tax audit

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Why Should I Use Auriga Accounting For TAX AUDIT?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your TAX AUDIT.

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Our team of experts will get in touch with you and collect all necessary documents and details

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Complete your registration

Your TAX AUDIT

Why Should I Use Auriga Accounting For tax audit?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your tax audit.

book appointment

Our team of experts will get in touch with you and collect all necessary documents and details

Resolve all your queries

We fill out and file your application for registration

Complete your registration

Your tax audit

OVERVIEW

A tax audit is a formal examination and verification of a taxpayer’s financial records and transactions by tax authorities to ensure compliance with tax laws and regulations. It is conducted to assess the accuracy and completeness of the taxpayer’s tax return, including the income reported, deductions claimed, and the overall compliance with tax laws.

Tax audits can be carried out by government tax agencies, such as the Internal Revenue Service (IRS) in the United States, the HM Revenue and Customs (HMRC) in the United Kingdom, or the tax departments in other countries. The purpose of a tax audit is to determine whether the taxpayer has accurately reported their income, claimed appropriate deductions and credits, and fulfilled their tax obligations.

During a tax audit, the tax authorities may request various documents and records, including financial statements, bank statements, invoices, receipts, contracts, and other supporting documents relevant to the taxpayer’s tax return. The tax authorities review these records to verify the accuracy of the reported information and may conduct interviews or meetings with the taxpayer or their representatives to gather additional information or clarification.

Tax audits can be conducted randomly or targeted based on specific criteria, such as higher-risk tax returns, industry-specific issues, or red flags identified through data analysis. They can cover various aspects of taxation, including income tax, sales tax, value-added tax (VAT), payroll tax, and other applicable taxes.

Who is mandatorily subject to tax audit?

A taxpayer is required to have a tax audit carried out if the sales, turnover or gross receipts of business exceed Rs 1 crore in the financial year. However, a taxpayer may be required to get their accounts audited in certain other circumstances.

ELIGIBILITY

benefit's

Compliance with Tax Laws: Tax audit helps ensure compliance with the tax laws and regulations of the respective jurisdiction. By conducting a thorough examination of the taxpayer’s financial records, transactions, and tax returns, tax audit helps identify any non-compliance or errors in reporting.

Accuracy of Financial Statements: Tax audit helps in verifying the accuracy and reliability of financial statements. It ensures that the tax liabilities and related provisions are correctly recorded in the financial statements, providing stakeholders with reliable financial information.

Minimizing Tax Risks and Penalties: Through tax audit, potential tax risks and exposures can be identified and addressed proactively. By identifying and rectifying any errors, inconsistencies, or non-compliance with tax laws, taxpayers can reduce the risk of penalties, fines, or additional tax assessments.

Improved Tax Planning: Tax audit provides an opportunity to review the taxpayer’s tax planning strategies. By examining the taxpayer’s financial and tax positions, tax audit can help identify opportunities for tax optimization and planning, leading to potential tax savings.

Enhanced Internal Controls: Tax audit involves a detailed review of financial records, processes, and internal controls. This examination helps identify weaknesses or deficiencies in internal controls related to tax matters. By addressing these issues, businesses can enhance their internal control systems and minimize the risk of errors or fraud.

Increased Credibility: A tax audit conducted by a qualified professional adds credibility to the taxpayer’s financial statements and tax compliance. It provides assurance to stakeholders, including investors, lenders, and regulatory authorities, that the tax positions and reporting are accurate and reliable.

Facilitates Tax Dispute Resolution: In the event of a tax dispute or examination by tax authorities, a tax audit report can serve as a supporting document. It provides a comprehensive analysis of the taxpayer’s tax positions and can help resolve disputes more efficiently.

Risk Management and Governance: Tax audit contributes to effective risk management and governance within an organization. By reviewing tax-related processes and controls, tax audit helps identify areas of potential risk and ensures that appropriate governance measures are in place.

FORMS

Form 3CA-3CD is applicable in case of person who is required by or under any law to get its accounts audited.

Part A (Clause 1 to 8) of Form 3CD requires the CA to furnish the basic details of the assessee. The user can move ahead only once Part A of the form has been filled and saved.

Part B of Form 3CD has further divisions basis clauses 9 to 44. Particulars of all the clauses are required to be filled here.

Form 3CB-3CD is applicable in case of a person not being a person referred above i.e. where accounts are not required to be audited under any other law.

PENALTY

Penalty under Section 271B: Section 271B of the Income Tax Act imposes a penalty for failure to get the accounts audited as required under Section 44AB. If a taxpayer is required to get their accounts audited but fails to do so, a penalty equal to 0.5% of the total sales, turnover, or gross receipts, or a sum of ₹1,50,000 (whichever is lower) may be levied by the assessing officer.

Ineligibility for Certain Deductions: Non-filing of the tax audit report within the prescribed due date may result in the taxpayer being ineligible to claim certain deductions under the Income Tax Act. For example, if the tax audit report is not filed by the due date, the taxpayer may not be allowed to claim deductions under Section 80-IA (deductions for certain industrial undertakings) and Section 80-IB (deductions for certain businesses).

Disallowance of Expenses: In case of non-filing of the tax audit report, the assessing officer may also disallow certain expenses claimed by the taxpayer in the computation of income. This can result in a higher taxable income and, consequently, a higher tax liability for the taxpayer.

DOCUMENTS

Financial Statements: The company’s financial statements, including the balance sheet, income statement, cash flow statement, and statement of changes in equity for the audit period.

General Ledger: The general ledger provides a summary of all the company’s transactions and account balances. It includes details of revenues, expenses, assets, liabilities, and equity.

Bank Statements: Bank statements and related documents for all company bank accounts, including reconciliations and supporting documents for transactions.

Supporting Documentation: Invoices, receipts, purchase orders, sales contracts, agreements, and other supporting documentation related to revenue, expenses, assets, and liabilities.

Fixed Assets Register: A register or schedule detailing the company’s fixed assets, including descriptions, acquisition costs, depreciation methods, and accumulated depreciation.

Payroll Records: Payroll registers, employee records, payroll tax filings, and related documentation for verifying employee compensation, benefits, and payroll tax compliance.

Inventory Records: Detailed records of inventory levels, valuation, purchases, sales, and cost of goods sold. This may include physical inventory count reports, inventory valuation methods, and inventory reconciliation records.

Debt and Equity Instruments: Details of debt instruments, such as loan agreements, debentures, bonds, and equity instruments like share certificates, share registers, and share issuance documents.

Contracts and Agreements: Copies of significant contracts, leases, joint venture agreements, licensing agreements, and other legal agreements relevant to the company’s operations.

Tax Records and Filings: Tax returns, tax-related schedules, tax payments, tax assessments, and any correspondence with tax authorities.

Internal Control Documentation: Policies, procedures, and internal control documentation related to financial reporting, including segregation of duties, authorization levels, and control frameworks.

Previous Audit Reports: Previous years’ audit reports and management letters, along with any follow-up actions taken by the company.

Corporate Governance Documents: Board meeting minutes, shareholders’ meeting minutes, board committee meeting minutes, and other corporate governance-related documents.

Legal and Regulatory Compliance: Documentation related to compliance with applicable laws, regulations, and industry-specific requirements.

Any Other Requested Information: Auditors may request additional information, reports, or documentation based on the specific requirements of the audit engagement and applicable auditing standards.

PROCESS

Determine the Applicable Food License: Identify the specific type of food license that is required for your business activities. This could include a food manufacturing license, food retail license, food storage license, or any other relevant license based on your business operations.

Understand Regulatory Requirements: Familiarize yourself with the regulations and requirements set by the food regulatory authority or governing body in your jurisdiction. These regulations may cover aspects such as food safety, hygiene standards, labeling, packaging, and premises requirements.

Prepare the Necessary Documentation: Gather all the required documentation for the registration process. This may include business registration documents, proof of ownership or tenancy for the premises, layout and infrastructure plans, food safety management plans, and other relevant certificates or clearances.

Complete the Application Form: Obtain the application form for the food license from the appropriate regulatory authority. Fill out the form accurately and provide all the necessary information as per the guidelines provided. This may include details about the business, premises, food handling processes, storage facilities, and personnel involved in food handling.

Submit the Application: Submit the completed application form along with the required documents to the designated regulatory authority. Ensure that all the information provided is accurate and complete. Pay the prescribed application fee, if applicable.

Inspection and Verification: After submitting the application, the regulatory authority may conduct an inspection of your premises to assess compliance with the specified standards. They may evaluate factors such as cleanliness, hygiene practices, equipment, and food handling processes.

Compliance and Approval: Once the inspection is completed and your business is found to be compliant with the regulations, the regulatory authority will review your application and supporting documents. If everything is satisfactory, they will issue the food license. The validity and terms of the license will be determined by the regulatory authority.

VALIDITY

WHY AURIGA?

Expertise and Knowledge: Auriga Accounting has professionals with expertise in tax laws and regulations. They stay updated with the latest changes in tax regulations, ensuring accurate and compliant tax audit filing for businesses. Their knowledge and experience can help navigate the complexities of tax audit requirements.

Preparation of Tax Audit Reports: Auriga Accounting can prepare and compile the necessary documentation and information required for tax audit reporting. They gather financial data, reconcile accounts, and ensure compliance with the tax audit requirements, enabling businesses to meet their obligations under the Income Tax Act.

Compliance with Tax Audit Procedures: Auriga Accounting assists businesses in complying with tax audit procedures prescribed by the tax authorities. They follow the prescribed formats, guidelines, and timelines for tax audit reporting, ensuring that all necessary information is included accurately in the tax audit reports.

Review and Analysis: Before filing the tax audit report, Auriga Accounting conducts a thorough review and analysis of the financial records, transactions, and relevant tax documents. They ensure that the tax audit report aligns with the financial statements, identifies any potential discrepancies, and addresses any issues or concerns to minimize the risk of penalties or non-compliance.

Liaison with Tax Authorities: Auriga Accounting can act as a liaison between the business and the tax authorities. They can represent and communicate on behalf of the business during the tax audit process, addressing any queries or requests for additional information from the tax authorities.

Tax Planning and Optimization: Alongside tax audit filing, Auriga Accounting may provide tax planning and optimization strategies to help businesses minimize their tax liabilities within the legal framework. They can identify opportunities for tax savings, claim applicable deductions, and ensure businesses are compliant with tax laws.

Ongoing Tax Support: Auriga Accounting can provide ongoing tax support beyond tax audit filing. They can assist with tax compliance, tax planning, and address any tax-related queries or issues that may arise throughout the year.

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