Every financial year demands tax filing from an individual or a business under the Income Tax Act of India. Under Section 44AB of the Income Tax Act, a tax audit is triggered for a firm or entity if their annual gross turnover and receipts exceed a specified limit.
This audit ensures complete and accurate information of a tax payee’s financial belongings. Information like income, deductions, and taxes, along with account log books that comply with the Income Tax Act of 1961.
Section 44AB states the rules and regulations of tax audit for individuals and businesses. It deals with the audit of accounts of businesses or individuals. To ensure they meet all requisites as prescribed under this section.
If annual gross income/receipts exceed the specified limit. The assessee is liable to trigger a tax audit under IT section 44AB.
The examination or evaluation of an individual’s book of account is termed a tax audit. Under this IT act, a practising Chartered Accountant conducts an audit. The CA then submits the audit reports and income tax return to the income tax department.
This section demands that a taxpayer maintain his book of accounts and other financial records properly to keep track of tax, income, and deductions in a financial year.
Following individuals or firms are liable for an audit from a chartered accountant -
Suppose an individual in a profession or a person carrying on a business fails to file an income tax return in compliance with Section 44AB. In that case, he is liable to pay the following penalties set by the income tax department -
In cases of national calamities, death or resignation of the tax auditor, and situations beyond the control of a taxpayer, the income tax department can revoke these penalties.
Now that you are aware of the intrinsics of Section 44AB of the Income Tax Act, complete the necessary procedures before the due date to avoid heavy penalties. This will also help you maintain a good record with the IT department.
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