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44AB Final (1)

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Harshit Arora
Harshit Arora

The document provides information on tax audit requirements in India. It discusses that tax audits are mandated for businesses and professionals with annual sales/receipts over certain thresholds. The purpose is to ensure accurate income reporting and compliance with tax laws. Tax auditors must be chartered accountants and are responsible for examining accounts, reporting discrepancies, and certifying tax audit reports using amended Forms 3CA, 3CB, and 3CD. The amended forms require additional details on various transactions to facilitate tax assessments.

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CONTENTS INTRODUCTION PURPOSE TAX AUDITORS ROLES AND RESPONSIBILITY NEW AMENDED TAX AUDIT REPORT Lunawat & Co.
INTRODUCTION-APPLICABILITY 1. Sec 44AB mandates audit of accounts by a Chartered Accountant: For every person carrying on Business, if in previous year his total Sales or Turnover or Gross receipts exceeds 1 Crore. For Professional, if in previous year its Total receipts exceeds 25 Lakhs. And to furnish report in prescribed form of such audit with in Specified Date Specified Date as per Sec 139(1) of the Act. means 30th September of the concerned Assessment year. 2. Scope of sec 44AB has also been enlarged and made applicable: to a person carrying on the business of nature referred to in sec 44AD or 44AE or 44BB or 44BBB. AND if such person claims that his income is lower than the amount of income deemed under these sections as presumptive income. INTRODUCTION-APPLICABILITY Lunawat & Co.
INTRODUCTION- DEFINITIONS 1. Business: As per sec 2(13) of the Act. Business includes any trade, commerce or manufacture or any adventure or concern in nature of trade, commerce or manufacture. 2. Profession: As per sec 2(36) of the Act. Define Profession to include Vocation . The Allahabad High Court in the case of Ram kripal tripathi has given view that Profession is a word of wide import and includes vocation which is only a way of living. 3. Sales, Turnover or Gross Receipts are not defined in the I.T. Act. However the Turnover has been defined in: Revised schedule VI of The Companies Act, 1956. The Guide to company audit issued by Institute in 1980. Lunawat & Co.
INTRODUCTION- COMPUTATION OF TURNOVER However as per Institute Guidance note and Schedule VI. For the Purpose of calculating Turnover we deduct from the amount of sales the following items(only important and typical items covered): Trade Discount Turnover discount Special rebate allowed Sales Return Freight, insurance, dispatch charges and some other similar charges Sales proceeds of any fixed Assets or of Property held as property for Investment. Sales proceeds of shares, securities and debentures if same are not part of stock. Lunawat & Co.
PURPOSE OF TAX AUDIT The purpose of tax audit is to: 1. Ensure proper maintenance of books of accounts and other records. 2. Reflect true income of tax payer. 3. Facilitate the administration of tax laws by a proper presentation of accounts before tax authorities. 4. Assist the income tax department to assess the correct income. 5. Ensure that income chargeable has been computed as per sec 145 of the Act. i.e. Method of accounting And ensure that the AS notified* under section 145 have been followed or not. * CBDT till now has notified the following two Accounting Standards: 1. AS relating to Disclosure of Accounting Policies. 2. AS relating to Disclosure of Prior Period and Extraordinary Items and Changes in Accounting Policies. Lunawat & Co.
TAX AUDITOR ROLES AND RESPONSIBILITIES 1. The Tax Auditor must be Chartered accountant. 2. Obtain Letter of appointment and must agreeing with the terms of audit engagement letter. 3. Reporting on accounts not computing income. 4. Reporting on relevant information in Form-3CD. 5. The tax auditor shall maintain proper working paper. Such working paper shall includes: Work done while conducting the audit and by whom; Explanations and information's received; Judicial pronouncements relied; Decision on the various points taken; Certificates issued by the client. Lunawat & Co.
TAX AUDIT REPORT New Form-3CA (AY 2014-15) The Tax Auditor should give audit Report in Form- 3CA, if the accounts of the Business or Profession have been audited under any other Law and such report should refer and annexed: 1. Name of the statutory auditor and provisions of the Act. 2. Audited Balance sheet and Profit & loss Account along with notes. 3. Particulars in Form-3CD. 4. Certify Form-3CD. 5. Observations or qualifications. if any: 6. Reasons for negative comment or qualification. 7. Membership No. Lunawat & Co.
TAX AUDIT REPORT New Form- 3CB(AY 2014-15) The Tax Auditor should give audit Report in Form- 3CB, if the accounts of the Business or Profession have not been audited under any other Law and such report should refer and annexed: 1. Examine and certify Balance sheet & Profit and loss account. 2. Report any discrepancies, inconsistency, observations, if any: 3. Particulars in Form-3CD. 4. Certify Form-3CD. 5. Observations or qualifications. if any: 6. Reasons for negative comment or qualification. 7. Membership No. Lunawat & Co.
TAX AUDIT REPORT Amended Form-3CD The tax auditor report should annexed with Form 3CD. Whose important new amended clause are as follows: Clause 4: Registration No., if liable to pay indirect taxes. Clause 8: Relevant Clause of sec 44AB. Clause 17: Sale of Property, if consideration less than the value adopted by the state government i.e. Deemed sales Consideration u/s 43CA & 50C of the Act and furnish: o Detail of Property o Consideration received o Value assessable. Lunawat & Co.
Clause 21(b): Details of Amount inadmissible u/s 40(a)(i) & 40(a)(ia) of TDS not deducted or deducted but not deposited. E.g. date, amount, nature , amount deducted, name and address. Clause 28: Share of Private Company received for inadequate consideration i.e. u/s 56(2)(viia). Clause29: Consideration received for issue of shares exceeds FMV u/s 56(2)(viib). Clause 32息: Details of Speculation loss incurred as per section 73. Clause 32(d): Details of Loss of any specified business referred to in section 73A. TAX AUDIT REPORT Lunawat & Co.
Clause 32(e): Details of loss, if Company Deemed to be carrying speculative business referred to in section 73. Clause 34: Details of TDS e.g. section, Nature of Payment, Amount Required to be Deducted, actually deducted and deposited. Clause 39: Audit u/s 72A of the finance Act, 1994 regarding valuation of taxable service, details if any disagreement. Clause 41: Demand raised and refund in previous year under any laws other than I.T. Act. or Wealth tax Act. Along with details of relevant proceedings TAX AUDIT REPORT Lunawat & Co.
Thank You Presented By: Harshit Arora ( Article Assistant at Lunawat & Co.)

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44AB Final (1)

  • 1. 1
  • 2. CONTENTS INTRODUCTION PURPOSE TAX AUDITORS ROLES AND RESPONSIBILITY NEW AMENDED TAX AUDIT REPORT Lunawat & Co.
  • 3. INTRODUCTION-APPLICABILITY 1. Sec 44AB mandates audit of accounts by a Chartered Accountant: For every person carrying on Business, if in previous year his total Sales or Turnover or Gross receipts exceeds 1 Crore. For Professional, if in previous year its Total receipts exceeds 25 Lakhs. And to furnish report in prescribed form of such audit with in Specified Date Specified Date as per Sec 139(1) of the Act. means 30th September of the concerned Assessment year. 2. Scope of sec 44AB has also been enlarged and made applicable: to a person carrying on the business of nature referred to in sec 44AD or 44AE or 44BB or 44BBB. AND if such person claims that his income is lower than the amount of income deemed under these sections as presumptive income. INTRODUCTION-APPLICABILITY Lunawat & Co.
  • 4. INTRODUCTION- DEFINITIONS 1. Business: As per sec 2(13) of the Act. Business includes any trade, commerce or manufacture or any adventure or concern in nature of trade, commerce or manufacture. 2. Profession: As per sec 2(36) of the Act. Define Profession to include Vocation . The Allahabad High Court in the case of Ram kripal tripathi has given view that Profession is a word of wide import and includes vocation which is only a way of living. 3. Sales, Turnover or Gross Receipts are not defined in the I.T. Act. However the Turnover has been defined in: Revised schedule VI of The Companies Act, 1956. The Guide to company audit issued by Institute in 1980. Lunawat & Co.
  • 5. INTRODUCTION- COMPUTATION OF TURNOVER However as per Institute Guidance note and Schedule VI. For the Purpose of calculating Turnover we deduct from the amount of sales the following items(only important and typical items covered): Trade Discount Turnover discount Special rebate allowed Sales Return Freight, insurance, dispatch charges and some other similar charges Sales proceeds of any fixed Assets or of Property held as property for Investment. Sales proceeds of shares, securities and debentures if same are not part of stock. Lunawat & Co.
  • 6. PURPOSE OF TAX AUDIT The purpose of tax audit is to: 1. Ensure proper maintenance of books of accounts and other records. 2. Reflect true income of tax payer. 3. Facilitate the administration of tax laws by a proper presentation of accounts before tax authorities. 4. Assist the income tax department to assess the correct income. 5. Ensure that income chargeable has been computed as per sec 145 of the Act. i.e. Method of accounting And ensure that the AS notified* under section 145 have been followed or not. * CBDT till now has notified the following two Accounting Standards: 1. AS relating to Disclosure of Accounting Policies. 2. AS relating to Disclosure of Prior Period and Extraordinary Items and Changes in Accounting Policies. Lunawat & Co.
  • 7. TAX AUDITOR ROLES AND RESPONSIBILITIES 1. The Tax Auditor must be Chartered accountant. 2. Obtain Letter of appointment and must agreeing with the terms of audit engagement letter. 3. Reporting on accounts not computing income. 4. Reporting on relevant information in Form-3CD. 5. The tax auditor shall maintain proper working paper. Such working paper shall includes: Work done while conducting the audit and by whom; Explanations and information's received; Judicial pronouncements relied; Decision on the various points taken; Certificates issued by the client. Lunawat & Co.
  • 8. TAX AUDIT REPORT New Form-3CA (AY 2014-15) The Tax Auditor should give audit Report in Form- 3CA, if the accounts of the Business or Profession have been audited under any other Law and such report should refer and annexed: 1. Name of the statutory auditor and provisions of the Act. 2. Audited Balance sheet and Profit & loss Account along with notes. 3. Particulars in Form-3CD. 4. Certify Form-3CD. 5. Observations or qualifications. if any: 6. Reasons for negative comment or qualification. 7. Membership No. Lunawat & Co.
  • 9. TAX AUDIT REPORT New Form- 3CB(AY 2014-15) The Tax Auditor should give audit Report in Form- 3CB, if the accounts of the Business or Profession have not been audited under any other Law and such report should refer and annexed: 1. Examine and certify Balance sheet & Profit and loss account. 2. Report any discrepancies, inconsistency, observations, if any: 3. Particulars in Form-3CD. 4. Certify Form-3CD. 5. Observations or qualifications. if any: 6. Reasons for negative comment or qualification. 7. Membership No. Lunawat & Co.
  • 10. TAX AUDIT REPORT Amended Form-3CD The tax auditor report should annexed with Form 3CD. Whose important new amended clause are as follows: Clause 4: Registration No., if liable to pay indirect taxes. Clause 8: Relevant Clause of sec 44AB. Clause 17: Sale of Property, if consideration less than the value adopted by the state government i.e. Deemed sales Consideration u/s 43CA & 50C of the Act and furnish: o Detail of Property o Consideration received o Value assessable. Lunawat & Co.
  • 11. Clause 21(b): Details of Amount inadmissible u/s 40(a)(i) & 40(a)(ia) of TDS not deducted or deducted but not deposited. E.g. date, amount, nature , amount deducted, name and address. Clause 28: Share of Private Company received for inadequate consideration i.e. u/s 56(2)(viia). Clause29: Consideration received for issue of shares exceeds FMV u/s 56(2)(viib). Clause 32息: Details of Speculation loss incurred as per section 73. Clause 32(d): Details of Loss of any specified business referred to in section 73A. TAX AUDIT REPORT Lunawat & Co.
  • 12. Clause 32(e): Details of loss, if Company Deemed to be carrying speculative business referred to in section 73. Clause 34: Details of TDS e.g. section, Nature of Payment, Amount Required to be Deducted, actually deducted and deposited. Clause 39: Audit u/s 72A of the finance Act, 1994 regarding valuation of taxable service, details if any disagreement. Clause 41: Demand raised and refund in previous year under any laws other than I.T. Act. or Wealth tax Act. Along with details of relevant proceedings TAX AUDIT REPORT Lunawat & Co.
  • 13. Thank You Presented By: Harshit Arora ( Article Assistant at Lunawat & Co.)