedefinitionof“Supplier”under section2(n)oftheMSMEDAct,2006.Itistheresponsibility oftheauditeetoclassifyandidentifythosesupplierswho arecoveredbythisAct.Verifytheinterestpayableorpaid as mentioned above on test check basis. 22 PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark Particularsofpaymentsmade topersonsspecifiedunder section 40A(2)(b). ·Section40(A)(2)providesthatexpenditureforwhich paymenthasbeenoristobemadetocertainspecified personslistedinthesectionmaybedisallowedif,inthe opinionoftheAO,suchexpenditureisexcessiveor unreasonablehavingregardtothefairmarketvalueofthe goods,servicesorfacilitiesforwhichthepaymentismade; orforthelegitimateneedsofbusinessorprofessionofthe assessee;orthebenefitderivedbyoraccruingtothe assessee from such expenditure. ·Thefollowingstepsmaybetakenbythetaxauditorinthis connection:(a)Obtainfulllistofspecifiedpersonsas contemplatedinthissection.(b)Obtaindetailsof expenditure/paymentsmadetothespecifiedpersons.(c) Scrutiniseallitemsofexpenditure/paymentstotheabove persons. Anyamountofprofit chargeabletotaxunder section41andcomputation thereof. ·Section41(1)providesthatwhereanyallowanceor deductionhasbeenmadeintheassessmentforanyyearin respectofloss,expenditureortradingliabilityincurredby theassesseeandsubsequentlyduringanypreviousyear theassesseeobtainsanyamount,whetherincashorinany othermannerwhatsoever,theamountobtainedbyhimor thevalueofbenefitaccruingtohimischargeabletotaxas business income. Inrespectofanysumreferred toinclause(a),(b),(c),(d),(e) or(f)ofsection43B,the liabilityforwhichandamounts shallbeallowedasdeduction onlyonactualpaymentbasis beforetheduedateforfiling of ITR. Sec. 139(1). ·S.43Bthefollowingamountsshallbeallowedasdeduction intheyearinwhichamountsareactuallypaid:(a)Anytax, duty,cessorfeeetc(b)Employer’scontributiontoPF(c) Anybonus,commissionpayabletoitsemployees(d) InterestonloanorborrowingfromPublicFinancial institutionetc(e)Interestonanyloanoradvancefroma schedulebank(f)Anysumpayabletoemployeeinlieuof any Leave credit. AmountofCentralValue AddedTaxcreditsavailedofor utilisedduringtheprevious yearanditstreatmentinthe profitandlossaccountand treatmentofoutstanding CentralValueAddedTax credits in the accounts. ·CENVATcreditisavailableoneligibleinputs,inputservices andcapitalgoods.Suchcreditsareutilizedforthepayment oftheexcisedutyandservicetaxliability.Accordinglythe taxauditorshouldcheckrelevantstatutoryrecords maintainedundertheCentralExciseRules1944andthe recordsmaintainedunderCENVATCreditRules,2004and ascertaintherefromtheamountofcreditoneligibleinputs, inputservicesandthecapitalgoodsandtheamount utilisedduringthepreviousyear.RecordsmaintainedinRG- 23, wherever available should also be verified. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark ·Thetaxauditorshouldverifythatthereisaproper reconciliationbetweenbalanceofCENVATcreditinthe accountsandrelevantexciseandservicetaxrecords.The taxauditorshouldreporttheamountofCENVATavailed and utilised under this sub - clause. ·Iftheassesseehasneitheravailednorutilizedthecredit, then“No”istobeclicked.Inothercases“Yes”willbe clickedandtheauditorisrequiredtomentiontheamount inthefirstcolumnandthecorrespondingaccountinwhich itisdebitedorcreditedinthesecondcolumn.Itis advisabletogivethedetailsofthecreditavailedand utilized as separate line items. Particularsofincomeor expenditureofpriorperiod creditedordebitedtothe profit and loss account. ·AsperAS-IT-IImaterialchargesorcreditswhicharisein currentyearasaresultoferrorsoromissionsinaccountsof earlier years will be considered as prior period items. Particularsofeachloanor depositinanamount exceedingthelimitspecifiedin section269SStakenor acceptedduringtheprevious year :-- Name,addressandpermanent accountnumber(ifavailable withtheassessee)ofthe lender or depositor; ·Ifthetotalofallloans/depositsfromapersonexceed Rs.20,000/- but each individual item is less than Rs.20,000/- ,theinformationwillstillberequiredtobegiveninrespect ofallsuchentriesstartingfromtheentrywhenthebalance reachesRs.20,000/-ormoreanduntilthebalancegoes down below Rs.20,000/. Particularsofeachrepayment ofloanordepositinan amountexceedingthelimit specifiedinsection269Tmade during the previous year. ·Section269Tisattractedwhererepaymentoftheloanor depositismadetoaperson,wheretheaggregateamount ofloansordepositsheldbysuchpersoneitherinhisown nameorjointlywithanyotherpersononthedateofsuch repaymenttogetherwithinterest,ifany,payableonsuch deposit is Rs.20,000 or more. ·Allrepaymentsmadetoanypersonwheretheloanor depositalongwithinterestisRs.20,000ormorearetobe reportedunderthissub-clause,eventhoughtheamountof repaymentmaybelessthanRs.20,000.Thetaxauditor should verify such repayments and report accordingly. Detailsofbroughtforwardloss ordepreciationallowance,in thefollowingmanner,tothe extent available: ·B/Flossesmayrelatetodifferentheadsofincomesuchas HP,Businessorprofession,speculationbusinessorcapital gainshastobeidentifiedfromlastyearscomputationof income. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark Section-wisedetailsof deductions,ifany,admissible underChapterVIAorChapter III (Section 10A, Section 10AA). ·ChapterVIAoftheActdealswithvariousdeductionsthey have been categorised under the Act as follows: A.Deductioninrespectofcertainpayments.B.Deduction in respect of certain incomes. C. Other Deductions. Whethertheassesseeis requiredtodeductorcollect taxaspertheprovisionsof ChapterXVII-BorChapterXVII- BB, if yes please furnish: ·Oncethetaxauditorgiveshisaffirmationwithregardto applicabilityoftheprovisionsofChapterXVII-Band/or ChapterXVII-BB,heisrequiredtofurnishfurtherdetailsin Clause34(a).Theauditorshouldobtainacopyofthe TDS/TCSreturnsfiledbytheassesseewhichshallformthe basisofreportingunderthisclause,totheextentpossible. Further,inviewofthevoluminousnatureofthe transactions,thetaxauditorcanapplytestchecksand compliancetestsonthetransactionsreportedintheTDS returnbytheassesseeforverifyingtheinformation required to be provided under this clause. Thetaxauditorshouldrefertotherelevantprovisions, rules,circulars,notificationsandsuchcertificatesobtained fromtheauditeetoverifythecaseswheretaxhasbeen shortdeductedatsource.Incasethepayer deducts/recipientcollectstaxatsourceataratelowerthan thespecifiedrateonthebasisofcertificateissuedunder section195or197,thelowerrateornilrate,asthecase maybewillbeconsideredasthespecifiedrateforthe purposeofreportingunderthisclause.Inthecaseof paymenttonon-residentstheapplicablerateoftax deductionatsourceistobereadalongwiththeDouble Taxation Avoidance Agreement. whethertheassesseehas furnishedthestatementoftax deductedortaxcollected withintheprescribedtime.If not, please furnish the details: ·Underclause34(b),thetaxauditorhastoascertainand reportwhethertheassesseehasfurnishedthestatement ofTDS/TCSwithintheprescribedtime.IfalltheTDS/TCS statement(s)relatingtothepreviousyearhavebeenfiled within the prescribed time. whethertheassesseeisliable tointerestonlatepaymentof TDS,ifyesthenreportthe same. Incasethetheassesseehaddisputedthelevyor calculation of interest under TRACES, in Form No.26AS, Inthecaseofatrading concern,givequantitative detailsofprincipalitemsof goods traded. ·Thetaxauditorshouldobtaincertificatesfromthe assesseeinrespectoftheprincipalitemsofgoodstraded, thebalanceoftheopeningstock,purchases,salesand closingstockandtheextentofshortage/excess/damage andthereasonsthereof.Theinformationisrequiredtobe given to the extent available with the auditee. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme StepsAudit AreaAudit ProcedureArea Checked by and Remark Inthecaseofamanufacturing concern,givequantitative detailsoftheprincipalitemsof rawmaterials,finished products and by-products. Thisclauserequiresthatquantitativedetailsof“principal items”ofrawmaterialsandfinishedgoodsshouldbegiven. Therefore,informationaboutpettyitemsneednotbe given.Normally,itemswhichconstitutemorethan10%of theaggregatevalueofpurchases,consumptionorturnover may be classified as principal items. Whetheranycostauditwas carriedout,ifyes,givethe details,ifany,of disqualificationor disagreementonanymatter/ item/value/quantityasmay bereported/identifiedbythe cost auditor ·Thetaxauditorshouldascertainfromthemanagement whethercostauditwascarriedoutandifyes,enclosethe copy of the report of such audit. Whetheranyauditwas conductedundertheCentral ExciseAct,1944,ifyes,give thedetails,ifany,of disqualificationor disagreementonanymatter/ item/value/quantityasmay bereported/identifiedbythe auditor. ·Thetaxauditorshouldascertainfromthemanagement whetheranyauditwasconductedundertheCentralExcise Act,1944andifsuchauditwascarriedout,obtainthe report,ifavailableandenclosethecopyofthereportof such audit. Detailsregardingturnover, grossprofit,etc.,forthe previousyearandpreceding previous year: Gross profit/Turnover; Net profit/Turnover; Stock-in-trade/Turnover; Materialconsumed/Finished goods produced. ·Theseratioshavetobecalculatedonlyforassesseeswho areengagedinmanufacturingortradingactivities.This clauseisnotapplicabletoassesseescarryingonprofession. Moreover,theratioshavetobegivenforthebusinessasa wholeandneednotbegivenproductwise.Further,the ratiomentionedin(5)neednotbegivenfortrading concern or service provider. Pleasefurnishthedetailsof demandraisedorrefund issuedduringthepreviuos yearunderanytaxlawsother thanIncome-taxAct,1961and WealthtaxAct,1957 alongwithdetailsofrelevant proceedings. ·Theauditeemaybeassessedundervarioustaxlawsother thanIncome-taxAct,1961andWealth-taxAct,1956 resultingintoademandorderorarefundorder.Thetax auditorshouldobtainacopyofallthedemand/refund ordersissuedbythegovernmentalauthoritiesduringthe previousyearunderanytaxlawsotherthanIncomeTax Act.Normally,theIndirecttaxlawssuchasCentralExcise Duty,ServiceTax,CustomsDuty,ValueAddedTax,CST, Professional Tax etc would be covered as other tax laws. PY 2015-16Vinod Vyas 9461112999Tax Audit Programme