How to do a Tax Audit?
In simple words, Audit is the term which is used for the official inspection of the accounts of an organization and production of the report on the basis of the account information by a systematic review or an independent body or assessment of the things.
There are several kinds of audits that are conducted under some specific laws like company audit conducted under the provisions of company law. In the same manner, tax audits are mandatory under the income tax law. It is basically a review or the examination of the accounts of a business from the view point of an income tax carried by a taxpayer.
What are the Main Objectives of a Tax Audit?
Tax audits for companies are very beneficial and can be used from time to time. Here are some of the objectives to maintain a proper tax audit report:
- It helps in maintaining the proper records and ensures the accuracy of the books of accounts.
- Proper reporting noted by the tax auditor on the basis of observations and discrepancies after the methodical inspection of account books.
- It provides information about the depreciation of the tax, compliance of the income tax laws on various provisions. It saves the time of the tax authorities as they don’t have to verify the correctness of the income tax return filed as a total income by the taxpayer.
How to do Tax Audits?
Tax audits are furnished as tax audit reports through the Chartered Accountant (CA). CA furnish the tax audit reports online through his log in details. Taxpayers have to add the details of their CA in the login portal. After the report has been uploaded by the tax auditor, the taxpayer has the full rights to accept or reject the tax audit report in their login portal.
If the reports are rejected by the taxpayer, tax auditors need to follow the whole procedure again until it gets accepted by the taxpayer. It is important to file the tax audit reports before the due dates of filing the income returns.
What are the types of Tax Audit Report Forms?
Tax auditors need to furnish their reports in the form of 3CA or 3CB forms.
Form No. 3CA: It is for the professions or business for whom it is mandatory to get their accounts audited under the other laws.
Form No. 3CB: It is for the persons who carry out their business without getting their accounts audited under the other laws.
Note: In some cases, tax auditors have to furnish their reports in the form of 3CD form.
Is there any kind of Consequences for Non-compliance?
Yes, taxpayers need to face the penalties for the non-compliance of their tax audits.
If a taxpayer fails to do tax audits, lower than 0.5% of their total sales have to face penalties. While if there is any kind of reasonable cause of non-compliance of tax audits, the taxpayer may be imposed from the penalties.
To know more about your tax audits kindly contact Enterslice which has a team of expert to guide you further on this.
