Income Tax Audit Limit for Businesses & Professionals, Tax Audit - Limit, Due Date & Section 44AB

Audit for Businesses

Starting financial year FY 2016-17 (income tax return filing for AY 2017-18), the turnover limit for businesses which can opt for presumptive income scheme has been increased from Rs 1 crore to Rs 2 crore.For other businesses who do not opt for presumptive income scheme, audit limit will remain Rs 1 crore. There has been no change in the audit limit for businesses who are not opting for presumptive income scheme.

Income Tax Audit under section 44AB, Audit for Professionals, Income Tax Filing & Audits in Chennai

The tax audit limit for professionals is Rs 50 lakhs from FY 2016-17 onwards.

Starting financial year FY 2016-17 (return filing for AY 2017-18), presumptive income scheme has been extended to professionals with receipts up to Rs 50 lakhs. Under this scheme, their income is assumed to be 50% of receipts. Books of accounts are not required to be maintained and audit is not applicable.

Following Table can help you understand better,the audit limits in case of business & profession with or without opting presumptive income scheme.

Income Tax Audit u/s 44AB, Tax Audit Report Under Section 44AB - Form 3CA, 3CB, 3CD & 3CE

As per section 44AB of the Income Tax Act, Income Tax Audit is compulsory in the following cases:
• A person who is carrying on a Business and has a turnover of more than Rs. 1 Crore.
• A person who is doing a Profession and the gross receipts exceed Rs 50 Lakh (w.e.f A.Y. 2017-18).
• A person who has opted for the presumptive taxation scheme under section 44AD but claims that the profits of such businesses are lower than the deemed profits computed according to the scheme. According to the section 44AD, the deemed profits are 8% of total turnover or gross receipts of Business.
• A person who has opted for the presumptive taxation scheme under section 44ADA but claims that the profits of such Profession are lower than the deemed profits computed according to the scheme. According to the section 44ADA, the deemed profits are 50% of total turnover or gross receipts of Profession.
• Any person in the business of Goods transportation who has not more than 10 goods carriage and he has opted for presumptive taxation scheme under section 44AE and claims that his profit is less than the deemed profit that is computed under the scheme.

Turnover for Income Tax Audit is the gross receipts of the business or profession, but does not include:
• Income received from renting of the house or any other rental income.
• Any money received by selling of an asset which was held as Investment.
• The receipt by selling of a Fixed Asset.
• Income which is received by way of Interest. It may be noted that if a person is required to get his books audited under any other law (Companies Act, 2013) and he is getting his books audited as per the other law before the specified date and furnishes by that date the report of the tax audit as per the other law and a further report by an accountant, he is not required to get tax audit done under Section 44AB.

ITR/ Tax Audit Report Due Date Extended up to 15 Oct. 2018

A report of the audit under Income Tax has to be filed in:Form 3CA – If the books of accounts of the business or profession of the person have been audited under any other law.Form 3CB – If the books of accounts of the business or profession of the person have not been audited under any other law.

Form 3CD – This form has to be filed in both of the above cases. It is the Statement of particulars to be furnished under section 44AB.

Income Tax Return Filing Due Dates for FY 2017-18, Income tax audit

The audit under Income Tax shall be done by a Chartered Accountant and its report shall be filed before 30th Septemberof the relevant Assessment Year. Penalty

If a person fails to comply with the provisions relating to the Income Tax Audit (Section 44AB), there is a penalty of 0.5%of the total turnover or Rs. 1,50,000 whichever is less. However, if a person has a reasonable cause for non-filing of the tax audit report, then such a penalty may not be levied on him.

For any help on ITR Filing feel free to consult the tax experts at Income Tax Academy.
FREQUENTLY ASKED QUESTIONS ON E-FILLING OF TAX AUDIT REPORTS – OTHER ISSUES

1. NO TAX AUDIT, Top 10 Tax Audit Services in Chennai, Tax Auditors Chennai

Q1. Whether Tax Audit Report u/s 44AD etc will be counted in the specified limits of 45 Tax Audits?

Ans. As per Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008, these will not be included and you can file unlimited such Tax Audit Reports
Q2. What are the limits on signing of Tax Audit Report?

Ans. As per Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008,

a) A CA can sign up to 45 Tax Audit.
b) In case of Partnership Firm, limit will be 45 / Partner.
c) Audit U/S 44AD, 44AE, 44AF will not be included in the limit. (FROM FY 2012-13, SEC 44AF ISNOT APPLICABLE)
2. ONLINE FILLING, DATE OF SIGNING AND DATE OF FILLING

Q3. What are the Tax Audit Reports which are to be compulsorily filed online?
Ans. As per Notification No. 34/2013 dated 01/05/2013, & Notification No. 42/2013 dated 11/06/2013, Audit reports under Sections 10 (23C) (iv), (v), (vi) or (via), 10A, 12A (1)(b), 44AB, 80-IA, 80-IB, 80-IC, 80-ID, 80JJAA, 80LA, 92E or 115JB are to be filed electronically. (It covers audit report u/s 44AD, 44AE, 44AF also) (FROM FY 2012-13, SEC 44AF is not applicable)

Q4. Should we sign Tax Audit Report on 30th September?
Ans. As the word “before” has been used in sec. 44AB, we should not sign Tax Audit Report on 30thSeptember. You should sign Tax Audit Report before 30th September, since the assessee is required to “obtain” Tax Audit Report before the due date i.e. 30th September.

Q5. Where audit is to be conducted u/s 92E, what is the last date of filling online Tax Audit Report?
Ans. Normally, Tax Audit Report is to be submitted by 30th September. However, for these assesses Report u/s 92E as well as Tax Audit Report can be filled by 30th November.

3. CAN A PARTNER SIGN ON BEFALF OF OTHER PARTNERS
Q6. Please advice in case of partnership firm can only one partner sign all the reports?

Ans.
a) Clause 12 Of Part I of Schedule I of Chartered Accountants Act allow a partner to sign on behalf of (i) Other Partner (ii) Firm
b) Sign can be either digital or physic
al c) In my view, one partner can sign form 3CD etc. keeping in view the limit of 45 audits per partner.
[Clause 12 of Part I of Schedule I of Chartered Accountants Act states that “A CA in practice will be guilty if he allows a person not being a member of the institute in practice, or a member not being his partner to sign on his behalf or on behalf of his firm, any balance-sheet, P&L a/c, report or financial statements“] 4. PROBLEM OF TWO TAX AUDITORS OF SAME ASSESSEE
Q7. An individual has two businesses audited by two different tax auditors. How to submit Tax Audit Report?
Ans. In my view, you can follow the below mentioned steps:
a) Combine data of two B/S, P/l, tax audit report and submit as one
b) If tax audit conducted by two CAs, any CA can submit.
c) It is advised to attach physical copies of both Tax Audit Reports too, for disclosure of the fact that
(i) two CAs have done Tax audit and
(ii) that CA who is filling had relied on the work of other CA

5. CAN RETURN BE FILED AFTER DUE DATE
Q8. Can Income tax Return be e-filed after 30th September? However we will file Tax Audit Report within 30th September?

Ans. Yes, Online Tax Audit Report is to be filed by 30th September to avoid penalty of Rs. 1.5 Lakhs or ½% of Turnover, whichever is lower. However, return may be filed later. However, such return will be treated as belated return.

6. REVISION OF TAX AUDIT REPORT ONCE FILED
Q9. Can online filed Tax Audit Report be revised?
Ans. A Tax Audit Report which has not been approved by assessee can be revised. However after it has been approved by the assessee, it should not be revised. However, there is no restriction by the utility, as of now, to upload revised xml. So we should take due care, so that correct data is uploaded in the first instance itself. However, members may kindly note that, all the xml files uploaded will be there in their domain.

7. OFFLINE FILED TAX AUDIT REPORT TO BE SUBMITTED ONLINE AGAIN?

Q10. I have uploaded 5 returns without uploading tax audit as it was required to submit offline at that time. Should we submit these again online? Ans. No, you are not required to submit IT Return online again. However, kindly ensure that Tax audit Report is duly uploaded within due date. 8. ITR 7 TO BE FILED ONLINE?

Q11. Whether e-Filing of ITR 7 For AY 2013 – 14 mandatory or can we file paper returns also?
Ans. It Is Mandatory To Submit Online
9. MANDATORY E-FILLING OF TRUST, SOCIETY
Q12. Are All Charitable Trust and Cooperative Society’s Income Tax Return Are to E-File?
Ans: The Charitable Trusts etc. are Required To File Return Online Also.
10. RESPONSIBILITY OF TAX AUDITOR FOR DELAY IN UPLOADING
Q13. Is tax auditor responsible for delay in uploading of Tax Audit Report?
Ans. Guidance Note on Tax Audit states that normally, it is the professional duty of the CA to ensure that the audit accepted by him is completed before the due date. Hence, yes, if delay is attributable to his part.
11. PENALTY FOR NON FURNISHING OF REPORT
Q14. What are the penalties for non furnishing a Tax Audit Report?
Ans. Sec 271B states that, if any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred fifty thousand rupees, whichever is less.

12. WAIVER OF PENALTY FOR NON FURNISHING Q15. What are the circumstances under which penalty cannot be imposed for non furnishing of Tax Audit Report? Ans. As per section 273B, no penalty is imposable under section 271B on the assessee for the above failure if he proves that there was reasonable cause for the said failure. The onus of proving reasonable cause is on the assessee. Some of the instances where Tribunals/Courts have accepted as “reasonable cause” are as follows:

(a) Resignation of the tax auditor and consequent delay;
(b) Bona fide interpretation of the term `turnover’ based on expert advice;
(c) Death or physical inability of the partner in charge of the accounts;
(d) Labour problems such as strike, lock out for a long period, etc.;
(e) Loss of accounts because of fire, theft, etc. beyond the control of the assessee;
(f) Non-availability of accounts on account of seizure;
(g) Natural calamities, commotion, etc.

13. FORMAT OF MAINTAINANCE OF RECORDS OF TAX AUDIT
Q16. What is the format for maintaining records of Tax Audit Assignments?
Ans. Record of Tax Audit Assignments
1. Name of the Member accepting the assignment
2. Membership No.
3. Financial year of audit acceptance
4. Name and Registration No. of the firm/ firms of which the member is a proprietor or partner.
14. COMMUNICATION WITH PREVIOUS AUDITOR

Q17. Is communication with the previous tax auditor necessary?
Ans. Yes

15. SHOULD CA ACEEPT TAX AUDIT IF UNDISPUTED FEES OF PREVIOUS AUDITOR NOT PAID

Q18. Should a CA accept Tax audit where undisputed fees of previous auditor have not been paid?

Ans. As per Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008, “a member of the Institute in practice shall not accept the appointment as auditor of an entity in case the undisputed audit fee of another CA for carrying out the statutory audit under the Companies Act, 1956 or various other statuteshas not been paid”

16. TAR OF PVT LTD COMPANY

Q19. Whether Form 3CA or Form 3CB to use for Tax Audit Report purpose of a Pvt. Ltd. Co. having statutory Audit done by the same CA. Ans. Form No 3CA-3CD

17. ADDRESS FOR NRI DIRECTOR IN ITR

Q20. While filling Director Details in ITR 6, only Indian Address is accepted in the form. However, one of the directors is an NRI and having foreign address. Should we fill in a local address of the Director and proceed or there is some other way out? Ans. ITR-6 Required Residential Address. If Indian Address Available Then Give.

18. PAN OF RELATIVE FOR UNSECURED LOAN