Tax Audit Services – Key Points to be Remembered

Tax Audit Services:

Tax Audit Services involves a prescribed format of examining the books of accounts of a taxpayer or a company to check the compliance with the law. It is regulated by the Income Tax Act, 1961 and governed by the Income Tax authorities. Income Tax Audit Services are conducted to ensure that the Income tax return filing done by the taxpayer is accurate and correct.

Relate Articles: Some Facts about Income Tax Return Filing in India

Important Provisions related to Tax Audit Services:

Some important provisions mandated by the Income Tax Act, 1961 and related to the Tax Audit Services to be performed are-

  • Section 44AA- This section states “Maintenance of accounts by certain persons carrying on profession or business”.
  • Section 44AB- It states “Audit of accounts of certain persons carrying on business or profession”.
  • Section 44AC- It deals with “Special provision for computing profits and gains from the business of trading in certain goods”.
  • Section 44AD- It states “Special provision for computing profits and gains of business on presumptive basis”.
  • Section 44ADA- This section deals with “Special provision for computing profits and gains of profession on presumptive basis”.
  • Section 44AE- It states the “Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages”.
  • Section 44BB- It states “Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils”.
  • Section 44BBB- It states “Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects”.
  • Section 271B- It deals with “Failure to get accounts audited”.

Points to checked for Tax Audit Services:

There are some checkpoints that have to be taken care of while performing Tax Audit Services. These points are-

  • Ensuring the accurate and correct maintenance of the books of accounts and records.
  • Ensuring that the owner is involved in more than one business having turnover above Rs. One Crore which makes him/ her liable to have tax audit of all the business entities.
  • Examination of the books of accounts methodically and properly by the taxpayer or the company before submitting it to the Tax Auditor.
  • Examining the tax return filling is done accurately and efficiently.
  • Certifying that the records, data and books of accounts are as per the requirements of the mandated laws and provisions by the auditor.
  • The taxpayer or the company should ensure all the prescribed information to be provided like taxes paid, taxes depreciated, returns filed etc. are in accordance.

Tax Audit Report:

An Income Tax Auditor has to file for a report after the completion of the Auditor Services. The reporting is done through the prescribed forms mandated by the Income Tax Act, 1961. These forms are namely Form 3CA, Form 3CB, Form 3CD and Form 3CE.

Process for Filing Tax Audit Report:

  • The Tax Auditor or Chartered Accountant performing the audit using his official online credentials has to present the report after the Tax Audit Services online.
  • The information about the hired Chartered Accountant by the taxpayer or the company must be fully furnished in their online login platform.
  • After the auditor successfully uploads the Tax Audit Report, the taxpayer has to either accept it or reject it on their login portal.
  • If the taxpayer rejects the report then the whole process of the Tax Audit Services is to be done until a report is accepted the taxpayer.
Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or