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Procedure for conducting tax audit

CA Md. Shadab (CA Practice ) (26 Points)

24 September 2014

What is the procedure for conducting tax audit?

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Divya Sethi (ca student) (459 Points)
Replied 25 September 2014

The Tax Auditor has to cover 32 points during the Audit.

S.No	Fact
1	Name of the assessee
2	Address
3	Permanent Account Number
4	Status
5	Previous year ended
6	Assessment year
7	Partners & their Capital, change in the partners or members(if any)
8	Nature of Business, & change details (if any)
9	Books of accounts maintained?.
10	(44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB Details)
11	Method of accounting employed
12	Method of valuation of closing stock & Capital asset converted into stock-in-trade
13	Amounts not credited to P/L A/C
14	Particulars of depreciation
15	Deduction allowable u/s 33AB & 35 etc.,
16	Details about, Bonus/Commission paid & Contribution received from employees.
17	Amounts debited to the profit and loss account
18	Payments made to specified persons
19	Amounts deemed to be profits and gains under section 33AB or 33ABA or 33AC
20	Any amount of profit chargeable to tax under section 41
21	Any sum referred to in clause (a), (b), (c), (d), (e) or (f) of section 43B.
22	Value Added Tax credits
23	Amount borrowed otherwise than through an account payee cheque.
24	Loans or Deposits exceeding the limit specified.
25	Details of brought forward loss or depreciation allowance
26	Chapter VI-A Deduction Details
27	Complied to Chapter XVII-B - TDS
28	Stock Details
29	Details of tax on distributed profits ( in case of Domestic Co.,)
30	Cost Audit Report(if any)
31	Audit Report under Central Excise Act (if any)
32	Accounting ratios

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Tushar Sharma (2 Points)
Replied 29 August 2019

Steps to do tax audit, i.e. under the Income Tax Act, 1961 :

Basic vouching like normal statutory audit, in case you aren't the auditor and the other audit is not that reliable or no other audit is applicable for the client.
Reconciling the turnover with indirect tax returns such as GST/VAT/Service Tax.
Compliance with TDS provisions, and disallowing interest for late payment/deduction and late fees for TDS returns filed late. Check TDS Returns and payment challans.
Disallowing the expenses entirely or 30% of them, if tax has not been deducted.
Checking the workings for weighted deductions claimed, such as 10AA or Section 35 or Section 80-IA and the like, whether they are in order and there is no excess claim.
Disallowing penalty or late fees paid under any other law, advertisement or club expenditure, any income tax paid taken on debit side of P&L and other specific disallowances.
Disallowing expenditure in relation to which the income is exempt under Section 14.
Verifying whether ICDS have been followed and the requisite adjustments for ensuring compliance.
Whether brought forward losses have been properly disclosed, amount set-off in current year and balance carried forward.
If MAT/AMT is applicable, appropriate disclosures made and checking the workings and also for MAT/AMT credit carried forward.
Ensure that CSR expenditure is not taken as deduction,unless specifically allowed under any other section.
Disclosure relating to any refunds of indirect tax received, as also confirmed demand in relation to any direct/indirect tax and the judicial forum/appellate authority where the appeal is pending.
In case of firms, whether remuneration is within permissible limits, worked out as per the provisions of Income Tax Act.
Checking workings for depreciation, additional depreciation,whether they are accurate, as also workings for deferred tax assets/liability.

Shrikant Toshniwal (TAX CONSULTANT) (1109 Points)
Replied 02 September 2019

@ DIVYA SETHI TAX AUDIT PROCEDURE CONDUCTING START WITH EXAMIANTION OF BOOKS OF ACCOUNTS(LEDGER,JOURNALS,VOUCHER,BANK..ETC) .......AND THE CHECKING START WITH ACCOUNTING STANDARD IS FOLLOWS OR NOT AND THE LAWS LIKE INCOME TAX ,COMPANY LAW ,GST WHICH IMPLIMENTED TO ASSESSEE ARE FOLLOW OR NOT.. IN HIS BOOKS OF ACCOUNTS

IF NOT FOLLOW PROPERLY GIVE OVER OPINION IN THE REPORTS