Am I supposed to get my books of accounts audited?

Indian tax laws require certain persons to get their accounting records audited. Audit means that a review of accounting records to make sure they are proper.

As a proof of audit a report is also prepared and certified by a Chartered Accountant and this report has to be submitted along with income tax return of the business or profession.

 

In the following cases Audit is compulsory

  • Taxpayer is carrying on Business – Audit is compulsory if total sales, turnover or gross receipts are more than Rs 1 crore
  • Taxpayer is carrying on Profession – Audit is compulsory if gross receipts are more than Rs 25lakhs
  • Taxpayer is covered under presumptive income scheme under section 44AD – Audit is compulsory income of the business is lower than presumptive income AND taxpayer’s total income is more than the minimum exempt income.
  • Taxpayer is covered under presumptive income scheme under section 44AE – Audit is compulsory income of the business is lower than presumptive income

 

Where audit is compulsory, report has to be submitted in Form 3CA and Form 3CD by 30th September of the assessment year.

 

Penalty

Penalty under section 271B may be levied if tax payer does not get accounts audited as per the requirements of Section 44AB. The minimum penalty is 50% of the total sales, turnover or gross receipts and the maximum penalty is Rs 1,50,000. If the tax payer has a reasonable cause for failure to get an audit done, AO may not levy such penalty.

 

Is Tax Audit applicable to you? Reach out to us if you need help with your tax returns or with getting your accounts audited. Write to us support@cleartax.in

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