The tax audit report is to be electronically filed by the chartered accountant to the Income-tax Department. Here's all you need to know about it
The Finance Ministry has recently extended the deadline for filing income tax returns (ITR) for the assessment year 2022-23 by businesses till November 7. This is the third extension granted for the filing of tax returns where an audit is required. The original date was September 30, 2022, which was extended to October 7 and further to October 31.
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Now, the same has been extended to November 7, 2022.
Why the extension?
In a notification, the Central Board of Direct Taxes, the apex decision-making body in matters of income and corporate tax, said that since it had extended the deadline for filing audit reports last month, the ITR filing due date, too, is extended.
While extending the deadline for the first time from September 30 to October 7, CBDT said that it was done on account of difficulties being faced by the taxpayers and other stakeholders in the filing of various reports of an audit.
What is a tax audit?
The concept of tax audit came in the year 1984 in the Indian tax laws. It aims to ascertain the compliance of various provisions of the act and is conducted by a chartered accountant only.
The taxpayers who are subject to income tax audits are required to get their accounts, i.e. balance sheet and profit and loss account, audited by a practising chartered accountant.
Additionally, a proper audit for tax purposes ensures that the books of account and other records are properly maintained by the taxpayer, that they truly reflect the taxpayer's income and that claims for deduction are made correctly.
What forms are required to do the same?
The chartered accountant conducting the tax audit give his/ her findings, observation, etc., in the form of an audit report in Form Nos. 3CA/3CB and 3CD.
The form prescribed for the audit report under section 44AB of the act is Form No. 3CB, and the prescribed particulars are to be reported in Form No. 3CD.
Who needs to get their accounts audited?
In the case of a specific business, or if the income or turnover of a taxpayer exceeds stipulated limits, a tax audit is required.
What is the objective of tax audits?
Apart from reporting requirements of Form Nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they truly reflect the taxpayer's income and that claims for deduction are correctly made by him/her.
Such an audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of assessing officers in carrying out routine verifications, like checking the correctness of totals and verifying whether purchases and sales are properly vouched for or not.
What is the penalty for not getting the accounts tax audited?
As per section 271B of the act, if any person who is required to comply with section 44AB fails to get his/ her accounts tax audited for any year or years, the assessing officer may impose a penalty. The penalty shall be lower than the following amounts:
(a) 0.5 percent of the total sales, turnover or gross receipts in business, or of the gross receipts in profession, in such year or years.
(b) Rs 1,50,000.
Also, according to section 271B, no penalty shall be imposed if reasonable cause for such failure is proved.