Ashtavinayaka, what are the Astha Mahima of Tax Audit?

Arjuna (Fictional Character): Krishna, from today celebration of festival of Lord of knowledge and Vignaharta Shri Ganesha has started with full of joy. Everywhere the devotees are busy in preparation of the festival. Similarly, the taxpayers are busy in filing tax audit report and income tax return as the last date to upload them is 30th September 216.

Krishna (Fictional Character): Arjuna, every year we celebrate the festival of Lord Shri Ganesha for 11 days and similarly the festival of tax audit is till 30th September. If we joyfully illustrate then, For Income Tax Taxpayer i.e Devotees, Shri Ganesha is lord of Knowledge, means income tax laws, ‘veneration plate’ means ‘income tax return and audit report’, Shri Ganesha’s ‘modak’ means income tax, ‘devotees’ means taxpayers, ‘priest’ means Tax Experts. By worshiping Lord Ganesha and making proper utilization of knowledge, everyone’s work would be done without obstacles. This means that if the class of businessmen files tax audit report, income tax return and pays appropriate tax in this September month, then his work would get done without any obstacles. So on this eve of the beginning of the festival Lord Ashtavinayaka, let’s discuss about eight important aspects of Tax audit!

Arjuna: Krishna, what are the eight important aspects of Tax audit?

Krishna: Arjuna, the some eight important aspects of Tax audit are as follows:

According to income tax law, for the financial year 2015-16, the businessmen whose annual turnover exceeds Rs.1 Crore and the professionals for example; 

1. Doctors, engineers, advocates, etc. whose annual income exceeds Rs.25 lakhs will have to get their books audited. This audited report will be called as “Tax Audit Report” and it is required to be uploaded with income tax return.

2. The taxpayers whose annual turnover is less than Rs.1 Crore and claims its profit to be less than 8%, will have to get his books audited compulsorily.

3. The due date for getting tax audit done is 30th September.

4. While filling income tax return, true information has to be given and balance sheet, profit and loss account, taxable turnover, tax and TDS, etc. information has to be uploaded along with it and these details are verified in tax audit. This way, a taxpayer gets tax audit done and later files income tax return.

5. A CA has to give the tax audit details through form “3 CA/CB and 3 CD”. In this form, whether details of income and expense are as per income tax laws and whether they are correct or incorrect is to be given. For example: Whether the account books, balance sheet, profit and loss account, etc. made available by the businessmen are true and correct and similarly, the details of various rules relating to depreciation, PF, TDS, Loans and deposits, etc. has to be given. This tax audit report has to be e-filed by CA to income tax department. And also the taxpayer has to confirm it by logging in from his account.

6. Very detailed and critical information has to be taken from taxpayer and given in tax audit report as per the provisions mentioned in the law. Following is the information made compulsory by the government to be filled in tax audit report:

1. In case of taxpayers who have sold immovable property for a value less than government stamp duty value, details of such property sold along with actual consideration and stamp duty valuation are to be reported. 
2. Where expenditure, loan repayments have been made in cash exceeding Rs.20000; the name, address, PAN of the payee along with the nature of payment is to be furnished.
3. Comparative details regarding Gross turnover, Gross profit, Net profit, Closing Stock are to be given.
4. Complete details of Tax deduction made by the taxpayer and paid to the Government. For example: nature of payment on which TDS deducted, whether TDS has been deducted on correct amount and at correct rate and whether the same has been paid on time or not. Further, if the TDS returns have been filed late, then whole details relating to it and if TDS payment is made late the interest payable on late payment of TDS.
5. The details of transactions effected with relatives has to be given.
6. Income Tax Department cannot verify every taxpayer’s books of accounts. Similarly, compliance of provisions of various Acts is difficult. Many a times it is difficult for the taxpayer to fit the complicated business transaction within the framework of law. So to make the taxpayer be able to easily follow the tax provisions this audit is required to be done. Though there are many difficulties faced due to it but its benefits are many. Because of this, Government can assess tax properly.   
7.  If the tax audit report is not uploaded before 30th September, then the taxpayer may have to pay penalty up to Rs.1,50,000.

Arjuna: Krishna, what one should learn from this?

Krishna: Arjuna, as we start the preparation for the festival of Lord Ganesha before time, similarly the taxpayer should prepare for income tax return and audit. In this month of festivals, the taxpayer may have to face various obstacles while filing income tax return and tax audit and along with it being a part of schemes introduced in income tax and sales tax. For this, the taxpayer will have to work a lot on it. Let’s pray that Lord Ganesha will remove these obstacles of taxpayers while doing all these tax work!