Audit Under Income Tax Act
Tax audit applicability has to be reviewed in light of Section 44AB, the nature of the business or profession, presumptive-tax positions, and the current compliance thresholds. We assist taxpayers with audit readiness, coordination with the auditor, and e-filing support.
Who is generally covered by a tax audit under Section 44AB?
Tax-audit applicability depends on the current thresholds and conditions prescribed under Section 44AB and related provisions of the Income-tax Act. The exact answer changes with the taxpayer profile and the applicable law for the year.
- Businesses whose turnover or gross receipts cross the currently applicable threshold under Section 44AB
- Professionals whose gross receipts cross the applicable audit limit for the relevant year
- Certain taxpayers using presumptive-tax provisions who declare lower income than prescribed, subject to the conditions of the Act
- Cases where books, reporting, or specific provisions of law trigger audit-related compliance in practice
Because the monetary limits and cash-transaction conditions have changed over time, tax-audit applicability should always be reviewed for the relevant assessment year rather than assumed from older thresholds.
By when should the tax-audit report be completed?
The due date for tax-audit reporting is notified for the relevant assessment year and may change by law or extension. Taxpayers should therefore confirm the current due date instead of relying on historical dates.
The audit report is filed electronically by the chartered accountant, and the taxpayer is required to review and accept the filing through the income-tax portal.
Frequently Asked Questions
Can a tax audit be carried out even when no statutory audit is required?
Yes. If there is no separate statutory audit report to attach, the tax auditor can report under the applicable tax-audit form and certify the prescribed particulars based on the books of account and supporting records made available for the tax audit.
Similar approach can also be adopted in case of assessees following accounting year other than the financial year more particularly in the case of foreign companies or subsidiary of foreign companies who have to follow the English calendar year as its accounting year.
Who can Appoint Tax Auditors and who should sign their Appointment Letter?
The Assessee himself can appoint Tax Auditor for conducting the audit as mentioned in section 44AB. It is advisable that such an appointment letter should be signed by the person competent to sign the Return of Income.
Is it necessary to Appoint Statutory Auditors as Tax Auditors?
Section 44AB does not specify that only the statutory auditor appointed under the Companies Act should perform the tax audit. Therefore the tax audit can, be conducted either by the statutory auditor or by any other CA in practice.
I am working in a public limited company having businesses in more then one state, Can we appoint more than one CA firms as Tax Auditor?
It is possible for the assessee to appoint two or more CAs as joint auditors for carrying out the tax audit, in which case, the audit report will have to be signed by all the CAs.
I am working in Tax department of a Multinational Company and our Tax audit is jointly conducted by two CA firms. On some issues our auditors differ from each others and want to issue separate Tax Audit reports, can they do so?
In case of difference in the opinion of joint tax auditors, each tax auditor may issue separate audit report.
Can a company appoint a relative of a director as its tax auditor?
The position should be reviewed carefully under the Companies Act, related-party provisions, independence requirements, and the professional ethics rules applicable to chartered accountants. Whether the appointment is permissible can depend on the relationship, remuneration, approvals, and the specific facts of the company.