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Is there any department who will keep eye on our account and financial statements

Atharv Sankliya (1306 Points)

24 October 2021

is there any department who will keep eye on our account and financial statements??

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 24 October 2021

No! Only before you file income tax, they will check your financial statements through auditor. Tax department doesnt have staff to check every company records. If they have any doubt, then they will check it.

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Atharv Sankliya (1306 Points)
Replied 24 October 2021

Let suppose there is a firm named abc , sale good on credit of 10 lac rupees to a firm named xyz ltd and mentioned as debtor = 10 lac in balance sheet now will tax department tally it in balance sheet of xyz ltd that the firm mentioned 10 lac rupees as creditor ???

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 24 October 2021

Not necessarily. Both cash and credit sales will be reducing the profits. The tax is applied on them, meantime there is deferred taxes For example, money due on a current receivable account cannot be taxed until collection is actually made, but the sale needs to be reported in the current period. Because these differences are temporary, and a company expects to settle its tax liability (and pay increased taxes) in the future, it records a deferred tax liability. Tax authorities will cross check with your financial statements only/