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Tax Audit

Overview

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 business or any profession is reviewed which makes the process of income computation for filling 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 Income Tax Return Filing Forms

ITR 1 (Sahaj)

For individuals earning income from salary, single house property, agriculture, & income from other sources. This form is to be filed by individual residents having total income up to Rs. 50 lakhs and agricultural income up to Rs. 5,000.

Note Not applicable to individual being director in a company or has invested in unlisted equity shares or having foreign assets or foreign income.

ITR 2

For individuals and HUFs having earnings other than from PGBP (profits and gain of business or profession). It may be from capital gain, lottery, or foreign assets, etc. while total income should exceed Rs. 50 lacs. In case of agriculture income, it should exceed Rs. 5,000. Also, it is filed by those who invested in unlisted equity shares during the financial year.

ITR 3

For individuals and HUFs having earnings from profits and gains of business or profession. It also needs to be filed by the individuals having their income as a partner in a firm.

ITR 4 (Sugam)

For Individuals, HUFs, and Firms (other than LLP) being a Resident having entire Income of up to Rs.50 lakhs from business or Profession. It also covers those who have opted presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act.

Note

Not applicable to individual director in a company or who has invested in unlisted equity shares

ITR 5

ITR 5 is filed by firms, LLPs, AOPs (Association of Persons), BOIs (Body of Individuals) etc.

ITR 6

ITR 6 is filed by companies other than those claiming exemption under section 11 (Income from property held for charitable or religious purposes).

ITR 7

It is required to be filed by those falling under section 139(4A) or section 139 (4B) or section 139 (4C) or section 139 4(D) that can either be individual or a company.

What Documents are required to file Income Tax Return?

·       Copy & PAN of Aadhaar

·       Address details

·       Bank Account details

·       Additional disclosures with reference to income from payroll & fixed deposits

·       Data required for claiming deduction

·       Data required regarding TDS return filing and advance tax payments

·       Investment proof

·       TDS certificate in Form 16

·       Interest income certificate in Form 16A

·       Form 26AS