Income Tax Audit
Tax Audit – An audit is known as official inspection which is conducted for business and people once your business crossed a specific amount and here you must have your book of account audited. The purpose of tax audit is to ensure accurate maintenance and correctness of the books of account by CA and this is verified by the income tax department.
A tax audit with those classes or taxpayers who are liable should conduct the audit by a chartered accountant or a firm of CAs as per section 44AB. There are different types of tax audit in India which are field audit, office audit, & correspondence audit.
Who is applicable?
- Any business whose turnover or gross receipt exceed amount of 2Cr.
- Any person pursuing a profession whose profit exceed amount of 50lakh in any previous year is applicable for tax audit.
- Section 44AB has limits 1Cr and 44AD has limit of 2Cr.
Purpose of income tax audit
- Ensure proper maintenance of books of accounts and also of other records.
- To ensure that the records presented are of the tax payers and claims for deductions are correctly made and presented.
- Filing the returns efficiently.
- It helps to restricts the fraud practices