Tax Audit | Auditing | BCom Sem 6 | VNSGU | Advance Accounting & Auditing 7 |

What is Tax Audit ?

A Tax Audit is an audit, made compulsory by the Income Tax Act, if the annual gross turnover/receipts of the assessee exceed the specified limit. Tax audit is conducted in Sec 44AB of the Income Tax Act by a Chartered Accountant. Simply Tax Audit means, an audit of matters related to tax.

Persons covered: (Tax Audit Limit AY 23-24)

Business Turnover Based Limit -
#1 Cash Transactions more than 5% - 1 Crore
#2 Digital Transactions More than 95% -10 Crore

For Professional (Medical or IT or Lawyer or CA Profession etc.)
#Gross Receipt More than 50 lakh Audit is required

(2) Persons not covered:
The following persons are not required to get their accounts audited:
(i) A person who is not required to file the return under the Income-tax Act or who is outside the scope of Income-tax Act eg agriculturists.
(ii) A person who is a non-resident and is engaged in business of operations of ship
(iii) A person who is a non-resident and is engaged in business of providing services or plant and machinery on hire etc in production of mineral oils. (Sec 44BB)
(iv) A person who is a non resident and is engaged in the business of operation of aircraft
(v) An assessee which is a foreign company engaged in the business of civil construction or business of creation of plant and machinery in connection with a turn key power projects approved by the Central Government.

Auditor: The accounts are to be audited under this section by an "accountant" which means by any chartered accountant in practice. It may be audited by a firm of chartered accountants.
As laid down by the Institute of Chartered Accountants of India, the maximum of 60 tax audits can be accepted in a financial year by an auditor If he accepts more than that, he will be guilty of professional misconduct. In case of a firm of chartered accountant, the number of tax audit that can be accepted is 60 for each partner in the firm.

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