A Tax audit is all about accounting. It is done to make sure that the rules in the Income Tax Act are being followed. In the case of corporations, an audit is already required by the Companies Act.

Audits of all kinds are carried out by various laws, including cost audits, stock audits, and statutory audits carried out by company law provisions. An income Tax audit also requires a “Tax Audit”.

A Tax audit examines or reviews taxpayers‘ business or professional accounts from an income tax perspective. It simplifies the calculation of income for filing a return of income.

A Tax audit is conducted with the following goals in mind:

Ensure that the books of accounts are maintained correctly and certified by a tax auditor.

Report any observations discovered during the tax auditor’s examination of the books of accounts.

Report required information such as tax depreciation and compliance with various income tax law provisions, among other things.

All of these make it possible for the tax authorities to confirm the accuracy of the taxpayer’s income tax returns. It also gets easier to claim deductions and calculate and verify total income.

Filing Requirements –

Tax audit is mandatory. In such cases, the assessee is required to submit the following forms along with the income tax return:

Form 3CA:

This form should be used when the assessee’s books have already been submitted for audit under other laws. According to the Companies Act or the Societies Registration Act, the books may have been audited. In such cases, the Income Tax Act’s requirement for an audit is satisfied without needing a second audit.

Form 3CB:

This form is used when the assessee’s books are only audited to meet the Income Tax Act’s requirements.

Documents Required for Preparation of Tax Audit Report –

• The Assessee’s Name and Address
• A copy of the Assessee’s PAN or Aadhar Card
• The Assessee’s GST Registration Number; or any other document that demonstrates the payment of indirect taxes
• Previous Year and Assessment Year
• Nature of Business and Change in Nature of business, if any
• Method of accounting in the previous year and change in the method, if any
• Tax summary
• TDS
• Ratio of Turnover
• And so on…