Tax Audit Services

In the event that you are a taxpayer, and the turnover of your business or total receipts from any profession surpass the limits set forth by The Income Tax Act in any previous year, it becomes mandatory to undergo a tax audit conducted by an Independent Chartered Accountant. The Tax Audit report, prepared in accordance with Section 44AB of the Income Tax Act, 1961, is a crucial requirement in such cases.

Ensuring compliance, the due date for submitting the Tax Audit report is set at 30th September of the Assessment Year. Adhering to this deadline is vital to avoid penalties and ensure a smooth process of assessment and verification by tax authorities. This requirement underscores the significance of accurate financial reporting and transparency for businesses and professionals with turnovers exceeding the prescribed limits.

The purpose of the tax audit process is to ensure meticulous adherence to Income Tax compliances and other relevant laws. The tax audit endeavors to scrutinize the books of accounts of the assesses, confirming that the mandatory compliances specified by the Income Tax Law are duly followed.

In accordance with the prevailing laws and statutes, our approach to tax audits involves a systematic examination of financial records, ensuring that all relevant disclosures are made in the specified formats. Our Tax Audit team, equipped with extensive experience and qualifications, is adept at handling tax audits efficiently and within specified timelines. This commitment to a thorough and timely tax audit process reflects our dedication to compliance and transparency in financial reporting.

Who is mandatorily subject to the Tax Audit?

Section 44AB of the Income Tax Act, 1961 mandates that individuals or entities engaged in business or profession must undergo a statutory audit of their books of accounts. This audit is required to be conducted by a practicing Chartered Accountant (CA) in order to ensure compliance with the provisions of the Income Tax Act.

The audit process, as outlined in Section 44AB, serves as a mechanism to verify and validate the financial records and transactions of businesses and professionals. This requirement is applicable to certain persons whose turnover or gross receipts exceed the specified limits, ensuring that they adhere to the stipulated financial reporting standards and regulatory guidelines.

Who is mandatorily subject to the Tax Audit?

Section 44AB of the Income Tax Act, 1961 mandates that individuals or entities engaged in business or profession must undergo a statutory audit of their books of accounts. This audit is required to be conducted by a practicing Chartered Accountant (CA) in order to ensure compliance with the provisions of the Income Tax Act.

The audit process, as outlined in Section 44AB, serves as a mechanism to verify and validate the financial records and transactions of businesses and professionals. This requirement is applicable to certain persons whose turnover or gross receipts exceed the specified limits, ensuring that they adhere to the stipulated financial reporting standards and regulatory guidelines.

Business

For businesses, if the total amount of sales, turnover, or gross receipts surpasses Rs. 1 crore in any previous year, a mandatory tax audit is required as per Section 44AB of the Income Tax Act. However, there’s a provision that modifies this limit.

If the aggregate of all receipts and payments in cash during the previous year does not exceed 5% of such receipts and payments, the limit of Rs. 1 crore is substituted by Rs. 5 crore. This means that if the business maintains a low level of cash transactions, and the cash component is within the specified threshold, the higher limit of Rs. 5 crore becomes applicable.

It’s essential to note that these revised limits of Rs. 5 crore are applicable from the Assessment Year 2021-22 onwards. This provision aims to accommodate businesses with a higher turnover while still ensuring a check on the cash component to prevent potential tax evasion.

Profession

In the context of professions, if the gross receipts in business exceed Rs. 50 lakhs in any previous year, it becomes imperative and mandatory for such entities to undergo a statutory audit of their books of accounts. This audit must be conducted by a practicing Chartered Accountant (CA) to ensure compliance with the provisions of the Income Tax Act.

Moreover, even under specific circumstances where the turnover is below the specified limits, certain entities may still be required to have their books of accounts audited by a practicing CA.

The entities falling under these criteria must ensure that their books of accounts are audited by a CA before the specified due date and must furnish the report of such audit. This regulatory requirement aims to enhance transparency and accuracy in financial reporting and compliance with applicable tax laws.

How Can Tax Audit Be Beneficial for Your Organization?

Tax audits indeed offer a myriad of benefits that extend beyond mere legal compliance. Here are additional advantages that can positively impact your organization:

1) Acceptance by Government Authorities: Audited financial statements are recognized and accepted by government authorities as true and fair representations of your financial position. This acknowledgment is crucial for taxation purposes and ensures compliance with regulatory requirements.

2) Facilitates Access to Loans and Licenses: Having audited financial statements enhances your organization’s credibility and reliability. Financial institutions and regulatory bodies often require audited records when considering loan applications or issuing licenses, making the audit a valuable asset in these processes.

3) Enhances Trustworthiness: Audited financials add a layer of reliability to your organization, instilling trust among various stakeholders such as customers, suppliers, investors, employees, and tax authorities. This heightened trustworthiness can positively influence relationships and collaborations.

4) Fraud Prevention: The audit process acts as a deterrent to fraudulent activities within your organization. The thorough examination of financial records helps identify and rectify potential discrepancies, reducing the likelihood of fraudulent activities and ensuring the integrity of your operations.

5) Strategic Decision-Making: Through the audit, VBX INNOVATIONS provides concrete suggestions for business improvements based on findings in your records. This valuable input can aid in strategic decision-making, allowing your organization to adapt and thrive in a dynamic business environment.

Penalty for non-filing or delay in filing tax audit report

In the event of non-compliance, the least of the following penalties may be imposed:

1) 0.5% of the total sales, gross receipts, or turnover.
2) Rs. 1,50,000.
However, you need not be concerned about penalties, as VBX INNOVATIONS is dedicated to taking care of your business through timely compliances. Our commitment is to ensure that your business adheres to all necessary regulations, minimizing the risk of penalties and allowing you to focus on your core operations with confidence.

Why us – VBX INNOVATIONS?

1) At VBX INNOVATIONS, our extensive experience spans many years in the field, catering to a diverse clientele ranging from individual taxpayers to conglomerates. Our firm’s audit practices have consistently evolved, positioning it as one of our notable areas of specialization. As one of the premier tax audit consultants in Delhi, we are committed to delivering exceptional service.
We take a constructive approach to our audits, recognizing the importance of compliance with the Income Tax Act, 1961. Our audit procedures are meticulously designed to ensure accuracy, transparency, and adherence to regulatory requirements. With a focus on continuous improvement, we bring a wealth of experience and expertise to every client engagement, contributing to the success and compliance of businesses across various sectors.

2) During our planning phase, we prioritize a proactive approach, aiming to preemptively address any potential surprises or challenges. Our strategy involves managing issues upfront, ensuring a smooth and efficient audit process with minimal disruptions.

3) Our expert and experienced tax team offer tangible suggestions for business improvement, leveraging their findings from thorough record examinations. This proactive approach aims to enhance operational efficiency and strategic decision-making for your business.

4) Our commitment is to safeguard your business from legal consequences and penalties through meticulous compliance and proactive measures.

5) Following the highest standards, our audit methodology is aligned with guidelines from the Institute of Chartered Accountants of India (ICAI), ensuring convergence with international auditing standards for thorough and reliable assessments.

6) Our focus is on delivering critical insights that you and your stakeholders can leverage for precise and resourceful reporting, enhancing informed decision-making and transparency in your business operations.

7) Employing a pragmatic and logical approach, our audit methodology is risk-based, incorporating thorough planning, client collaboration, and cutting-edge technology. Our dedicated audit team not only ensures the credibility of your financial statements but also provides valuable insights for enhanced system management and risk mitigation to empower your leadership.