Tax Audit

Tax audit is an investigation or an analysis of the tax returns presented by a business or an individual to estimate the exact amount of income tax payment. Knowing about Tax Audit in India: Rules, Forms, Penalty for Income Tax Audit is very important as it is conducted to calculate the tax payments of individuals and businesses accurately. Government of India conducts various audits under different laws such as company audit/statutory audit carried out under company law provisions, cost audit, stock audit etc. Likewise, Income Tax law has made ‘Tax Audit’ compulsory. In tax audit, accounts of a business or any profession are reviewed which makes the process of income computation for filing of return of income easier.

Income Tax Act has made tax audit compulsory on the annual gross turnover/receipts if the amount exceeds a specified limit. Chartered Accountant conducts the tax audit as defined in Section 44AB of the Income Tax Act, 1961.

In simple terms, Tax Audit is an audit of matters related to tax.

Tax Audit Applicability

Section 44AB has made tax audit a mandatory thing for the following persons:

Business: Rs 1 Crore

It means an assesse requires to be audited as mentioned in Section 44AB if his annual gross turnover increases Rs 1 Crore in business.

Profession: Rs 50 Lakh

It means an assesse has to go through tax audit under Section 44AB if his annual gross income in profession increases Rs50 lakh.

Type of Accounts Come Under Tax Audit

• Individual/Proprietorship
• Hindu Undivided Family
• Company
• Partnership Firm
• Association of Person
• Local Authority