The term Audit refers to an inspection of the Books and Accounts of business. Audit could be done by any person who is within the organization or even by a third party. The types of audit vary according to the statutes and purposes. Hence you may find various types of audit viz. Statutory Audit (External audit), Internal audit, Concurrent audit, Stock audit, Income-tax audit, VAT audit, System audit etc. and so on. Income-tax Act, 1961 has also provided an audit for business/profession. This audit is known as Tax audit and performed by a Chartered Accountant.
Following is the list of business/profession in which Tax audit is required by the Act:-
- The business in which total sales or turnover during the financial year is more than One Crore Rupees or,
- The profession in which gross receipts during the financial year are more than Twenty Five Lakh Rupees.
- Taxpayer is running any presumptive business in which taxpayer wants to show net profit less than 8% of the total sales or turnover of a financial year and income of the taxpayer is more than basic exemption limit.
- Taxpayer is running a business of hiring, leasing of goods carriages as per section 44AE of the Act and he wants to show income less than Seven Thousand Five Hundred Rupees per month for every vehicle.
Other important points for Tax audit-
- Tax audit is done by a Chartered Accountant in practice.
- Taxpayer is required to submit all the books of accounts, records and documents to the auditor for verification and inspection.
- After performing an audit of accounts, auditor shall submit an audit report to taxpayer.
- The due date of filing of Income-tax return is 30th September in case of Tax audits.
- If the taxpayer does not opt for Tax audit, then he will be charged a penalty as per the Income Tax Act. Penalty will be 0.5% of the turnover of business/profession OR Rs. 1,50,000/-, whichever is lower.