Tax audit

Doing Tax Audit & computing the tax liability are two different aspects.  Tax Audit involves only of auditing the entities Books of accounts to confirm that they are in compliance with the tax laws.  All the payments/expenses/incomes etc.. are being supported by proper & sufficient documents.  All the assets of the entity are being properly valued & liabilities are being properly stated.  After that an Tax Audit Report is being issued by the Tax Auditor to the entity.

After the above is being done, then the task of computing the tax liability of the entity is being performed.

Statutory Audit is different from Tax Audit.  SA is being performed if there is an requirement of Audit under any law.  For instance under the Companies Act, the co is required to get it’s books of accounts audited from the Statutory Auditor say quarterly, half-yearly or yearly depending upon the size of the entity.  The statutory Auditor verifies if all the requirements as laid down under the Co’s Act are being complied by the Company.  After that the Statutory Auditor issues an Audit Report to the Company.

In case of companies where Statutory Audit is being performed, there is no need to perform a separate Tax Audit, as there is an requirement under the Co’s Act to get the books of acoc*nts audited by the Statutory Auditor.  In such case the Stat Suditor also can perform Tax Audit & he then issues an Tax Audit Report, Statutory Audit Report & also computes the Tax liability.

thanks for the info Giridhar.

Upon completing the statutory audit, I suppose the tax liability of the company is worked out?

Does it involve these:

Tax computation (adjusting P&L )

Deductions

Despositing the tax using ITNS 280

Filing & uploading the ITR 6 on incometaxindia.gov.in

  Pls. correct if i've missed something.

Yes, after completion of the audit,  the necesasry adjustments are being made in the P&L of teh client as advised by the Statutory Auditor & then only the Net Profit as per teh P&L account after necesaty audit adjustments is being considered to compute the total tax liability of the co.

After That the Gross total Income of the company under each of teh head is being computed.  After that if there are any B/F losses under teh respective head then these are adjusted against those Income under teh respective heads.  Depreciation loss if any is also adjusted.

After setting off teh losses,  the Gross Total Income is being arrived.  After that deductions under Chapter VI-A if any applicable to teh co are being considered & then after that on the Net Income the final tax liability is being calculated.  After calculating the Tax liability the TDS & the Advance Tax paid by the company are being deducted.  Then if applicable the interest u/s 234B & 234C is beng charged.  Then after adjusting the tax liability against TDS & Advance Tax, the remaining liability if any is required to be paid by the company. using the challan.

After the above the file is being uploaded on the net.

If the company makes an investment should it be in the name of the company or the director to avail the deduction under VIA?

thanks Giridhar.

Dear Rohit,

Please note that a Company is not eligible to claim deduction u/s 80C of the IT Act.  Only individuals & HUF can claim deduction u/s 80C.  so the director has to make the investment in his own name to claim deduction u/s 80C.

However there are other sectinos in Chap VI-A that a co cna claim deduction.