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What is tax audit? The dictionary meaning of the term audit is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit, cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer
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FAQ :
A tax audit under Section 44AB is an inspection of a taxpayer's accounts by a chartered accountant to ensure compliance with the Income-tax Law. The auditor provides findings in a report, typically using Form Nos. 3CA/3CB and 3CD.
Businesses with total sales, turnover, or gross receipts exceeding Rs. 1 crore (or Rs. 10 crore if 95% of transactions are via banking) and professionals with gross receipts over Rs. 50 lakhs are generally required to undergo a tax audit. Specific conditions apply if opting out of presumptive taxation schemes.
The tax audit report must be obtained on or before 30th September of the relevant assessment year. For example, the report for the financial year 2022-23 is due by 30th September 2023.
Failure to obtain a tax audit report as required by Section 44AB can result in a penalty under Section 271B. This penalty is the lower of 0.5% of total sales/turnover/gross receipts or Rs. 1,50,000. However, no penalty is imposed if a reasonable cause for the failure can be proven.
If a person, like a company or co-operative society, is already required to get their accounts audited under another law, they don't need a separate audit for Section 44AB. They must obtain the audit report under that law and also a report from a chartered accountant in the prescribed Section 44AB forms (3CA and 3CD).
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