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A Tax Audit is an examination of your tax return by Chartered Accountant to verify that income and deductions filed are accurate. The income tax law asks the taxpayers to get the audit of accounts of their business or profession done according to provision of income tax law. It is basically the examination of books of accounts and records to ensure that you are paying the appropriate taxes and also complying with the Income Tax Act. The provision for tax audit in India are secured under section 44 AB of the Income Tax Act 1961.
Objective of Tax Audit
- Ensuring that books of accounts are in line with tax laws and accounting policies
- Reporting under Form 3 CA / 3 CB / 3 CD
- Ensuring that books of accounts shows correct income tax payer
- Preparation of reports in standard way for tax authorities
Applicability of Tax Audit
- An individual carrying on business and his/her total sales, turnover or gross receipts (as the case may be) for the financial year exceeds 1 crore.
- A person carrying on profession and gross receipts in profession for the year exceed Rs 50 Lakhs
Due Date of Tax Audit
The due date of filing the tax audit report under section 44AB is 30th September of the assessment year i.e. for financial year 2016-17; tax audit report should be submitted by 30th September 2017.