- Section: Section 44AB of the Income Tax Act, 1961
- Purpose: To ensure that companies are maintaining proper books of accounts and complying with the income tax laws
- Applicability: Companies, including foreign companies, with a turnover of more than Rs. 1 crore in the financial year are required to get their accounts audited by a practicing Chartered Accountant (CA). For businesses carrying out profession or business, the threshold limit is Rs. 50 lakhs.
- Timeline: The tax audit must be completed before the due date of filing the income tax return, which is generally September 30th of the assessment year.
- Exemption: Certain types of companies and businesses are exempt from tax audit requirements, such as companies with a turnover below the threshold limit or those opting for the presumptive taxation scheme.
- Penalty: If a company fails to get their accounts audited, they may be subject to a penalty of 0.5% of the total sales or turnover, up to a maximum of Rs. 1,50,000.
- Due date: The due date for filing the tax audit report is September 30th of the assessment year.
- Forms: Form 3CA and Form 3CB are used to file tax audit reports by the CA. Form 3CD is used to provide details of the audit findings and recommendations.
- Reporting Authority: The tax audit report is filed with the Income Tax Department and the audit findings are also reported to the Board of Directors of the company.
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