A comprehensive guide to income tax audits in India including the process, benefits and required documents, with a focus on how Praman Advisors Private Limited can simplify the compliance journey for businesses and professionals.
1. Overview of Income Tax Audit:
An income tax audit is a compulsory examination of an assesses books of accounts to ensure that they comply with the Income-tax Act 1961. The primary purpose is to verify the accuracy of the income, deductions claimed and adherence to various tax provisions. A qualified Chartered Accountant (CA) conducts the audit and submits a detailed report to the Income Tax Department.
The audit applies to specific categories of taxpayers, mainly businesses and professionals, who cross a certain threshold of turnover or gross receipts. For businesses, the current turnover limit is ₹1 crore, extendable up to ₹10 crores, if cash receipts and payments do not exceed 5% of the total. For professionals, the gross receipts limit is ₹50 lakh. This process is crucial for maintaining financial transparency and preventing tax evasion.
While an audit may seem like a burden, it offers significant advantages to both the taxpayer and the tax authorities:-
- Ensures Compliance: The audit process ensures that your financial records and tax filings are in strict adherence to the Income Tax Act. This helps you avoid future scrutiny, penalties and legal complications.
- Enhances Credibility: An audited financial statement is a testament to a business's integrity and transparency. It builds trust with stakeholders including investors, banks and customers, which can be crucial for securing loans or attracting investments.
- Identifies Discrepancies: The meticulous review by a CA can help uncover unintentional errors or discrepancies in your accounting. This allows for timely correction, preventing potential penalties and interest charges.
- Assists in Tax Planning: The auditor can provide valuable insights into your financial health and suggest legal ways to optimize your tax liabilities by availing eligible deductions and allowances.
- Reduces Risk of Scrutiny: Timely and accurate filing of an audit report reduces the likelihood of your case being selected for detailed scrutiny by the Income Tax Department.
To ensure a smooth and efficient audit process, it is essential to have all the necessary documents organized and ready. While the specific list may vary depending on the nature and size of your business, the following are generally required:-
- Accounting Records:
- Cash book, ledger and journal.
- Trial balance.
- Profit and loss statement.
- Balance sheet.
- Source Documents:
- Purchase bills and sales invoices.
- Receipts and payment vouchers.
- Bank statements.
- Loan statements (for home/car loan etc.).
- Tax-Related Documents:
- PAN card and Aadhaar card.
- Form 26AS and AIS/TIS.
- TDS certificates (Form 16/16A).
- Details of any capital gains from investments.
- GST returns, if applicable.
- Other Details:
- Information about fixed assets and depreciation calculation.
- Details of inventory.
- Any other documents related to income and expenditure.
The process of getting your income tax audit done through Praman Advisors Private Limited is designed to be seamless and user-friendly:-
- Consultation & Inquiry: Start by contacting Praman Advisors for a free consultation. Our team of experts will assess your specific requirements and determine the applicability of an audit for your business or profession.
- Document Submission: Once you have signed up, you will be guided to submit all the required documents through our secure online platform. Our user-friendly technology makes this step effortless.
- Audit & Verification: Our experienced CAs will meticulously audit your financial records, cross-verifying the data with your submitted documents. They will identify any discrepancies and discuss them with you for clarification.
- Report Preparation: Upon successful verification, our team will prepare the audit report in the prescribed forms (Form 3CA/3CB and Form 3CD), ensuring all details are accurate and compliant.
- e-Filing and Confirmation: The final report is electronically filed with the Income Tax Department. We will handle the entire e-filing process and provide you with a confirmation of the submission.
At Praman Advisors, we believe in transparent and fair pricing. The fees for an income tax audit vary based on the complexity of your business and the volume of transactions. We offer customized solutions to fit your specific needs.
Manju Laur: 📞 +97119 94042
- Due Dates: For the financial year 2024-25, the due date for submitting a tax audit report is typically September 30, 2025. This gives you ample time to complete the process. Missing this deadline can lead to a penalty of 0.5% of the total turnover, up to a maximum of ₹1.5 lakh.
- Timelines: Our efficient, AI-driven process and dedicated professionals ensure a quick turnaround time. We work proactively to complete the audit well before the due date, giving you peace of mind.
