Be Prepared for Tax Auditors Coming to Review Necessary Tax Documentation
When the tax season is near, business and individuals alike begin to file their tax in the relevant tax year. That’s the prevailing situation in India. If you have a company in India, it wise that you comply with all of the law that governs business affairs. Should you have trouble in keeping all tax-related matters in check, get in touch with a local legal entity. Tax audit services in India is widely available. But, let’s find out about the essentials a tax audit services should cover.
All limited liability partnerships (LLPs) or individuals earnings reaches above a specific threshold are compulsory to do a tax audit. It is a mandatory requirement under section 44AB of the Income Tax Act, 1961. The article states that companies with a total sales of over Rs. 1 Crore is subject to undergo a tax audit. A chartered accountant must do a tax audit. Even individuals conducting a profession receiving a gross income of over Rs. 50 Lakhs in the previous year are required to have a tax audit. Over the years, we have accumulated a wealth of experience during our tax audit services in India. Hence, each chartered accountant has in-depth knowledge of requirements.
The Function of a Tax Audit
A tax audit is done by independent bodies, usually chartered accountants hired for this purpose. Every company must be responsible for undergoing a tax audit as it becomes a part of the corporate planning exercise. With a tax audit in place, organisations or companies can minimise business risks and liabilities. Individuals can benefit from a tax audit as well. For individuals required to undergo tax audit, it can be overwhelming to keep track records of tax in check and balance. Hence, such individuals need the assistance of tax audit services to ensure all tax-related matters are maintained accordingly. A tax auditor could also negotiate with tax agencies to provide tax relief to companies or individuals. This is a common practice where companies and individuals could genuinely benefit from a comprehensive tax audit.
What Entails a Tax Audit
Tax audit services in India routinely will check, review and report all relevant tax matters. The chartered accountant will be doing the tax audit report. He or she will furnish the tax audit report using a specific format. The tax auditor will use the Form 3CA to produce a tax audit report for companies that are already mandated to get their accounts audited under the Companies Act, 2013. If a tax audit works for companies or individuals that need tax auditing under the provisions of section 44AB, the tax auditor will furnish the report using Form 3CB. The tax auditor will then need to submit another form, Form 3CD together with any of the abovementioned forms. This forms the complete audit report.
Penalty for Non-compliance
Any company or individuals not complying to is subject to penalty. For companies, the penalty is 0.5% of the total sales, turnover or gross receipts. As for individuals, the penalty is up to Rs 1,50,000. Some companies or individuals overlook the deadline for tax filing. The prepared tax report must be filed together with tax filing on every 30th September of the relevant assessment year. Engaging with tax audit services in India ensures that all tax report can be filed just in time of the due date.