The deadline for income tax audit report filing will end on September 30, 2022. This means taxpayers who are eligible for the same have only three days to complete the process.
Section 44AB is the provision relating to the taxpayers who are required to get their accounts tax audited by a chartered accountant. So, those covered under this are required to obtain the audit report on or before September 30 of the relevant assessment year, e.g., a tax audit report for the financial year 2021-22 corresponding to the assessment year 2022-23 should be obtained on or before September 30, 2022.
What is a tax audit?
The concept of tax audit came in the year 1984 in the Indian tax laws.
The tax audit aims to ascertain the compliance of various provisions of the act and is conducted by a chartered accountant only. The chartered accountant conducting the tax audit must give his/ her findings, observation, etc., in the form of an audit report in Form Nos. 3CA/3CB and 3CD, said Yeeshu Sehgal, Head of Tax Market, AKM Global, while talking to CNBC-TV18.com.
What is the objective of a tax audit?
The primary objective of the audit is to complete the requirements of Form Nos. 3CA/3CB and 3CD.
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, Sehgal told CNBC-TV18.com.
What are forms 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.
In the case of taxpayers who are required to get their accounts audited by or under any other law other than income-tax law, the form prescribed for audit report is Form No. 3CA, and the prescribed particulars are to be reported in Form No. 3CD.
Form 3 CD is divided into two parts, Part A & Part B. Part A (Clause 1 to 8) of Form 3CD requires the CA to furnish the basic details of the taxpayer. The taxpayer can move ahead only once Part A of the form has been filled and saved.
Part B of Form 3CD has further divisions (clauses 9 to 44). It is to be noted that reporting under one of the clauses (clause 44) of part B of form 3CD was kept in abeyance till March 31, 2022, but it has now become mandatory for all the reports submitted after March 31, 2022.
Clause 44 requires reporting on the break-up of the total expenditure of entities registered or not registered under the GST, according to Sehgal.
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, Sehgal said.
Please click here to view full story on CNBCTV18.