All about Income Tax Audit u/s 44AB for FY 22-23

Income tax audit applicability is in addition to compliance of statutory audit under companies act. Tax audit is mandatory for all companies, LLPs whose turnover/ gross receipts exceeds the prescribed threshold. Limits applicable to other business entities and professionals are similarly applicable to companies. In case of business if turnover exceeds Rs.10crore and for professional’s gross receipts exceeding Rs.50 Lakhs will be liable for tax audit.

 

Sr. No.	Particulars	Business	Tax Audit	Condition
1	Turnover > 10 Cr	Other than professional	Yes	1.Not opting for presumptive taxation 2.If cash transactions are up to 5% of total gross receipts and payments
2	Turnover < 10 Cr	Other than professional	No
3	1Cr < Turnover < 10 Cr	Other than professional	Yes	1.Not opting for presumptive taxation 2.If cash transactions are more than 5% of total gross receipts and payments
4	Turnover < 2 Cr & opted for 44AD	Other than professional	No	Opted for section 44AD
5	Carrying on business under section 44AD, 44AE, 44AF, 44BB, 44BBB	Other than professional	Yes	Claims profits or gains lower than the specified limit under presumptive taxation scheme
6	Turnover > 50 Lac	Professionals	Yes	1.Not opted for presumptive taxation under 44ADA 2. opted for 44ADA but Claims profits lower than the specified limit under presumptive taxation scheme
7	Turnover > 50 Lac	Professionals	No	Opted for presumptive taxation under 44ADA and declare profits as per prescribed limit of presumptive taxation.

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How to calculate turnover for Tax Audit FY 2022-23

While checking applicability of tax audit compliance turnover is very important key factor. The concept of Tax audit turnover applies to all Income Tax assessees who should undergo a tax audit. In general, turnover refers to total amount of sales made by entity over a particular period of time. But while calculating turnover for the purpose of tax audit in income tax, it refers to total sales made by assessee after making required adjustments for goods returned, price adjustments and trade discounts.

What is not to be included in calculation of turnover for tax audit? 

• Sale or purchase of fixed assets
• Rental /Interest income
• Advances from customers
• Cash discount, trade discounts
• Returned goods
• Sale proceeds of any shares, securities, debentures, etc., held as investment

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Due Date for Tax Audit of FY 2022-23

It is very much necessary for person to whom tax audit is applicable to get their accounts audited and file audit report before the due date i.e. 30^th September of that year. So, due date for tax audit of FY 2022-23 AY 2023-24 will be 30^TH September 2023. CBDT has power to grant extension for time limit of audit as it deem fit.

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Penalty for Tax Audit FY 2022-23

If any assessee to whom tax audit is applicable fails to get tax audit done within due date then penalty will be levied on assessee. And quantum of penalty will be least of following: Penalty for Tax Audit FY 2022-23 , AY 2023-24 as below

• 0.5% of the sales, turnover, gross receipts
• Rs.1,50,000

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Limitation on Chartered Accountant for the number of Tax Audits

In India, only Chartered accountants or a firm of Chartered accountants has authority to sign tax audit report. But in spite of this fact, there is limit on number of tax audit filing by CA. The maximum number of audits allowed to Chartered Accountant is restricted to 60  tax audits. And incase of partnership firm this limit will apply to each member individually.

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Accounts audited with any other law

If a person is required to get his books of accounts audited under any other law such as statutory audit as per company act then such taxpayer is not required to audit its books of accounts again for income tax purpose, provided accounts are audited under such any other law before due date of filing return. Now, taxpayer has to only get the audit report as per income tax regulation before return’s due date.

Tax audit forms for FY 2022-23:

In case assessee is covered under provisions of this act for tax audit then assessee is required to file the following form together with income tax return:

1.Form 3CA & Form 3CD– These Forms should be used in case where the Accounts of the business or profession of a person have already been audited under any other Law. In such case second audit need not be performed to comply with requirements of income tax.

2.Form 3CB & Form 3CD–These Forms are used in case where the Accounts of the business or profession are audited exclusively to satisfy requirements of Income tax act.

3.Form 3CE: Audit report in respect of non-residents and foreign companies receiving royalty or fees for technical services and liable to get audited.

Assessee to whom audit provisions are applicable have to submit Income tax return (ITR) till 30^th September.

All these forms are required to be filed and submitted through income tax online portal only. Tax auditor shall file tax audit report online by using his login details as a CA and assessee is also required to add that CA as auditor using his login. After tax auditor uploads tax audit report online , it is duty of taxpayer to accept it on online portal.

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Can Tax audit report be revised

Yes, tax audit report can be revised. Income tax portal also allows filing of revised tax audit report online. Also, no limit is prescribed for number of times we can revise report.

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Penalty Waiver in Tax Audit ?

Yes, penalty waiver for non submission of tax audit it allowed. Provided reasonable cause is provided by Assessee.  If the tax audit report is not submitted on time or before the deadline, no penalty under section 271B will be enforced. The provisions of section 271B must be applied, however, if the audit report is not submitted by the deadline.

No Penalty for Failure of Tax Audit under section 271B of the Income Tax Act,1961 in case of Reasonable Causes with Case Laws