Simple understanding of Tax audit for AY 2018-19


As soon as due date of filing tax audit is coming near, assessee and tax auditor are making effort to comply with the tax audit provision.

I have tried to prepare a complete analysis of tax audit for fy 17-18 (AY 18-19), so that the professional can easily complete all the task in time with a clear understanding of the tax audit.   

OBJECTIVE

  • To ensure the book of account and other records of assessee are properly maintained.
  • Book of account accurately reflect the income of taxpayers and deduction are correctly declared.
  • To make the income computation for filing the returns more efficient.
  • Report the requirements of Form No 3CA/3CB and 3CD
  • Facilitate the administration of tax laws by the proper presentation of accounts before tax authorities and considerab1ly save the time of assessing officers in carrying out routine verification.                

APPLICABILITY

It is obligatory in the following cases for a person carrying on business or profession to get his accounts audited before the “specified date as per section 139(1) ”by a CharteredAccountant in practice:

  • if the total sales, turnover or gross receipts in business exceeds 100 lakh  in  any previous year;or
  • if the gross receipts in profession exceeds 50 lakh in any previous year;or
  • where the assessee is covered under section 44AE, (44BB  or  44BBB)and claims that  the profits and gains from business are lower than the profits and gains computed on a presumptive basis. In such cases, the normal monetary limits for tax audit in respect of business would not apply.
  • where the assessee is carrying on a notified profession under section 44AA, and he claims that the profits and gains from such profession are lower than the profits and gains computed on a presumptive basis under section 44ADA and his income exceeds the basic exemption limit.
  • where the assessee is covered under section 44AD(4) and his income exceeds the basic exemption limit.

NON-APPLICABILITY

The requirement of audit under section 44AB does not apply to a person who declares profits and gains on a  presumptive basis under section 44AD and his total sales, turnover or gross receipts does not exceed ` 2crore.

Further, the requirement of audit under section 44AB does not apply to a person who derives income of nature referred to in sections 44B and 44BBA.

SPECIFIED DATE

In relation to the accounts of the previous year or years relevant to any assessment year specified date means the due date for furnishing the return of income under section 139(1). In tax audit due date is 30 September.

PENAL PROVISION

According to section 271B, the assessing officer may impose a penalty if the assessee is failed to file a tax audit report as required under section 44AB. The penalty shall be lower of the following amounts:

  • 0.5% of total sales, turnover or gross receipts (as the case may be), in business in such years or years
  • 0.5% of the gross receipts in the profession, in such year or years
  • Rs 1,50,000

*However, according to IT act 1961, section 273B, no penalty shall be imposed if reasonable cause for such failure is proved.

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ARUN KUMAR  
on 06 August 2018
Published in Audit
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