{"id":31178,"date":"2021-05-27T12:26:20","date_gmt":"2021-05-27T06:56:20","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=31178"},"modified":"2025-02-21T16:28:51","modified_gmt":"2025-02-21T10:58:51","slug":"tax-audit-under-section-44ab","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/","title":{"rendered":"Tax Audit under Section 44AB- Everything You Need to know"},"content":{"rendered":"\n<p class=\"has-drop-cap\">There is a multifarious audit\nthat takes place under different laws such as statutory audit\/company audit\nconducted under company law provisions, stock audit, cost audit etc. Likewise,\nincome law also necessitates an audit called Tax audit.&nbsp;<\/p>\n\n\n\n<p>As the name suggests, a <a href=\"https:\/\/corpbiz.io\/tax-audit\" title=\"Tax Audit\"><strong>tax audit<\/strong><\/a> is a scrutinization of accounts of any profession or business carried out by the individuals from an income tax standpoint. It makes the filing process easier through the process of income computation.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/#Objectives_of_tax_audit\" >Objectives of tax audit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/#Who_is_liable_for_tax_audit\" >Who is liable for tax audit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/#What_if_there_is_a_compulsion_for_an_individual_to_get_his_accounts_audited_under_any_other_law\" >What if there is a compulsion for an individual to get his\naccounts audited under any other law?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/#What_creates_an_Audit_report\" >What creates an Audit report?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/#How_when_tax_audit_report_should_be_submitted\" >How &amp; when tax audit report should be submitted?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/tax-audit-under-section-44ab\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Objectives_of_tax_audit\"><\/span>Objectives of tax audit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Tax audit serves the following\nobjectives for the taxpayers:&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Ensure legit maintenance of books of accounts &amp; certification of the same.<\/li>\n\n\n\n<li>Reporting discrepancies identified by the tax auditor after extensive scrutiny of the books of account.&nbsp;<\/li>\n\n\n\n<li>To report prescribed detail such as compliance with the various provision of IT law, tax depreciation etc. All these allow authorities to validate the legitimacy of the <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>Income Tax returns<\/strong><\/a> filed by the taxpayer.&nbsp;<\/li>\n\n\n\n<li>Calculation and validation of aggregate income, claim for deductions etc., also become less tedious.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_liable_for_tax_audit\"><\/span>Who is liable for tax audit?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A taxpayer must carry out a tax audit if the sale or gross receipts of a business surpass INR 1 crore in the given financial year. However, a taxpayer might need to get their account audited on other scenarios. We have clubbed the different scenarios in the tabular form given below:<\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong> The maximum limit of INR 1 crore for the tax audit is projected to be escalated to INR 5 crore w.e.f 2020-21 if the taxpayer\u2019s cash receipts are not greater than 5% of the turnover and if the taxpayer\u2019s payment is capped @ 5% of the total payments.<\/div>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Category of person<\/strong>\n  <\/td><td>\n  <strong>Threshold<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Business<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on business (excluding\n  presumptive taxation scheme*)<\/strong>\n  <\/td><td>\n  Total\n  sales or gross receipts surpass Rs 1 crore in the FY\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on business which stands eligible\n  for presumptive taxation u\/s 44AE, 44BB or 44BBB<\/strong>\n  <\/td><td>\n  Claims\n  profits or gains lying under the &nbsp;prescribed limit under presumptive taxation\n  scheme\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on business which stands eligible\n  for presumptive taxation under Section 44AD&nbsp;<\/strong>\n  <\/td><td>\n  Discloses\n  taxable income under the limits prescribed as per presumptive tax scheme and\n  has income more than the basic threshold limit\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on the business and stands\n  ineligible for presumptive taxation u\/s 44AD due to presumptive taxation in\n  any one financial year of the lock-in-period when the presumptive tax scheme\n  was opted. <\/strong>\n  <\/td><td>\n  If\n  income surpasses the max. amount non-taxable in the 5 consecutive tax years\n  from the FY when the presumptive taxation was not chosen. \n  <\/td><\/tr><tr><td>\n  <strong>Carrying on business and declaring\n  profit as in line with presumptive taxation scheme under Section 44AD<\/strong>\n  <\/td><td>\n  If\n  the total sales gross receipts lies under Rs 2 crore in the FY, then tax\n  audit is non-applicable to businesses.\n  <\/td><\/tr><tr><td>\n  <strong>Profession<\/strong>\n  <\/td><td><\/td><\/tr><tr><td>\n  <strong>Carrying on profession&nbsp;<\/strong>\n  <\/td><td>\n  Total\n  gross receipts is higher than Rs 50 lakh in the FY&nbsp;\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on the profession which stands\n  eligible for presumptive taxation u\/s 44ADA<\/strong>\n  <\/td><td>\n  1.\n  Claims profits or gains lesser than the given limit as per presumptive\n  taxation scheme&nbsp;&nbsp;\n  2.\n  Income exceeds the max amount which is non-taxable. \n  <\/td><\/tr><tr><td>\n  <strong>Business loss<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>In case of loss from carrying on of\n  business and not opting for presumptive taxation scheme<\/strong>\n  <\/td><td>\n  Total\n  sales, turnover or gross receipts surpass Rs 1 crore\n  <\/td><\/tr><tr><td>\n  <strong>If taxpayer\u2019s gross income surpasses\n  threshold limit but he has encountered a loss from a business (in the absence\n  of presumptive taxation scheme)<\/strong>\n  <\/td><td>\n  In\n  case of loss from business when sales and gross receipts surpassed 1 crore,\n  the taxpayer is tax audit u\/s 44AB\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on business with presumptive\n  taxation scheme u\/s 44AD&amp; having a business loss but income lies below\n  basic threshold limit. <\/strong>\n  <\/td><td>\n  Tax\n  audit not applicable\n  <\/td><\/tr><tr><td>\n  <strong>Carrying on business (presumptive\n  taxation scheme u\/s 44AD applicable) and confronting a business loss but with\n  income surpassing basic threshold limit<\/strong>\n  <\/td><td>\n  Declares\n  taxable income lesser the limits given as per presumptive tax scheme &amp;\n  has income surpassing the basic threshold limit\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_if_there_is_a_compulsion_for_an_individual_to_get_his_accounts_audited_under_any_other_law\"><\/span>What if there is a compulsion for an individual to get his\naccounts audited under any other law?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In such cases, auditing will not be subjected to such taxpayers. It is more than enough for taxpayers to get their account audited under other law prior to the due date of return filing. The taxpayer can submit the audit report under IT law.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cbdt-amends-the-tax-audit-report-form-3cd-itr-6-form-no-10-ie-and-10-if\/\">CBDT Amends the Tax Audit Report Form 3CD, ITR 6, Form No 10-IE and 10-IF <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_creates_an_Audit_report\"><\/span>What creates an Audit report?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Tax auditor is required to submit his report in a given format which could be Form 3CB or 3CA where:&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Form\nNo. 3CA is submitted when an individual carrying on profession or business is\nunder obligation to get his accounts audited under any other law.<\/li>\n\n\n\n<li>Form\nNo. 3CB is submitted when an individual carrying on a profession or business is\nnot obligated to get his accounts audited under any other law.<\/li>\n\n\n\n<li>In\ncase of either of these audit reports, the tax auditor should submit the given\ndetails in Form No. 3CD.&nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_when_tax_audit_report_should_be_submitted\"><\/span>How &amp; when tax audit report should be submitted?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The tax auditor must submit a tax audit report online via login credentials in the capacity of CA, \u2018<em><strong>Chartered Accountant<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Chartered_accountant\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>\u2019. The taxpayer is also required to add CA info in the portal. As soon as the auditor submits the audit report, the same must either be rejected\/accepted in the login portal.&nbsp;<\/p>\n\n\n\n<p>In case of rejection,\nre-follow all the procedures till the audit report is accepted by the taxpayer.\nYou must fill report of the tax audit on or before the ITR\u2019s filing due\ndate.&nbsp;<\/p>\n\n\n\n<p>It is 30 Nov of the subsequent\nyear if the taxpayers have entered into a cross-border transaction &amp; 30 Sep\n(extended to 31 Oct for AY 2020-21) of the subsequent year for other\ntaxpayers.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It should be noted that in the case of non-filing, a penalty of 0.5% of the total sales or Rs 1,50,000 will be imposed accordingly on the defaulter. Therefore, being aware of the filing date is the best way of preventing such happening.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/income-tax-audit-under-section-44ab-of-income-tax-act\/\">An Insight on Income Tax Audit under Section 44AB of Income Tax Act<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There is a multifarious audit that takes place under different laws such as statutory audit\/company audit conducted under company law provisions, stock audit, cost audit etc. Likewise, income law also necessitates an audit called Tax audit.&nbsp; As the name suggests, a tax audit is a scrutinization of accounts of any profession or business carried out [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":31191,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[152],"tags":[1775],"acf":{"service_id":"50"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":4782,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/31178"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=31178"}],"version-history":[{"count":6,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/31178\/revisions"}],"predecessor-version":[{"id":68831,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/31178\/revisions\/68831"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/31191"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=31178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=31178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=31178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}