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December 10, 2022 / Audit

Steps in The Process Flow for income tax audit report

Access or Availability to Chartered Accountants Audit Reports & Steps in The Process Flow for audit report & online Filing 2.0

The post includes a list of 22 audit reports and information on how to file them, as well as Process Flow Steps In Online Filing 2.0 on the New Income Tax Portal for all audit forms, including Form 15CB & Form 10CCB.

ALL INCOME TAX AUDIT FORMS AND ITS PROCESS FLOW

Below mention for all Audit Forms except Income Tax Form 15CB & Form 10CCB

Process-Flow 15ca and 15cb

	Steps	Action by	Action Description


*STEP-1*		Income tax Assesses or Taxpayer	Add Chartered Accountants in My Chartered Accountants Functionality under Taxpayer login. If Chartered Accountants is already added, skip to Step 2.


*STEP-2*		Income tax Assesses or Taxpayer	Assign Income tax Form for the relevant Assessment Year / Financial Year + Permanent account number + Membership No. combination either via My Chartered Accountants Functionality or File Forms Functionality by selecting Filing Type and Attachments (wherever applicable) under Taxpayer Login.



*STEP-3*		Chartered Accountants	Navigate to Worklist For Your Action in Client Request List (only if Chartered Accountants is added for 1^st time as in Step 1). If Chartered Accountants is already added, go to income tax Forms Request List & Accept Request under Chartered Accountants their respective Login.



*STEP-4*		Chartered Accountants	Navigate to Worklist For Your Action in Pending for Filing List & click on File income tax Form under Chartered Accountants Login.


*STEP-5*		Chartered Accountants	Prepare and File income tax Form, upload attachments (wherever applicable) and filling via using Digital Signature Certificate under Chartered Accountants Login.


*STEP-6*		Income tax Assesses or Taxpayer	Navigate to Worklist “For Your Action” & click on Accept & complete the process
			by using prescribed modes of online e-verification under income tax Taxpayer Login.

*STEP-7*		Chartered Accountants or Income tax Assesses or Taxpayer	Filled Income tax Form can be downloaded from View Filed Income tax Forms Functionality for both Taxpayer Login & Chartered Accountants.

ALL INCOME TAX AUDIT FORMS AND ITS PROCESS FLOW – APPLICATED FOR INCOME TAX FORM 15CB & INCOME TAX FORM 10CCB

	Steps	Action	Action Description

		by
*STEP-1*		Income tax Assesses or Taxpayer	Add Chartered Accountants in My Chartered Accountants functionality under income tax Taxpayer login. If Chartered Accountants is already added, skip to Step 2.


*STEP-2*		Income tax Assesses or Taxpayer	Assign Income tax Form for relevant Assessment Year / Financial Year Permanent account number + Membership No. combination via My Chartered Accountants Functionality by selecting Filing Type under Taxpayer Login.


*STEP-3*		Chartered Accountants	Navigate to online e-file Form. Select income tax Form & submission of Permanent account No of income tax Taxpayer for which you wish to fill the Form and other Assessment Year / Financial Year details under Chartered Accountants Login


*STEP-4*		Chartered Accountants	Prepare and submit income tax Form, upload attachments (as per applicable) & Filling via using Digital Signature Certificate under Chartered Accountants Login.


*STEP-5*		Income tax Assesses or Taxpayer	Navigate to Worklist “For Your Action” & click on Accept & complete the process
			by using prescribed modes of online e-verification under income tax Taxpayer Login.

*STEP-6*		Chartered Accountants or Income tax Assesses or Taxpayer	Form after submission can be downloaded from View Filed income tax Forms Functionality for both Taxpayer & Chartered Accountants Login

LIST OF INCOME TAX AUDIT REPORTS

	Sl.		Form No.	Form Description	Mode of
	Sl.				Mode of
	No.				Submission
	No.				Submission

1		FORM-3AC		Chartered accountants -Audit Report U/s 33AB (2)	Via On-line mode

2		FORM-3AD		Chartered accountants -Audit Report U/s 33ABA (2)	Via On-line mode

3		FORM-3AE		Chartered accountants -Audit Report U/s 35D (4)/35E (6)	Via On-line mode

	4		FORM-3CA-3CD	Chartered accountants -Audit report U/s 44AB, in a case Chartered accountants -where the accounts of the business or profession of a person have been audited under any other law	Via Off-line Mode



5		FORM-3CB-3CD		Chartered accountants -Audit report U/s 44AB, in the case of a person referred to in rule 6G(1)(b)	Via Off-line Mode
5		FORM-3CB-3CD


6		FORM-3CE		Chartered accountants -Audit report U/s 44DA(2)	Via On-line mode
6		FORM-3CE


	7		FORM-3CEA	Report of an Chartered accountants to be furnished by an assessee under sub-section (3) of section 50B relating to computation of capital gains in case of slump sale	Via On-line mode



8		FORM-3CEB		Report from an Chartered accountants to be furnished U/s 92E relating to specified domestic transaction or international transaction(s).	Via On-line mode
8		FORM-3CEB


9		FORM-3CEJA		Report from an Chartered accountants to be filed for purpose of section 9A regarding fulfilment of certain conditions by an eligible investment fund	Via On-line mode
9		FORM-3CEJA


	10		FORM-3CLA	Report from an Chartered accountants to be furnished under sub-section (2AB) of section 35 of the Act relating to development facility and or in-house scientific research.	Via On-line mode



11		FORM-10B		Chartered accountants -Audit report U/s 12A(1)(b), in the case of charitable or religious trusts or institutions	Via On-line mode
11		FORM-10B


				Chartered accountants Audit report U/s 10(23C), in the case of any fund or or trust or institution or other educational institution or any university or any hospital other medical institution referred to in sub- clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of section 10(23C)	Via On-line mode
	12		FORM- 10BB




13		FORM-10CCB		Chartered accountants Audit report U/s s 80-IB/ 80-IC/ 80-IAC/ 80-IE/80-I(7)/ 80-IA(7)	Via On-line mode

14		FORM-10CCC		Chartered accountants Certificate rule 18BBE(3)	Via On-line mode

15		FORM-10CCF		Chartered accountants Report U/s 80LA(3)	Via On-line mode

16		FORM-10DA		Chartered accountants Report U/s 80JJAA	Via On-line mode

17		FORM-15CB		Certificate of an Chartered accountants	Via On-line mode /
17		FORM-15CB			Via Off-line Mode
					Via Off-line Mode

18		FORM-29B		Chartered accountants Report U/s 115JB for computing the book profits of the company	Via On-line mode
18		FORM-29B


	19		FORM-29C	Chartered accountants Report U/s 115JC for computing Adjusted Total Income and Alternate Minimum Tax of the person other than a company	Via On-line mode



20		FORM-56F		Chartered accountants Report U/s 10A or 10AA	Via On-line mode

21		FORM-6B		Chartered accountants Audit report U/s 142(2A)	Via On-line mode

22		FORM-66		Chartered accountants Audit Report under clause (ii) of section 115VW	Via On-line mode
22		FORM-66

November 26, 2022 / TDS

In & out of E-TDS Challan 26QB – Income Tax Dept.

CHALLAN 26QB: FOR TDS ON PROPERTY SALES

In compliance with the provisions laid down in section 194-IA, where a buyer purchases an immovable property such as a house or part of a building other than agricultural land, it is required to deduct TDS on such property at 1% at the time of payment to the seller in case cost greater than Rs.50 Lakh. Corporate and non-corporate deductors may use the method.

List of Particular of the Information/ details to be required In Challan 26QBB

Deductor and deductee PAN category, whether it is corporate or non-corporate
Deductor and deductee Full name
Deductor and deductee address
Choice of more than one deductor or deductee
Information of the transferred property and full address of such property
Date of arrangement or reservation, consideration for sale, and payment type (lump sum or installment)
The amount that is paid or attributed
TDS number and other statistics, such as TDS rate, interest, charges, etc.
Mode of payment (net banking or e-payment by a bank branch visit)
Payment/credit date and tax deduction date

Protective measures while making the payment of Challan 26QB i.e TDS on property

One percent TDS on the gross sales consideration required to be deducted and paid to the income tax department, the buyer is allowed to deduct TDS. Only the buyer can deduct TDS, not the seller.
If sales consideration is less than Rs. 50 Lakh, No TDS will be deducted. If installments are charged, TDS will be deducted on each installment.
On the whole sales amount, tax is to be paid.
The buyer is not entitled to accept a TAN number (Tax Deductible Account Number).
The seller must have his PAN number, otherwise, 20 percent of the TDS would be deducted. The PAN number also requires to be provided by the buyer.
TDS shall be withheld at the point of payment or at the point of the seller’s credit, whichever is earlier.
Within 7 days after the end of the month in which TDS is deducted, TDS is to be deposited along with Form 26QB.
The buyer must give the TDS certificate to the seller after payment of the TDS to the government.

What is the Procedure to pay tax under property TDS via Challan 26QB?

Visit the website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp to pay for TDS by using Challan 26QB
After that, click on Challan 26QB and choose the taxpayer type:
- Taxpayer for corporations: 0020
- Non-firm taxpayer: 0021
Full information such as the Financial Year and Assessment Year, the name of the deductor and deductor, the address of the deductor and deductor, property descriptions, and the sum of tax deducted.
Pick the payment mode. Select e-tax payment for online payment directly, and e-payment for offline payment on corresponding days.
If you vote for online payment via net banking, By using the correct username and password, log in to your net banking account.
Thereafter The system will create printable acknowledgment after the correct payment, which consists of details such as TDS payment and banking details.
Take the print out of your acknowledgment slip if you want to pay offline. The slip of acknowledgment will be valid for Ten days after completion. By visiting the designated bank branch, you can pay tax via cheque or Demand Draft. You will get a copy of your Challan 26QB from the bank after making a successful payment.

STEPS TO BE FOLLOW FOR MAKING INCOME TAX PAYMENT THROUGH CHALLAN:

Press on the e-pay tab or pay taxes online on the TIN NSDL website and choose the respective Challan. If you open the screen with the form, enter the following details:
1. Permanent Account number
2. Your Residential address
3. year of Assessment for which the tax is to be paid
4. Minor Head code
5. Applicable Tax (income tax on salaried workers)
6. Type of payment: You must pick 100 in the case of advance tax, 300 in the case of self-assessment tax and 400 in the case of daily assessment tax to make any payment only if the income tax department has increased the query.
7. Choose a bank name from the drop-down list of banks
Click the Proceed button after filling in all the required details. The TIN system will display all the information entered by you along with your name in the income tax department database for the Permanent Account Number entered by you.

Note: Permanent Account Number is Compulsory for the payment of income tax. Paying of tax would not continue without a correct Permanent Account Number (PAN) number.

You will get an opportunity to check the information you entered. If you notice any errors, click on the Edit button to correct the details. If all the filled-in details are correct, tap submission. You will be directed to its net-banking site via the TIN system.
Log in with a user ID and password to your net banking account and enter the payment details. Your pay has to be split into separate elements such as income tax and education cess, etc.
Through debiting your account and on a satisfactory deposit, your bank will process the transaction online; a printable certification representing CIN (Challan Identification Number) will be created by the machine. The CIN number, payment information, and name of the bank from which the payment was made would be included in the Challan acknowledgment. Challan recognition is the evidence of payment being made. After a week of making payment, you can check the Challan status online in the Challan Status Enquiry section on the NSDL-TIN website using your CIN.

How to pay income tax using the offline Challan?

By visiting your particular bank branch, you can also pay income tax by using respective Challan offline. You may make payment by cheque or Demand Draft. A counterfoil containing the Corporate Identification Number (CIN) number and payment information will be provided by the bank during deposit. After a week of payment, you can check your Challan on the Tax Information Network (TIN) NSDL website.

Challan 287:

Under Pradhan Mantri Garib Kalyan Yojana Scheme or PMGKY scheme, 2016 while making an income tax payment

Normally Challan 287 are using Under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) Scheme, 2016, for making tax payments by taxpayers preparing to planning to disclose income during the period From 17 December 2016 until 31 March 2017 under the PMGKY Scheme.

Pradhan Mantri Garib Kalyan Yojana Scheme or PMGKY, 2016

You could report all of declaring any of your disclosed income (either in the form of cash or deposit) to pay tax, cess, or penalty under the taxation and investment regime of PMGKY, 2016. under the Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, the tax on such declare any of your disclosed earnings is to be deposited in government accounts with the help of Challan 287 under the income tax.

How to make payment of tax under PMGKY?

Under Pradhan Mantri Garib Kalyan Yojana, 2016, you can pay tax on your disclosed income by following the steps below:

Declare income such as deposits and cash: under government PMGKY, 2016, you are expected to report your unaccounted deposits and cash.
Pay tax and make the deposit: As recommended by the Income Tax Department, you are expected to pay tax at a 50 percent rate on reported income. Afterward, in Pradhan Mantri Garib Kalyan Yojana, 2016, you are expected to pay 25 percent of the total declared amount. The money therefore charged will be blocked for four years by the state, and will be charged to you without interest.
Payment of income tax using Challan 287 and proof of payment: You are expected to pay tax using Challan 287 after completing the above steps and to receive a counterfoil in respect of the payment made. The counterfoil is seen as evidence of the payment you have made.

Protective measures while filing income tax challan

For filing taxes by using Challan 287, the PAN number is compulsory. If you do not have a PAN number, apply for the Permanent Account Number (PAN)number and the application date of the quotation, and the number of the certificate.
Make sure the bank counterfoil contains the following details:
- Seven Digit BSR code of the branch of the bank via which the payment was made
- Date of Challan’s deposit
- Serial Number of Challan
- CIN Number

Challan 286:

For making the payment of Undisclosed income under the Income Tax Declaration Scheme 2016

The Finance Act, 2016 consists of the requirement under the Government’s Income Tax Declaration Scheme 2016, to pay taxes on undisclosed income received during the previous year. Challan 286 may be used to pay income tax on certain income to the state. As specified by the Income Tax Department, income tax on such undisclosed income is payable at a Forty-five percent rate. This Income Tax Declaration Scheme 2016 is effective as of June 1st, 2016.

Online Check the status of TDS Challan with the Tax Dept.

Check the status of your tax challan deposited in banks online. Taxpayers can verify the status of their verity either through the CIN or the TAN. Banks can verify the online status of the tax deposited in their banks by choosing either a bank branch or a nodal bank branch.

TIN Facilitation used to charge the Fee for TDS & TDS return Filling:

TDS return filling fee

August 3, 2022 / Cryptocurrency

Crypto currency As per Income Tax Provisions U/S 115BBH

What is means of Crypto currency according to Income Tax provisions ?

Crypto currency and Income Tax

In the introduction of Budget 2022, the government has announced taxation norms on the same. Key pointers regarding income tax implications on crypto currencies in India are as follows –

Crypto currency – Meaning as per Income Tax provisions

A form of virtual digital asset
Not being an Indian currency or foreign currency as per the provisions of Foreign Exchange Management Act, 1999
Functions as a store of value, unit of account
Can be transferred, stored or traded electronically

Classification of Virtual Digital Asset

As per the Finance Bill, 2022, the crypto currencies are classified as a capital asset for the purpose of taxation and hence, income under the head capital gain will arise on transaction of the same.

Tax on income from Crypto currencies [Section 115BBH]

Income from transfer of crypto currencies will be taxed at the rate of 30% Deduction – No deduction of any expenditure except for cost of acquisition will be allowed Set off/ Carry forward of losses – No set off of losses against any income is allowed as well as carry forward of losses in this respect is also not allowed

Computation of capital gains on transfer of Crypto currencies

The following should be ignored while computing capital gains on transfer of crypto currencies

Cost of improvement relating to the asset
Selling expenses e. the expenditure incurred in connection with the transfer of virtual digital asset

Indexation of cost of acquisition

Any exemption under section 54F Further, no deduction under Chapter VI- A shall be allowed. However, relief under section 87A i.e. rebate can be

Applicability of TDS provisions [Section 194S]

A new section 194S is proposed to be inserted in The Income Tax Act, 1961 e.f.07.2022 regarding TDS.
Deductor – Any person responsible for paying any sum by way of consideration for the transfer of crypto currency.
Deductee – Tax is required to be deducted if amount is payable to a resident person

taxation of bitcoin

Rate of TDS – 1% of consideration

When to deduct – At the time of payment or at the time of credit of such sum to the account of resident, whichever is earlier

Exemption from TDS

If consideration is payable by any person (other than a specified person) and its aggregate value does not exceed 10,000 during the financial year
If consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year

Meaning of “specified person” – An individual or a HUF, whose total sales, gross receipts does not exceed Rs. 1 crore in case of business or Rs. 50 lakh in case of a profession, during the financial year immediately preceding the financial year in which such virtual digital asset is transferred An individual or a HUF who does not have any income under the head profits and gains of business or profession.

January 8, 2023 / INCOME TAX

All about Income tax return (ITR) filing via ITR-U Form

Income tax return (ITR) filing via ITR-U

CBDT notifed Itr filing via ITR-U Form.

What is means of Income tax return (ITR) filing via ITR-U?

In addition to provide an updated return, the CBDT has announced a new Rule 12AC and Form ITR-U that must be filed for every year late Income tax return filing. With the new updated return idea introduced by the Finance Act of 2022, Income tax taxpayer now have up to 24 months to submit their income tax returns.
A new section, u/s 139(8), was added to allow individuals to file updated returns of income, with the exception of searches and seizures and other predetermined situations.
Time limit of 24 months from the end of the relevant AY is specified for filing an updated return, and it is effective as of 01-04-2022. A person may submit an amended return for AY 2020–21 and AY 2021–22 in FY 2022–23.
Income tax return filing for AY 2022-23: The last date for income tax return (ITR) filing for FY 2021-22 or for AY 2022-23 is 31st July 2022 and for filing
ITR-U will also be available for filing updated returns for FY 19-20 & FY 20-21

Updated-Income-Tax-Return.

What are case in Which ITR-U Can be Filed ?

ITR U filling

Wrong Heads of Income Choosn
Reduction of unabsorbed Depreciation
Return Previously not filed.
Reduction of Carried forward losses
Income not reported correctly
Reduction of Tax Credit u/s 115JB/115JC
Wrong rate of tax

Note: Taxpayers will be allowed to file only 1 such correction (updated return) per AY.

What are the case in which ITR-U Form Cannot be filed?

ITR U can not be filed

Income tax return is reducing the income tax liability from the return filed earlier
Updated return is a return of the loss
Return result increases the income tax refund
Any proceedings for Assessment / Reassessment/Revision/Recomputation is Pending or Completed for Said A.Y.
Income tax Act will not allow to file the updated return if there is no additional tax outgo
Search/Survey/Prosecution are Initiated for said A.Y.

Additional Tax:

The Income tax Act requires that the taxpayer has to pay an additional 25% interest on the tax due if the updated Income tax return is filed within 12 months from the end of relevant AY.
While interest will go up to 50% if it is filed after 12 months but before 24 months from the end of relevant AY.
Taxpayers looking to file the same for FY 19-20 will need to pay the due tax and interest along with an additional 50% amount of such tax and interest.
For those looking to file for FY 20-21, the additional amount will be 25% of the due tax and interest.

Online ITR Filing Amendment – FY 2021-22 (AY 2022-23)

Update about The Late Fee, Additional Tax u/s 140B & last date to File updated Return

ITR return due date

Mandatory filing of Income Tax Return AY 2022-23

India’s population is more than 136 crores, but only around 8 crore people pay income tax. This means that the taxpayers constitute only about 5.8 percent of the total Indian public. A lot of people do not file an income tax return (ITR) generally because of one prime excuse – their income is under the basic exemption limit. However, according to the taxation rules, several persons are mandatorily required to file an income tax return if they have incurred high value financial transactions with potential tax liabilities. The Indian Government has made some changes in the rules regarding ITR filing. According to the new Rule 12AB notified by CBDT, a person will have to file an ITR even if their income in a financial year is under the basic exemption limit.

The Indian government has implemented the non-filers monitoring system (NMS) to identify such persons that may be required to file an ITR. Failure to file an ITR in case a person has potential tax liabilities can lead to penalties along with serious criminal charges. This article intends to guide the readers about the new changes regarding the mandatory ITR filing.

In India, majority of people do not file Income tax return as their income is below basic exemption limit. Population of India is 136 crores, however only 5.8% of the total population file ITR. But Taxation rules has made it compulsory for people to file ITR if they engage in high value transaction that may have tax liabilities.

The new rules suggest that, a person will have to file ITR if they engage in transactions that may attract tax liabilities, even if their Income is below the exemption limit. A new system i.e non-filers monitoring system is implemented to find such persons. In case such person is found, who is engaging in such transaction but not filing ITR can be charged with criminal charges.

You will find all the relevant information regarding the new rule in this article:

What were the old rules for ITR filing (mandatory)?

Following is the list of people who were mandatory to file ITR, even if income is less than basic exemption limit under section 139 of Finance Act 2019:

If in current account, there is a deposit of more than 1 crore.
If the expenditure on foreign travel is more than 2 lakhs.
If the expenditure on electricity consumption is more than 1 lakh.

New rules for mandatory ITR filing

It has been made clear by CBIT; under what conditions it is compulsory to file ITR. the new rules will be applicable for FY- 2021-22.

If the Total sales/turnover/gross receipts of a business are more than Rs 60 lakh during the previous year.
Gross receipts of a professional are over Rs 10 lakh during the previous year.
Total TDS/TCS during a financial year is Rs 25,000 or more (in the case of senior citizens, the applicable limit is Rs 50,000)
Total deposits in saving bank account are Rs 50 lakh or more during the previous year.

It is to be noted that even in cases where TDS/TCS is less than the limit mentioned below, the person shall file ITR in order to avoid any charges as NMS system will identify such person beforehand.

Let’s also discuss some other cases where ITR filing is mandatory

If the gross total income of a person in any financial exceeds the basic exemption limit. The GTI is to be considered
A Company and firm including LLP is mandatorily required to file an ITR irrespective of their income levels.
In order to claim income tax return
In order to carry forward the loss
return if a person is a resident individual of India and has an asset or financial interest in a business located outside India.
If you are a resident of India as well as a signing authority in a foreign account.
In case they receive income derived from property held by a trust for religious or charitable purposes/ a political party/ research institution/ news agency/ education/medical institution/ trade union/ a hospital/ infrastructure debt fund/ any authority/ body or trust.
In case of a foreign company getting treaty benefits on any transaction in India.
To obtain loan or visa application.

How to file an ITR?

ITR is filed online through income tax portal. In case of any doubt or query it is best to consult a Chartered Accountant. There are CAs available in India that provide several services apart from filing income tax.

Conclusion

The new rules are stricter which make it compulsory to file ITR for persons engaging in high value transactions. The new rules will undoubtedly increase the number of income tax returns filed in India, ultimately leading to more transparency in economy.

August 15, 2022 / INCOME TAX

File your Income Tax Return-ITR

Income Tax Return filling

File your Income Tax Return(ITR)

Government of India is enforcing the Income tax on the income of a person. Every person is responsible for Income tax filing whose income is above the maximum exemption limit specified by income tax act 1961.
The Income tax dept make the assessment of theses these income return, and if any income tax amount has been paid in short or error, the excess paid income tax is refunded by the tax department to the assessee’s officially declared bank A/c .
Assesses who is willing to avoid penalties, all the person must have to file Online Income tax return on time. The official tax filing return is a different kind of form-based compliance required to file with income tax department that contains details about an assesses income & loss exemptions along with and taxes paid on it income earing.
Income tax return type i.e. ITR 1, ITR 2, ITR 3, ITR 4S, ITR 5, ITR 6, & ITR 7 are all are e-filling ITR Filing forms to be used by the Income Tax Dept as per specified manner.

System of Income tax Refund:

what is meaning, income tax refund process, & How to claim an Income tax refund?

Every person who should be familiar with the compliance under “Income tax refund.” In case person have properly completed his taxes filing in the past years, He will surly have gotten a income tax refund based on his financial statement and relevant required reports.
According to provisions relating to income tax refunds are specified in under sections 237 to 245 of the Income Tax Act. 1961.
When a Assesses has paid excess in income tax than his/her actual income tax burden, they may be eligible to get an Income tax refund. Advance tax, self-assessment tax, TDS, TCS, & even foreign income tax credit are all possibilities.

Income tax refunds are usually get in these two way to maintain tax filling transparency:

Via Cheques: Instead, a income tax refund bank account cheque may be send via speed post to the Assesses’s home address. It is essential to provide the correct home address again. Income tax refund cheque will be returned till the right home address is not provide correctly.
Via RTGS/NEFT: income tax authorities will credit your bank account directly with the eligible income tax refund. To the specified Indian bank A/c, Assesses have to required provide the below following details. i.e Ten digit bank’s account No, the bank’s MICR code, & communication address along with the name.

When submitting taxes online, people can choose the payment method that is most convenient for them.

Discrepancies in the communication address, bank account, or refund calculation, on the other hand, can result in delays or even cancelation.
Taxpayers can track the status of their return by entering their PAN and evaluation year on the official site 10 days after the assessing officer submits it to the refund banker.
Filing an ITR is a simplistic approach to get an income tax refund. It must be physically confirmed by sending signed ITR-V (acknowledgment) within 120 days after submitting returns using an Aadhar number OTP and an EVC issued via a bank account, or it must be validated using an Aadhar number OTP and an EVC issued via a bank account.

Also read : Implication of cash transaction under income tax Act

Important things to be keep in mind before Online Income tax return filing

ITR

Key thing on income tax return is to make sure that all of your Income details is completely disclosed over there.
Moreover, salaried persons can file to do e filling ITR only on the basis of his Form 16. In case they overlook details like as stock market transactions, interest income & other important details that required to be declared when filling income tax return.
Normally Salaried taxpayers usually use the ITR 1 or ITR 2 forms to file his income tax returns. Incom e tax return – ITR 1 is for whose have a 1house property & income up to INR 50,00,000/-.
In case person have more than 1 house or house is co-owned, they have to file the income tax return Form ITR 2. Even if income amount are accurate, Assesses should pick the exact form that applies to them, as the income tax dept. will deemed erroneous income tax form filed and can be considered as invalid return.
To complete online Income tax filing we have to take the assistance of legal & Taxation compliance firm like online ca services. www.caindelhiindia.com is a leading firm in Delhi/NCR that can help us to get Online ITR Filing compliance & getting your Income tax refunds.

Online ITR Filing Amendment – FY 2021-22 (AY 2022-23)

Income Tax Deductions to NRI in India

NRI.

Income Tax Deductions to NRI in India

BRIEF INTRODUCTION

So as defined above, “a non-resident could be a one who isn’t resident in India”, therefore we need to know who shall be considered as Resident in India.

NON-RESIDENT INDIAN

Where the NRI stayed in India for 182 days or more during the financial year; OR
Where the NRI have got stayed in India for 60 days within the financial year and for in total of 365 days within the preceding 4 years.

However, there are certain exceptions to the second condition –

If you’re an Indian citizen who has left India within the yr as a crewman of an Indian ship or for the aspect of employment abroad; or
If you’re a PIO or a citizen of India who comes on a visit to India;

Then the second condition of 60 Days and 365 days won’t apply to you, which suggests that within the above situations you may be considered resident in India if and only if you were present in India within the relevant year for a period of 182 days or more.
Therefore, you’re a Non-Resident if you do not fulfil any of the above conditions.

RESIDENTIAL STATUS

Residential-Status-for-Income-Tax

Residential status of an individual is set on the idea of the number of days a personal has physically stayed in India. Residential status has nothing to do with the nationality or domicile of a personal.
It should also happen that an Indian, who is citizen of India, is also a non-resident for tax purposes during a particular year and an American citizen could also be resident in India for taxation purposes during a particular year.

TYPES OF NON-RESIDENT INDIAN(NRI)

Under income tax Act 1961, non-resident is broadly classified under the subsequent three heads:

Non-Resident Indian/Person of Indian Origin
Foreign Company
Other Non-Resident Person

SALIENT FEATURES

Residential status is something, which is to be determined for every previous year. Residential status of assessment year isn’t relevant. Also, you’ll be a resident during a previous year and non-resident in another. Hence, it’s to be determined for every previous year.
It is very much possible to possess dual residential status in a very previous year, i.e., you’ll be a resident in India within the previous year and also resident in another country tell us. it’s going to happen thanks to different set of rules laid down by countries for determination of Residential status.

MEANING OF NON-RESIDENT INDIAN(NRI)

“Non-Resident Indian (NRI)” is a personal who may be a citizen of India or an individual of Indian origin and who isn’t a resident of India. In India Non-Resident Indian is especially governed by two Acts-

Income Tax Act, 1961 &
Foreign Exchange and Management Act, 1999(FEMA).

The term “Non-Resident Indian” is defined differently under both the Acts, however one must understand that for the needs of Income-tax, the FEMA Act holds no relevance and you only have to confirm to the provisions of income tax Act 1961.
Person of Indian origin (PIO) – it is an individual who either himself, or any of his parents or any of his grandparents were born in undivided India.

DEFINITION UNDER FEMA ACT, 1999

FEMA, an acronym for foreign exchange Management Act, has its rule stating that if an individual stays within the country for a period but 182 during the continuing fiscal year, then the same shall be regarded as an NRI. Typically, yr starts 1st of April and lasts till 31st March of the subsequent year.

Additionally, the subsequent persons are included within the list of NRIs:

People employed in organizations and therefore the ones carrying businesses overseas.
• People staying outside India because of some constraints for an unfixed period.
• Government servants deputed by the govt to be stationed overseas.

DEFINITION UNDER INCOME TAX ACT

Currently, an individual shall be considered to be NRI under the IT Act if he or she fulfils the subsequent conditions.

If the concerned person is absent for more than 182 days within the current yr.
If the concerned person has not been present for a period of twelve months or more during four preceding financial years.

NRI tax consultants are available in handy in cases like these. they supply services within the sector of advisory, consultation, analysing residential status, consultation on paying and filing IT returns, investment advice, checking eligibility for residency, etc.

DEEMED RESIDENCY PROVISION

residential-status..

According to the finance bill of 2020, an individual is to be considered as a resident of India if that person isn’t being taxed in the other country.
This bill has been introduced as a countermeasure to prevent the tax evaders. These people last and settle in countries that have little to no tax-paying requirements. this protects their money from tax-paying.
Umpteen numbers of misinterpretations of this bill have surfaced, like someone working during a country like Dubai or Qatar if he/she doesn’t pay tax in this country, then they have to pay tax in India. this can be completely baseless and wrong.
In accordance with the new bill, an individual shall pay tax in India after settling outside if he/she makes money from India itself.

PAYMENT OF INCOME TAX BY NON-RESIDENT INDIAN(NRI)

After you’ve got determined your residential status, the subsequent step is to spot income taxable in India as per your residential status. Simply put,

In case of Resident Individuals: The global income would be taxable in India i.e., the entire income earned by the said person would be taxable in India, whether in India or outside India.
In case of Non-Resident Individuals: The income earned or accrued in India or which is deemed to accrue in India, shall be taxed in India. Therefore, your income from any country besides India isn’t taxable in India.

INCOME EARNED OR ACCRUED IN INDIA

NRI Taxability

India follows “source rule” basis of taxation, i.e., the entire income which accrue or arises in India shall be taxable in India. Hence, the identification of the source of Income becomes a matter of utmost importance. Where it has been determined that the income has its source in India, irrespective of whether direct or indirect, the said income shall be taxed in India. Some of these incomes are:

Salary income received in India.
• Salary income received, in respect of services rendered in India.
• Rental income received, in respect of property situated in India.
• Capital gain arising in respect of transfer of property or asset situated in India.
• Any income from deposits in India like interest on fixed deposits
• Any interest received on savings checking account, etc.

NON-RESIDENT INDIAN(NRI) INCOME TAXABLE IN INDIA

Income from Salary: Your salary income is taxed in India under two situations.

Situation A: If it’s received in India- If you’re an NRI and you have got received any salary in India directly into an Indian Account or somebody else has received it in your behalf in India, then such salary income would become taxable in India.
Situation B: If it’s earned in India- Your income is claimed to be earned in India if it’s earned for services rendered in India. Therefore, if you’re a NRI and your salary earned is for the services rendered in India, it shall be taxed in India.
You will be taxed at the slab rate to which your income belongs to.

Income from House Property: Income arising from property located in India, whether in the form of rented or lying vacant and the same be taxed for an NRI. The calculation of such income shall be within the same manner as for a resident.

An NRI, like resident is allowed

A standard deduction of 30%,
• To deduct property taxes,
• To take advantage of interest deduction if there’s an equity credit line, and
• Claim the principal repayment of loan as deduction under section 80C. Also, tax and registration charges paid on purchase of a property can even be claimed under section 80C.

It is to be noted that, where the income is received in NRO account, whether or not received directly, the same would be susceptible to tax in India since the source of income i.e., the property is situated in India.

Read our blog- Tax Implications on House Property to grasp more.

Income from Other Sources: Indian sourced income within the sort of interest on fixed deposits and saving accounts is taxable in India. However, the amount received in NRE and FCNR account shall be tax free, whereas that received in NRO account would be subject to taxation in India.
Capital Gains: Any sought of capital gain arising in relation to transfer of capital asset, being situated in India, shall be taxed in India. Also, the capital gains on investments made in India in the form shares, securities shall be taxable in India.

Where an NRI sell a capital asset, being a house property, then

TDS be deducted @ 20%, in case of Long-term capital gains, or
TDS be deducted @30%, in case of Short-term capital gains.

The buyer whether or not he’s an individual is liable for deducting tax at source and paying it to the govt. Since the onus of deducting tax on payments made to NRI, lies on the customer, and hence the same shall obtain a Tax Deduction Account number (TAN) and issue a TDS certificate for the same.

SPECIFIC PROVISIONS WITH INVESTMENT INCOME OF NRI

Investment-Options-in-India-for-NRIs

As a NRI you’ll be able to avail of a special provision associated with investment income. A NRI income shall be taxed @ 20%, where he invests in certain assets in India.

INVESTMENTS ELIGIBLE FOR SPECIAL TREATMENT

The income derived from the subsequent assets in India acquired in foreign currency shall qualify for special treatment:

Investment in the shares of Indian Companies (Public or Private company)
• Investment in the debentures, being issued by a publicly-listed Indian company.
• Deposits made with the banks and public companies.
• Any security of the Central Government

No deduction under Section 80 is going to be allowed while calculating investment income.

SPECIAL PROVISION IN RESPECT OF LONG-TERM CAPITAL GAINS

On long term capital gain arising from the transfer or sale of those assets, no advantage of indexation and deduction under Section 80 is allowed. But you’ll be able to still save your taxes, by availing exemption on the gains earned under Section 115F. Under this, you’re required to reinvest the web consideration received within the amount of six months from the date of sale of the first asset, into the subsequent assets:

Shares in an Indian company
• Debentures of an Indian public company
• Deposits with banks and Indian public companies
• Central Government securities
• NSC VI and VII issues

The entire capital gain would be exempt if the entire of the net consideration is re-invested. However, if the price of recent asset purchased, falls short than the consideration, then the capital gain would be exempt proportionately, i.e.,

Total Capital Gain X Cost of New Asset

—————————–

Total net consideration

Exemption=

NOTE: The exemption is withdrawn if the new asset purchased is transferred or converted into money within a period of three years from the date of purchase. The NRI is eligible to withdraw the amount from the special provision, at any point of time and in such an event, the investment income and LTCG shall be charged to tax as per the standard provisions of Income Tax Act, 1962.

Tax-Planning-for-NRIs.

Just like resident individuals, the NRIs have been provided with the exemptions under section 54, section 54EC and section 54F on long-term capital gains, arising on account of sale of house property. The long-term capital gain is often invested under:

SECTION	ASSET SOLD/ TRANSFERRED	ASSET TO BE INVESTED IN	TIME PERIOD FOR INVESTMENT	QUANTUM OF EXEMPTION
54	· RESIDENTIAL HOUSE PROPERTY · HOLDING PERIOD OF 3 OR MORE YEARS	· RESIDENTIAL HOUSE PROPERTY IN INDIA	· WITHIN ONE YEAR BEFORE THE DATE OF TRANSFER OF ASSET. · PURCHASED AFTER 2 YEARS FROM THE DATE OF TRANSFER OF ASSET. · CONSTRUCTION WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF ASSET. · THE NEW ASSET CANNOT BE SOLD OR TRANSFERRED BEFORE THE END OF 3 YEARS.	· WHERE THE ENTIRE CAPITAL GAIN HAS BEEN INVESTED FOR ACQUISITION OF NEW ASSET, THE FULL AMOUNT OF CAPITAL GAIN WOULD BE EXEMPTED. · WHERE PARTIAL CAPITAL GAIN HAS BEEN INVESTED, THE CAPITAL GAIN NOT ADJUSTED IN NEW ASSET, SHALL BE CHARGED TO LONG-TERM CAPITAL GAIN TAX.
54F	· CAPITAL ASSET OTHER THAN HOUSE PROPERTY (NOTE: YOU SHOULD NOT OWN MORE THAN ONE RESIDENTIAL HOUSE PROPERTY AT THE TIME OF TRANSFER OF THE CAPITAL ASSET)	· RESIDENTIAL HOUSE PROPERTY IN INDIA		· TO CLAIM FULL EXEMPTION, ENTIRE SALE PROCEEDS SHOULD BE INVESTED IN NEW ASSET. · WHERE THE PARTIAL INVESTMENT HAS BEEN MADE, THE EXEMPTION WOULD BE: COST OF THE NEW HOUSE X CAPITAL GAINS SALE RECEIPTS
54EC	· CAPITAL ASSET BEING RESIDENTIAL HOUSE PROPERTY	· BONDS OF NATIONAL HIGHWAY AUTHORITY OF INDIA (NHAI) OR RURAL ELECTRIFICATION CORPORATION (REC)	· THE SAID INVESTMENT BE MADE WITHIN 6 MONTHS FROM THE DATE OF TRANSFER. · THE MAXIMUM AMOUNT OF INVESTMENT THAT CAN BE MADE IS RS. 50 LAKHS. · THE NEW ASSET CANNOT BE SOLD OR TRANSFERRED BEFORE THE END OF 3 YEARS.	· AMOUNT INVESTED OUT OF CAPITAL GAIN; OR · RS.50 LAKHS; WHICHEVER IS LOWER

Relevant proofs should be shown to the customer so no TDS is deducted by him.
• In case, the customer deducts TDS, advantage of these exemptions may be availed at the time of return filing by NRI and refund of such TDS may be claimed.

DEDUCTIONS AVAILABLE TO NRI

Deductions-Allowed-to-NRIs

Deduction under Section 80C:
The maximum amount of deduction available under the section is of Rs.1,50,000. Section 80C comprises of –

Life premium Payments-
Deduction would be available, where the policy has been purchased in NRI’s name or in the name of his/her spouse or any child’s name. The premium must be but 10% of sum assured.
Tuition Fee Payment-
- NRI can claim deduction of tuition fees paid to any school, colleges or any universities situated in India for the aim of full-time education of their children.
Principal repayment of home loans-
Like Residents, NRIs may claim deduction for principal repayment of house property loan borrowed for the needs of constructing or purchasing a residential house property. Other expenses like tax charges, registration fees, being incurred in respect of acquiring of such property, shall also be eligible.
Unit Linked Insurance Plan (ULIP)-
Investment in ULIP’s offers twin advantage of insurance and investment under one integrated plan. The lock-in period is of 5 years. Premium paid in respect of own, spouse and children shall be eligible for deduction.
Equity Linked Tax Saving Scheme (ELSS)-

Deduction under Section 80D:
NRIs can claim deduction for premium got insurance of themselves and family or parents in India.
The three possible situations and tax benefits for every is shown below:

POLICY TAKEN FOR	DEDUCTION ALLOWED	TOTAL TAX BENEFIT
SELF, SPOUSE & CHILDREN; PARENTS BELOW 60 YEARS	RS. 25,000 RS. 25,000	RS. 50,000
2. SELF, SPOUSE & CHILDREN BELOW 60; PARENTS ABOVE 60	RS. 25,000 RS. 30,000	RS. 55,000
3. SELF, SPOUSE ABOVE 60 & CHILDREN; PARENTS ABOVE 60	RS. 30,000 RS. 30,000	RS. 60,000

3. Deduction under Section 80E:

Section 80E allows NRIs to assert a deduction of interest paid on an education loan. Such a loan shall be taken for pursuing higher education of the NRI, or his spouse or children or for a student, in respect of whom, the NRI is a trustee.
There’s no limit on the number which might be claimed as a deduction under this section. The deduction shall be available, for the earlier of, period of 8 years or the interest is paid. No deduction would be available in respect of principal repayment of loan.

4. Deduction under Section 80G:

Where the NRI makes eligible donations, as prescribed under section 80G of the IT Act, 1962, the same shall be eligible for deduction to NRIs.

May 30, 2022 / INCOME TAX

Implication of Cash Transaction Under Income Tax Act

Implication of Cash Transaction Under Income Tax Act.

Implication of Cash Transaction Under Income Tax Act, 1961

BRIEF INTRODUCTION

Over the years there are lots of changes happening in terms of advancement and digitization within the business world. Digitization provides convenience and ease in doing business, along with, provides for keeping a check on the black money circulation, being practiced by many. Evasion practices or transactions in black money markets mostly happen in cash and digitization of such transactions is the best mode to avoid it. These practices adversely affect government revenues and shut the way for investment in productive fields.

The government is making all the efforts to push electronic transactions by providing various tax incentives and discouraging cash transactions by imposing various penalties or increasing tax compliances for cash transactions. Over the period of more stringent provisions are introduced under income tax Act associated with cash transactions.

In this article we’ll discuss various provisions of the income tax Act associated with cash transactions.

Disallowance of Expenses incurred in Cash

Disallowance of Expenses Incurred in Cash

As per Section 40A (3) of income tax Act, if payment for any expenditure exceeding Rs. 10,000 has been made in cash, i.e., otherwise than by an account payee cheque or account payee draft or ECS, then no deduction would be available in respect of such expenditure.
However, where the payment has been made in respect of plying, hiring or leasing of products carriage, then the said limit of Rs. 10,000, stand increased to Rs. 35,000.
Consequences of Non-Compliance: It is to be noted that no specific penalty has been prescribed for the above expense. However, no deduction for such expense shall be allowed from taxable income and it’ll end in increased tax liability.

Disallowance of Depreciation

As per Section 43(1), if any payment or part payment for purchase of fixed asset is formed in cash exceeding Rs. 10,000 in an exceedingly day then such a part of cost shall be disallowed for the purpose of computation of “Actual Cost” of the said fixed asset.
Consequently, no depreciation shall be allowed on such part and it’ll lead to increased taxation liability.

Disallowance of Donation to Political Parties

As per Section 13A of income tax Act, any income of an organisation by way of voluntary contributions received from any individual shall not subject to income tax.
However, political parties aren’t allowed to receive donations exceeding Rs.2,000 in cash and such donations shall be subject to tax.

Disallowance of Expense Incurred For Specified Business

Section 35AD

As per Section 35AD, 100% or 150% of the deduction is allowed with relevancy certain expenditures of capital nature, incurred for specified business.
However, it is to be noted, that no deduction shall be available in respect of expenses exceeding Rs.10,000, being made in cash.

Disallowance on acceptance of money loans, deposits etc.

As per section 269SS

As per section 269SS, the acceptance of loan or deposit or any other specified sum has been prohibited, if received in excess of Rs.20,000 in cash.
Herein, the word “Specified sum” means the amount receivable, in relation to transfer of an immovable property, whether actually transferred or not.

Consequences for Non-Compliance

If any loan or deposit or specified sum is accepted in contravention of Section 269SS then a penalty adequate to the quantity of such loan or deposit or specified sum shall be levied u/s 271D.

Disallowance On Repayment of Loan In Cash

No person, including banks, co-operative banks, companies etc., would be allowed to make the repayment of their loan or deposit or any specified advance received, in cash in excess of Rs. 20,000.
Herein, the word “Specified Advance” means any amount receivable, in relevancy to transfer of an immovable property, whether actually transferred or not.

Consequences for Non-Compliance

If any loan or deposit or specified sum is repaid in contravention of Section 269T then a penalty adequate the number of such loan or deposit or specified sum shall be levied u/s 271E.

NON-APPLICABILITY OF SECTION 269SS AND 269T

NON-APPLICABILITY OF SECTION 269SS AND 269T.

However, provisions of Section 269SS and 269T don’t seem to be applicable loans or advance or specified sum is received from or repaid to:

Government;
Banking company, post office savings bank or co-operative bank;
Corporate entity, established by Central, State or Provincial Act;
Government company, being defined in section 617 of the Companies Act, 1956;
Any other institutions, associations or bodies or class of institutions, associations or bodies, being notified by Central Government from time to time.

Disallowance on Receipt of Amount In Cash

When-to-say-NO-to-CASH..

Section 269ST clearly provides for disallowance of receipt of amount received in excess of Rs. 2,00,000 in cash, in respect of following transactions:

In aggregate from someone in an exceedingly single day. It includes any amount received from an individual during a single day no matter the actual fact that such amount is received in multiple instalments in an exceedingly day or received against multiple invoices.
• In respect of a particular transaction.
• Transactions involving any particular event or occasion from an individual.

Non-Applicability of Section 269ST

The provision of section 269ST would not be applicable to following entities –

Any amount received by the govt. or any banking company, co-operative bank or, post office saving bank.
• Transaction of the character which are laid out in section 269SS (Mode of taking or accepting certain loans, deposits and specified sum)
• Certain specified persons, as may be notified by the Central Government.

Penalty Consequences for Non-Compliance

The government provides for hefty penalty, being leviable on persons not complying with the provisions of section 269ST.
If any individual receipts amount in contravention of provisions of Section 269ST then a penalty corresponding to the amount received in cash shall be levied u/s 271DA.

Audit Aspect on cash transaction

Under Section 44AB of income tax Act, every one, whose total sales, turnover or gross receipts in business exceeds INR 1 Crore in any previous year then he’s required to induce his accounts audited under section 44AB of taxation Act.
However, where a person satisfies the below mentioned conditions, then the limit of Rs. 1 Crore would be increased to Rs. 10 Crores
- Aggregate of all amounts received during the year in cash, including amount received for sales, doesn’t exceed 5% of the said amount and
- Aggregate of all payments made in cash during the year, including amount incurred for expenditure, in cash, doesn’t exceed 5% of the said payment.
- Hence, where the aggregate of receipts and expenditure, being received in case, exceeds 5% of total receipts and expenditure, then the exemption limit for Audit would be Rs. 1 Crore.

TDS Implications on Cash Withdrawal

Bank-Post-offices-required-to-deduct-TDS.

To discourage cash transactions, the govt has introduced a replacement section 194N wherein if an individual withdraws aggregate cash exceeding INR 1 Crore during the year from his one or multiple bank account then Bank (Private or Public Sector), a co-operative Bank or a post office shall deduct TDS @2% on amount withdrawn in far more than INR 1 Crore.
However, the provisions of Section 194N would not be applicable to the following –
the Government;
Banking concern or co-operative society, being engaged in in the business of banking or a post office;
Business correspondent to that of a banking company or co-operative society, being carrying out activities in accordance with the applicable rules;
any white label ATM operator of a banking concern or co-operative society engaged in carrying on the business of banking, in accordance with the authorisation issued by the reserve bank of India.

Prohibited Deduction Under Chapter-V

Payment for Health Insurance Premium

- As per Section 80D, for the aim of claiming deduction from Gross Taxable Income, assessee is required to form payment of medical premium or other eligible deductions u/s 80D in any mode aside from cash.
- It is to be noted, that only the payments for preventive health check-ups would be allowed to be made in any mode including cash.

Donations made in cash

- Deduction for donations u/s 80G shall be allowed providing payment of donations are made in any mode aside from cash.
- No deduction shall be allowed in respect of donation of any sum exceeding INR 2,000 unless such sum is paid by any mode apart from cash.

CONCLUSION

Government of India introduced various rules and provisions, in order to tackle down the tax evasion activities and to make Indian economy grow with the correct use of its finances.
The above provisions are introduced as a tenet that each taxpayer is required to fits all the provisions of the tax Act for better and clean books of accounts.
It has been provided that the entities, complying with all the provisions, would be able to reap many benefits, in terms of deductions, better planning of future, and no legal disputes.
Also, a taxpayer is advised to maximize their digital transaction instead of cash transactions, in order to curb down the black money and increase the efficiency of their own working.

September 16, 2021 / Audit

FAQ’s on Tax Audit Under Income Tax Act

FREQUENTLY ASKED TAX AUDIT UNDER INCOME TAX QUESTIONS

Q- What provision is stated in section 44AB?

Ans. This provision specifies that taxpayers must perform an audit of their company or profession in order to provide an audit report for taxes purposes.

Q- Who does tax audits?

Ans. A tax audit is performed by a practicing chartered accountant or the appropriate authorities.

Q- What is the consequence for failing to comply with Section 44AB?

Ans. If you fail to comply with Section 44AB, you will be fined 0.5 percent of your entire sales, turnover, or gross revenues, or Rs. 1.5 lakh, whichever is less.

Q- Who is exempt from having a tax audit performed?

Ans. The following individuals are exempt from having a tax audit performed:

Any assessee whose income is derived from section 44B.
Any assessee whose income is derived from section 44BBA.
If an assessee’s books of accounts are audited under other laws, he or she is not required to have another tax audit performed under section 44AB. A tax report, in particular, must be filed in Form 3CA, Form 3CB, or Form 3CD.

Q- Who is not eligible to be a tax auditor?

Ans. There are several restrictions on the appointment of tax auditors, which are listed below:

Any member who works part-time is unable to undertake tax audits.
A chartered accountant cannot audit the accounts of someone to whom he owes more than Rs.10,000.
A statutory auditor will be considered professional misconduct if he or she accepts the appointment of a Public Sector Undertaking/Government Company/Listed Company and other Public Company with a turnover of Rs 50 crores or more in a year and accepts any other work, assignment, or service in relation to the same.

Undertaking/company on a compensation that exceeds the amount charged for carrying out the same undertaking/statutory company’s audit

The Chartered Accountant tasked with preparing and maintaining the assessee’s books of account should not audit such accounts.
Any partner or employee of a professional firm of Chartered Accountants is not permitted to audit the firm’s accounts.
An assessee’s internal auditor cannot be appointed as a tax auditor.
An auditor may not take more than 45 tax audit jobs in a fiscal year.

Q- Who is not eligible to be a tax auditor?

Ans. There are several restrictions on the appointment of tax auditors, which are listed below:

Any member who works part-time is unable to undertake tax audits.
A chartered accountant cannot audit the accounts of someone to whom he owes more than Rs.10, 000.
A statutory auditor will be considered professional misconduct if he or she accepts the appointment of a Public Sector Undertaking/Government Company/Listed Company and other Public Company with a turnover of Rs 50 crores or more in a year and accepts any other work, assignment, or service in relation to the same.

Undertaking/company on a compensation that exceeds the amount charged for carrying out the same undertaking/statutory company’s audit

The Chartered Accountant tasked with preparing and maintaining the assessee’s books of account should not audit such accounts.
Any partner or employee of a professional firm of Chartered Accountants is not permitted to audit the firm’s accounts.
An assessee’s internal auditor cannot be appointed as a tax auditor.
An auditor may not take more than 45 tax audit jobs in a fiscal year.

Q- What exactly is an audit report?

Ans : A tax auditor must submit his report in a prescribed form, which could be Form 3CA or Form 3CB, depending on whether the person carrying on business or profession is already mandated to have his accounts audited under another law. Form No. 3CB is required to submit when the person engaged in the business or profession is not mandated to have his accounts audited under another law.

The tax auditor must provide the specified particulars in Form No. 3CD, which is part of the audit report, in the event of either of the aforementioned audit reports.

Q- When and how should tax audit reports be provided?

Ans : The tax auditor must submit a tax audit report online using his login credentials as a Chartered Accountant. Taxpayers must also provide CA information in their login portal.

Once the tax auditor submits the audit report, the taxpayer should accept or reject it using their login site. If the audit report is refused for any reason, all steps must be repeated until the taxpayer accepts the audit report.
You must file the tax audit report on or before the due date of the income tax return. It is the 30th of November of the following year if the taxpayer has entered into an overseas transaction, and the 30th of September (extended to the 30th of November for AY 2021-22) of the following year for all other taxpayers.

Q- What happens if a person is compelled to have his or her accounts audited under another legislation, such as mandatory audits of businesses under company law provisions?

In such circumstances, the taxpayer is not required to have his accounts audited for income tax reasons again. It is sufficient if the accounts are audited under such other legislation before the return’s due date. Under income tax legislation, the taxpayer may provide this specified audit report.

Q- What is the difference between sales turnover and gross receipt in a tax audit?

Sales Turnover– The aggregate amount for which an enterprise affects sales is referred to as sales turnover.

Gross Receipts– the Income Tax Act does not define this word. Gross revenues comprise all receipts derived from the practise of a profession.

Q: How do you measure a commission agent’s sales turnover?

The turnover of a commission agency or a person selling items on consignment is defined by the transfer of ownership risk or reward. If the property in goods or all substantial risks and benefits of goods ownership remain with the principle, the relevant selling price will not be included in the commission agent’s turnover.

However, when the commission agent owns the products, bears considerable risk, and reaps the benefits of ownership, the selling price received/receivable is included in his turnover.

Q-How do you determine a stockbroker’s sales turnover?

When a stockbroker purchases stocks on behalf of a customer, the securities are not transferred into his name but are delivered in the customer’s name. This is also valid in the case of sales. The stockbroker holds delivery on behalf of his client. The ownership of securities is not transferred to share brokers. Only brokerage must be included when calculating the value of the turnover.

Q-How do you calculate sales turnover when you have numerous businesses?

If an assessee operates more than one business, the sale turnover or gross revenues from all businesses will be aggregated; however, if the assessee chooses the presumptive tax scheme, the turnover of such business will be omitted when calculating total sales turnover or gross receipts.

Q-How can I provide the Income Tax Department with a tax audit report?

A Chartered Accountant can electronically file the audit report with the income tax department. The tax auditor would instantly post the report to the income tax’s official website. The assessee must authorise and appoint a Chartered Accountant from his e-filing account in order to provide the report.

The date of the taxpayer’s approval of the report would be deemed the date of submission of the audit report. If the assessee does not accept or approve the tax audit report, it will be considered pending as if it had not been filed.

Q: How many tax audit reports may a Chartered Accountant sign?

A practising CA can perform up to 60 tax audits throughout an assessment year. The Institute of Chartered Accountants of India clarified that audits specified under statutes that require assessees to provide audit reports will not be counted toward the specified number of tax audit assignments if the auditee’s turnover is less than the turnover limit specified in section 44AB of the IT Act.

Q- Is it possible to amend a tax audit report?

Generally, an audit report under section 44AB should not be amended, but a member can do so on the following grounds:

Revision of a company’s accounts following its acceptance in an AGM;

A change in the law; • A shift in interpretation.
As a result, the audit report, once filed, might be amended on the aforementioned grounds.

Q- Is there a penalty for submitting an audit report late?

If a person fails to have his accounts audited or fails to provide the audit report, the assessing officer may order him to pay a penalty equivalent to the lesser of 0.5 percent of the total sale, turnover/gross revenues or 1,50,000 rupees.
It should be stressed, however, that there would be no punishment if the failure was due to a justifiable cause.

Q- Is Form 3CD reporting performed according to books of account or after modification in accordance with Income Computation and Disclosure Standards?

According to the preamble to the Income Computation and Disclosure Standards, ICDS is applicable for income computation chargeable under Profit and Gains of Business or Profession or Income from Other Sources, but not for bookkeeping.

Q- Should the audit report include the addresses of all locations?

If books of account are held in various locations, the auditor must supply the addresses of all sites as well as the information of the books of account preserved at each location.
In the case of a company assessee, the auditor must confirm that Form AOC-5 has been submitted with the ROC under the Companies Act for the keeping of books of account at a location other than the registered office.
The auditor’s responsibility is not only to provide a list of books of accounts, but also to analyse the books of accounts.

Q- Is it necessary to disclose the nature of the assessee’s businesses and any changes to them?

Clause 10 of Form 3CD requires the assessee to disclose the nature of each business or profession carried out by him or her during the preceding year. Any changes in the nature of the business should be stated explicitly. A transition from manufacturer to trader is one example of a change that necessitates reporting.
Any addition to, or permanent discontinuation of, a line of business is another example of a change that necessitates reporting. However, a temporary stoppage of operations may not constitute a change and so does not need to be notified.

Q- What types of documents should taxpayers keep in order to comply with the requirement to keep books of account?

The following papers should be kept:

A cash book
Journal, if books of accounts are kept in accordance with the commercial accounting system.
Ledgers.
Copies of invoices and carbon copies or counterfoils of receipts produced by the assessee for more than 25 rupees.
Original bills given to the assessee and receipts for expenditures spent by him;
Signed vouchers, if no invoices or receipts are given and the spending amount is less than 50 rupees, if the cash book does not have enough details about these expenditures.

Q: How many tax audits can a CA sign off on?

Chartered Accountants are limited to a specific number of tax audits each year, as determined by the ICAI. Here are the specifics regarding the ICAI-mandated Tax Audit limit for CAs.

CA TAX AUDIT LIMIT FOR AY 2021-22

The audit is carried out by a Chartered Accountant or a company of chartered accountants in accordance with tax audit regulations. A single person can only undertake 60 audits in a fiscal year. In the event of a partnership firm, this restriction applies to each partner who is a chartered accountant.

Q- What is the tax audit limit for fiscal year 2020-21?

Income Tax Audit Applicability & Application in India

If a taxpayer’s sales, turnover, or gross revenues surpass Rs. 1 crore in a fiscal year, he or she must have a tax audit performed. The Rs. 1 Crore threshold limit for a tax audit is planned to be enhanced to Rs. 5 Crore from AY 2020-21 (FY 2019-20) if the following two requirements are met:

(i) The entire amount received in cash during the preceding year, including sales, turnover, or gross receipts, does not exceed 5% of total turnover/gross receipts; and

(ii) The total of all cash payments made during the preceding year, including the amount paid for expenditure, does not exceed 5% of the total payment.

I hope the FAQs have answered at least some of your questions. Tax audits are not anything to be concerned about if you conduct your business properly and file returns on time. Assure that if you fall into the category of taxpayer, you follow all compliances on time.

September 16, 2021 / INCOME TAX

Income Tax Audit Applicability & Application in India

An Overview Income Tax Audit

A tax audit may only be undertaken by a Chartered Accountant or a partnership of Chartered Accountants. If the latter is used, the name of the signatory who signed the report on behalf of the company must be included in the audit report. When registering at the e-filing site, the signatory must enter his or her membership number.
The Statutory Auditor can also conduct tax audits. It is crucial to know that the number of tax audit reports that Chartered Accountants can file is limited. A Chartered Accountant is only allowed to conduct 60 tax audits each year. In the event of a corporation, the tax audit limit will apply to each of the partners.

Who is required to undergo a tax audit?

If a taxpayer’s sales, turnover, or gross earnings surpass Rs 1 crore in a fiscal year, he or she must have a tax audit performed. However, under some other instances, a taxpayer may be obliged to have their accounts audited. In the tables below, we have classified the numerous situations:

NOTE: The Rs 1 Crore threshold limit for a tax audit is planned to be enhanced to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) provided the taxpayer’s cash receipts are restricted to 5% of gross receipts or turnover and cash payments are limited to 5% of aggregate payments. The following are the many types of taxpayers:

*Nature of Business or Profession*	*Category of Taxpayer*	*When audit is Mandatory?*
Any Professions (Specified or Non-specified)	Any	When the gross receipts exceeds Rs. 50 lakhs during the relevant previous year.
Business	Bothe Payment and Receipt in case does not exceed 5% of the Total Receipts and Payments respectively.	If the previous year’s total sales, turnover, or gross receipts from the business exceeded Rs. 5 Crore.
Business	Either payment or receipt in cash exceeds 5% of the total receipts and payment respectively	If the previous year’s total sales, turnover, or gross receipts from business exceeded Rs. 1 crore.
Business eligible for Presumptive Tax Scheme under Section 44AD	HUF or Resident Individual	If an assessee’s income exceeds the maximum exemption level and he has chosen for the plan in any of the previous five years but does not do so in the current year.
Business eligible for Presumptive Tax Scheme under Section 44AD	Resident Partnership Firm	The taxpayer has chosen for the plan in any of the previous five years but does not do so in the current year.
Profession eligible for Presumptive Tax Scheme under Section 44ADA	Resident Assessee	The taxpayer contends that his professional earnings are less than those calculated under Section 44ADA, and that his overall income exceeds the maximum exemption limit.
Business eligible for Presumptive Tax Scheme un- derSection44AE	Any Assessee involved in the transportation, employment, or leasing of commodities	The taxpayer contends that his company earnings are less than the profit determined under Section 44AE.
Business eligible for Presumptive Tax Scheme un- der Section 44BB	Non-resident assessee engaged in exploration of mineral oil	The taxpayer contends that his company earnings are less than the profit determined under Section 44BB.
Business eligible for Presumptive Tax Scheme under Section 44BBB	Foreign Co. engaged in civil construction	Taxpayer contends that his profits from business are lower than the profit computed under Section 44BBB

*Nature of Business or Profession*	*When audit is Mandatory?*
Business loss
In case of loss from carrying on of business and not opting for presumptive taxation scheme	Total sales, turnover or gross receipts exceed Rs 1 Crore
If taxpayer’s total income exceeds basic threshold limit but he has incurred a loss from carrying on a business (not opting for presumptive taxation scheme)	In case of loss from business when sales, turnover or gross receipts exceed 1 Crore, the taxpayer is subject to tax audit under 44AB
Carrying on business (opting presumptive taxation scheme under section 44AD) and having a business loss but with income below basic threshold limit	Tax audit not applicable
Carrying on business (presumptive taxation scheme under section 44AD applicable) and having a business loss but with income exceeding basic threshold limit	Declares taxable income that is less than the limitations set by the presumptive tax scheme but more than the basic threshold limit.

The purpose of a tax audit

The primary goals of a tax audit are as follows: • Proper bookkeeping without fraud activities, and verification of the same by an auditor.

For reporting anomalies discovered thorough review of the books of accounts.
For reporting different information such as tax depreciation, compliance with income tax law provisions, and so forth.
Auditing simplifies the computation of taxes and deductions.
The primary responsibility is to check the information provided in the taxpayer’s income tax return about income, taxes, and deductions.

Appointment of Tax Auditors in a Firm

The Board of Directors is in charge of appointing tax auditors in a company. The Board may also transfer this authority to another officer, such as the CEO or CFO. Auditors in a partnership or sole proprietorship can be appointed by a partner, sole proprietor, or a person approved by the assessee. Furthermore, a taxpayer may engage two or more chartered accountants as joint auditors to conduct the tax audit. If all of the joint auditors agree with the findings, the audit report must be signed by all of them. In the event of disagreements, the auditors must state their views independently in a separate report.

Letter of Appointment for Tax Audit

Before proceeding with the tax audit, the tax auditor must acquire a letter of appointment from the concerned assessee. The appointment letter must be officially signed by the person authorized to sign the income tax return. The auditor’s compensation must be included in the letter.
In addition, the appointment letter should state that no other auditor has been entrusted with the duty for the current fiscal year, and it may provide information on the prior auditor. The latter is given in order to promote communication between the newly appointed auditor and his predecessor.

Tax Auditor’s Removal

Management has the authority to fire a tax auditor if the auditor has delayed the submission of the report to the point that it is no longer feasible to submit the audit report before the stated due date. A tax auditor cannot be fired because he provided an adverse audit report or because the assesee is concerned that the tax auditor would give an unfavorable audit report. If a Chartered Accountant is dismissed on unjust grounds, the Institute of Chartered Accountants of India (ICAI)-established Ethical Standards Board has the authority to intervene.

Accounts audited in compliance with any other legislation

If a taxpayer is required to have his books of accounts audited under another legislation, such as statutory audits of corporations under company law requirements, the person is not obligated to undertake his audit again for taxes purposes. The taxpayer just has to receive the audit report required by income tax legislation before the return’s due date.

Penalty for failing to complete a tax audit

Penalty for non-filing or late submission of a tax audit report

If a taxpayer is obligated to have a tax audit performed but fails to do so, the following penalties may be imposed:
5 percent of all sales, revenue, or gross revenues
150,000 rupees
If a taxpayer who is obligated to have his or her accounts audited fails to do so, a penalty may be imposed under Section 271B of the Income Tax Act. The penalty for failing to complete a tax audit is 0.5 percent of the turnover or gross revenues, up to Rs.1, 50,000.

However, if there is a justifiable explanation for such failure, no penalty under section 271B shall be imposed. So far, Tribunals/Courts have accepted the following legitimate causes:

Natural Disasters
The Tax Auditor’s Resignation and the Resultant Delay
Long-term labour issues, such as strikes and lockouts
Accounts lost due to circumstances beyond the Assessors’ control
The partner in charge of the accounts’ physical incapacity or death