The tax inspector prepares an online tax audit report using his references as a „chartered accountant”. Taxpayers must also add the CA details in their login portal. However, businesses can still file this year`s revised tax audit report to correct errors. Changes to above provision: Finance Act 2020: It is proposed to increase the threshold from Rs 1 crore of turnover for a tax audit from AY 2020-21 (FY 2019-20) to Rs 5 crore if the taxpayer`s cash receipts are limited to 5% of gross receipts or turnover and taxpayer`s cash payments are capped at 5% of total payments. Finance Act 2021: From 1 April 2021, the threshold will increase from Rs 5 crore to Rs 10 crore if cash transactions do not exceed 5% of total transactions. Below we present the different categories of taxpayers: The tax audit form has been activated on its portal by the income tax department In the table above, it can be seen that the government has attempted to reduce the compliance burden on various small and medium-sized businesses, but the tax audit burden for small businesses is still not completely excluded. There may be cases where small businesses are required to have an audit carried out, while in a similar case, a medium-sized company (turnover of 2-5crore) is not obliged to have the accounts audited. We expect the CBDT to provide clarification on the aforementioned discrepancies in the applicability of audits between small and medium-sized enterprises. The 2020 Finance Act amended the tax audit threshold under Section 44AB.
The tax audit limit according to § 44AB is as follows: (e) The conduct of the enterprise shall, if the provisions of paragraph (4) of section 44AD are applicable in its case and its income exceeds the maximum amount not subject to income tax in a previous year, have its accounts for that preceding year audited by an accountant before the date indicated, and on that date the report of such audit in the prescribed form, duly signed and verified by that accountant and containing the required information: Once the tax inspector has uploaded the audit report, it must be accepted/rejected by the taxpayer in his login portal. If this is denied for any reason, all procedures must be followed again until the audit report is accepted by the taxpayer. The Income Tax Act was amended on 01.04.2020, i.e. from tax year 2020-21 as follows: The turnover threshold of Rs 1 crore for a person carrying on business has been increased to Rs 5 crore provided that the following conditions are met 1. The sum of all cash receipts of the previous year shall not exceed 5% of this income. 2. The sum of all cash payments made during the preceding year shall not exceed 5 % of such payments. There are different types of audits carried out according to different laws, such as corporate audit/statutory audit of companies according to the provisions of company law, cost audit, inventory audit, etc. Similarly, the Income Tax Act also requires an audit called a „tax audit”. Here is a list of some major tax changes with tax audit/business audit for fiscal year 2019-20:1. The threshold of Rs 1 crore for the applicability of the tax audit u/s 44AB(a) is increased to Rs 5 crore if the taxpayer`s cash revenue is limited to 5% of gross receipts or turnover and cash payments are limited to 5% of total payments. For 2019-20, i.e.
the 2020-21 tax year, the limit was Rs 5 crore for companies and Rs 50 lakh for professionals, while the due date of the initial tax audit report was January 15, 2021. (e) If the person carries out the activity and the provisions of paragraph 4 of Article 44AD are applicable in his case and his income exceeds the basic threshold, which is not subject to income tax in any previous year, he shall be responsible for the tax examination. A taxpayer must have a tax audit carried out if the turnover, turnover or gross receipts of the transaction exceed Rs 1 crore in the financial year. However, a taxpayer may, in certain other circumstances, be required to have his or her accounts audited. We have classified the different circumstances in the tables below: Section 44AB of the Act requires any person carrying on a business to have his accounts audited if his total turnover, turnover or gross income in the shop exceeds or exceeds one crore of rupees in any previous year. In the case of a person practising the profession, he is obliged to have his accounts audited if his gross income in the profession exceeds fifty rupees lakh in a previous year. In order to reduce the compliance burden for small and medium-sized enterprises, the Finance Act 2020 made significant amendments to the Income Tax Act 1961 regarding the applicability of tax audit. It raised the threshold of tax inspection applicability for a person engaged in business activity from one crore of rupees to five crore of rupees in cases where: – If a taxpayer who is required to carry out the tax audit fails to do so, the lesser of the following amounts may be levied as a penalty: Rule 80(3) imposed a GST audit turnover limit of Rs 2 crore, but Notice No.
79/2020 – Central Tax of 15 October 2020 (Main Notice 16/2020-CT of 23 March 2020) inserted a rule reservation 80(3) which clearly states that any registered person whose total turnover in the financial year 2019-2020 exceeds five crore of rupees must have his accounts audited and provide a copy in accordance with paragraph (5) of Article 35. audited financial statements and a certified reconciliation in FORM GSTR-9C.