Every individual that comes under Section 44AB of the Income Tax Act, 1961 such as certain professionals and businesspersons whose annual turnover is more than specified amount have to get their accounts reviewed by a chartered accountant known as a tax audit. The following are eligible in a tax audit:
- A professional earning more than Rs. 50 lacs.
- A businessperson earning more than Rs. 1 crore.
- People under Sections 44AD (Presumptive Scheme for Businesspersons- if your Net Income is less than or equal to 8% of gross turnover; Net Income will be considered at 6% in case of digital receipts), 44ADA (Presumptive Scheme for Professionals – if your Net Income is less than or equal to 50% of gross receipts), 44AE (Transporters), 44AF (Retail Business), 44BB (Exploration of Mineral Oils) and 44BBB (Foreign Companies involved in the Business of Civil Construction).
Forms Filed for a Tax Audit:
- Form 3CA & Form 3CD – any businessperson and/or professional who falls under any other Act other than the Income Tax Act,1961, has to file Form 3CA which includes details like date of audit report, declaration of Form 3CD, particulars of individual or company, period of profit or loss, etc. Form 3CD includes detailed description of everything mentioned in Form 3CA.
- Form 3CB & Form 3CD – any professional and/or businessperson who falls under the Income Tax Act, 1961, has to file Form 3CB which includes date of balance sheet, period of profit or loss, address where books of accounts are kept, etc. along with Form 3CB, you will have to file Form 3CD.
- If any business or professional falls under more than one Act, then they don’t need to file for the Tax Audit You can simply file for the required field for the given financial year.
Rules to Follow:
- For a professional operating more than one profession, you will have to get your book of accounts audited if the total income from all your professions is more than Rs. 50 lacs.
- In case of a businessperson owning more than one business, you will have to get your book of accounts audited if the total turnover for all your businesses is more than Rs. 1 crore.
- If you are a professional who also owns a business, both need to be audited separately if the income for both separately is more than the slabs mentioned as above. In case either of the two is less than the required slab, only the business/profession meeting the slab requirements needs to be audited.
- Tax Audit report once filed online cannot be revised. However if you are filing a revised audit report, please mention the reason for revising the report very clearly when filing for a Tax Audit.
Penalty & Exemptions:
The due date for Tax Audit for all businesspersons and professionals to get their books of accounts audited has been extended from September 30, 2018 till October 15, 2018. If there is a delay in the submission of the audit report, there will be a penalty of 0.5% of the total gross receipts, the maximum penalty being Rs. 1.5 lacs. However certain cases can be exempted:
- Natural Disasters
- Tax auditor has resigned
- Physical inability or death of person responsible for the accounts
- Labor related issues like strikes or lock downs
- Loss of accounts because of theft or fire, etc.
There is no extension in the due date for those professionals and/or businesspersons who are liable to pay interest under Section 234A for delayed filing of their Income Tax Return.