Hello Guys, Welcome to our new series on Tax Audit. Let’s start today with understanding basics such as Tax Audit applicability and due dates.
Section 44AB of the Income-tax Act, 1961 lists out the cases in which the assessees are required to get their accounts audited by a Chartered Accountant. Form 3CA/3CB along with Form 3CD has been notified by the Income-tax department for the purpose of the same.
The due dates of filing of Return and submission of Tax Audit report by such assessees are as under :
- Due date for furnishing Tax Audit Report (Form 3CA/3CB + Form 3CD) — 30th September of relevant Assessment Year.
- Due date for filing ITR — 31st October of relevant Assessment Year.
The audit report has to be furnished by Tax Auditor in either Form 3CA or Form 3CB along with Form 3CD which forms part of the audit report and contains the prescribed particulars-
- Form 3CA – Tax Audit Report in the case of a taxpayer having business or profession income who is mandatorily required to get accounts audited under any other Act (other than Income Tax Act) i.e., in case of companies and LLP.
- Form 3CB – Tax Audit Report in the case of a taxpayer having business or profession income who is not required to get accounts audited under any other Act (other than Income Tax Act) i.e., in cases other than companies and LLP.
- Form 3CD – It is a 44-points detailed statement of particulars. All the details related to various aspects of the business and transactions have to be filled at appropriate places.
- Form 3CE – Tax Audit Report in the case of a taxpayer who is a Non-Resident or Foreign Company receiving a royalty or fee for technical services.
In the following cases, Form 3CB needs to be given even in case of Companies and LLPs :
- Companies incorporated between 01.01.2022 to 31.03.2022;
- LLPs incorporated between 01.10.2021 to 31.03.2022;
- Report of Statutory Auditor is not available till the due date of Tax Audit report for whatever reason (Open casual vacancy in the office of Statutory Auditor, Dispute with Statutory Auditor etc.)
Tax Audit under section 44AB is applicable in the following cases-
1). Business
- Total Sales, Turnover or Gross Receipts > INR 1 Crore in any PY
- The threshold limit, for a person carrying on business, has been increased from INR 1 crore to INR 10 crore when CASH RECEIPT as well as CASH PAYMENT does not exceed 5% of total receipt or payment (as the case may be)
2) Profession
- Gross Receipts > INR 50 Lakhs in any PY
3) 44AE/ 44BB/ 44BBB Business
- Covered under section 44AE (Goods Carriage) or section 44BB (Extraction of minerals by Non-Resident) or section 44BBB (Foreign companies, Business of Civil construction) and claimed his income to be lower than deemed income in any PY.
- These assessees will be required to get a tax audit even if their sales, turnover or gross receipts do not exceed INR 1 Crore.
4) 44ADA Profession
- Covered under section 44ADA and claimed his income to be lower than deemed income + Income exceeds the maximum amount which is not chargeable to tax.
5) 44AD Business
- If the provisions of section 44AD(4) are applicable and Income exceeds the maximum amount which is not chargeable to tax (i.e., 8% or 6% profit needs to be shown for the next 5 yrs, otherwise cannot opt 44AD for 5 yrs)
Penalty u/s 271B of Income-tax Act-
Assessing Officer may impose a penalty under section 271B if the taxpayer doesn’t get his accounts audited or file the audit report. A minimum penalty can be 0.5% of the total sales, turnover or gross receipts, which can go up to INR 1,50,000. However, if the taxpayer gives reasonable cause for non-compliance, no penalty will be imposed.
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Hemanth Uppala
Chartered Accountant
Content Writer | TAX DESTINATION
