TAX AUDIT UNDER INCOME TAX ACT 1961
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TAX AUDIT UNDER INCOME TAX ACT 1961
Tax audit refers to verification of financial record of any firm/taxpayer by an individual chartered accountant in practice who ensure that the taxpayer has maintained proper books and account and complied with the provisions of Income Tax Act 1961.
It is statutory obligation of every taxpayer having a gross receipt of Rs. 1 Crore in case of business and Rs. 50 Lakhs in case of profession prescribed under the act.
It is reported to the Income-tax department in Form no. 3CA/3CB and Form no. 3CD along with the income tax return.
In case the audit report is not submitted within its due date then the taxpayer is required to pay a penalty of an amount equal to 1.5% of the gross receipts/turnover, however, subject to a maximum fine of Rs. 1.5 lac.
What Is TAX AUDIT UNDER INCOME TAX ACT 1961 ?
To understand the Tax Audit, first of all we are required to understand the term Audit. Audit means in general an official inspection of an organisation’s accounts and records related to financial matters.
It is statutory obligation of every taxpayer having a gross receipt of Rs. 1 Crore in case of business and Rs. 50 Lakhs in case of profession prescribed under the act.
It is reported to the Income-tax department in Form no. 3CA/3CB and Form no. 3CD along with the income tax return.
In case the audit report is not submitted within its due date then the taxpayer is required to pay a penalty of an amount equal to 1.5% of the gross receipts/turnover, however, subject to a maximum fine of Rs. 1.5 lac.
Tax Audit Report Forms
The Tax Audit Report Is Prepared In Following Three Forms Based On The Type Of The Tax Audit Undertaken.
What Is Business Under The Income Tax Act 1961 ?
In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year. Under the Income Tax Act, “Business” simply means any economic activity carried on for earning profits. Section 2(3) has defined the business as “any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”.
What Is Profession Under The Income Tax Act 1961 ?
In case of a profession or professional, tax audit would be required if gross receipts in the profession exceed Rs.50 lakhs during the financial year. A profession or professional could be any of the following as per Rule 6F of the Income Tax Rules, 1962:
1-Architect
2-Accountant
3-Authorized representative
4-Engineer
5-Film Artist – Actor, Cameraman, Director, Music Director, Editor, and so on
6-Interior Decorator
7-Legal Professional – Advocate or Lawyer
8-Medical Professional – Doctor, Physiotherapist, or Nursing and Paramedical Staff
9-Technical Consultant
How to Register
Following are the steps to file Tax Audit Under Income Tax Act 1961.
Fill up a simple form on our website providing basic information
Our Executive will call you
Provide relevant documents online and we will file them with relevant authorities.
We will get your LLP registered.
FAQ
- LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
- The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
Atleast 2 partners are required for incorporating an LLP, No maximum limit is there
yes, the LLP can be converted into private limited company OR any other form of business at any time
Yes, the conversion of a partnership firm into an LLP
- Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
- Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct.
- A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
- The management-ownership divide inherent in a company is not there in a limited liability partnership.
- LLP will have more flexibility as compared to a company.
- LLP will have lesser compliance requirements as compared to a company.
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Compare Forms of Business
| Features | Proprietorship Firm | Partnership Firm | LLP | Private Limited Company | OPC |
|---|---|---|---|---|---|
| Limited Liability |
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| Separate legal entity |
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| Number of members | 1 | 2 – 20 | 2 – unlimited | 2 – 200 | 1 |
| Number of Directors /DP | N/A | N/A | 2 – unlimited | 2 – 15 | 1 – 15 |
| Foreign Investment (FDI) |
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| Ownership Transfer-ability |
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| Perpetual Existence |
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| Tax Benefits | GOOD | LOW | LOW | EFFECTIVE | EFFECTIVE |
| Statutory Compliance | VERY LESS | MINIMUM | AVERAGE | HIGH | HIGH |
| Formation Cost | 899/- | 5899/- | 6499/- | 6999/- | 6599/- |
| Call us:- +91 8764369079 | Know More | Know More | Know More | Know More | Know More |
