Tax Audit
A Tax Audit is a type of audit mandated under Section 44AB of the Income Tax Act, 1961. It involves a detailed examination of the books of accounts of a taxpayer to ensure accuracy in the computation of taxable income and compliance with provisions of the Income Tax Act. The audit must be conducted by a practicing Chartered Accountant and is applicable when the turnover, gross receipts, or income of a business or profession exceeds the prescribed threshold limits during a financial year.
Applicability of Tax Audit [As per Section 44AB]
The applicability criteria for Tax Audit are as follows:
Mandatory Tax Audit if turnover exceeds ₹1 crore in a financial year.
Enhanced Threshold of ₹5 crore (now ₹10 crore) applies if:
a) Cash receipts do not exceed 5% of total gross receipts/turnover and
b) Cash payments do not exceed 5% of total payments.
Note: The limit of ₹5 crore was increased to ₹10 crore from Assessment Year 2021–22 (FY 2020–21) onwards to promote digital transactions.
Mandatory Tax Audit if gross receipts exceed ₹50 lakhs in a financial year.
If a person declares lower income than the deemed profits under the presumptive scheme and his total income exceeds the basic exemption limit, tax audit becomes applicable.
All audits under Section 44AB must be completed and the audit report (Form 3CA/3CB and 3CD) must be submitted electronically before the due date specified under Section 139(1) of the Act (usually 30th September of the assessment year).
Objectives of Tax Audit:
Ensure proper maintenance of books of accounts and records.
Verify the correctness of income computation and deductions claimed
Report specific financial details required by the Income Tax Department
Promote voluntary compliance and reduce chances of tax evasion.
Facilitate the filing of income tax returns.
Our Tax Audit Practice - Types of Clients Handled:
Our firm has extensive experience in conducting tax audits across a wide spectrum of entities engaged in business and profession. We ensure timely completion, accurate reporting, and compliance with tax audit. We handle tax audit assignments for the following categories:
Companies (Private/Public Limited)
Tax audit for entities engaged in manufacturing, trading, service sectors, etc
Limited Liability Partnerships (LLPs) in Business
For LLPs carrying on business activities exceeding prescribed thresholds
Limited Liability Partnerships (LLPs) in Profession
For LLPs in professional fields such as healthcare, legal, consultancy, etc
Partnership Firms in Business
Retailers, wholesalers, contractors, manufacturers, etc
Partnership Firms in Profession
Professionals such as doctors, lawyers, architects operating as partnerships
Individuals with Business Income (Proprietorship)
Sole proprietors with turnover exceeding limits or opting out of presumptive schemes
Individuals in Profession (e.g., Doctors, Lawyers, Consultants)
Freelancers and independent professionals crossing the audit threshold
Our tax audit approach is tailored to minimize non-compliance risks, identify tax-saving opportunities, and ensure the entity is well-prepared for any scrutiny or assessment by tax authorities.