An overview:

As you have heard the name of many other audits like Statutory Audit, Cost Audit, Stock Audit which are governed by the respective laws, Section 44AB of the Income Tax Act, 1961 contain the provisions relating to the Tax Audit.Tax Audit is the audit of the books of accounts maintained by the assessee. It means audit of each and every segment of the books whether it is sale, purchase, expenditures, deductions etc. Tax Audit is not applicable in each and every case. It is mandatory to file only when the conditions mentioned in the section have been met. Tax Audit will be filed by the Chartered Accountant in Practice. Chartered Account will submit the tax audit report in the specific forms as prescribed for the Tax Audit including the observations and adverse remarks if any.Tax audit checks on all the frauds and malpractices in filing income tax returns.

Need of Filing Tax Audit

Mandatory Filing

Tax Audit report will be compulsorily required to be submitted in the following cases:

  • Assessee carrying on Businessand if the total turnover from such business exceeds1 Crore Rupees in the Previous year.

However, the threshold limit will be “Ten Crore Rupees” if the following conditions are fulfilled:

  • If the aggregate of all amounts received for sales during the previous year, in cash, does not exceed 5% of the said amount;and
  • aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed 5% of the said payment.
  1. Assessee having Professional Income and the total gross receipts from such profession exceed Fifty Crore Rupees in the Previous Financial Year. 
  2. If the Assessee has been covered by Section 44AD or Section 44ADA of the Income Tax Act, 1961 but he is claiming income less than minimum Income (8%/6% or 50%) as mentioned in the respective sectionsand his Total Income is more than the Basic Exemption, then assessee will be liable for tax audit.
  3. If the Assessee has been covered by Section 44AE, Section 44BB, Section 44BBB but heis claiming income less than taxable limit prescribed for Profit and Gains through Business and Profession deemed under those sections, then assessee will be liable for tax audit.

Meaning of Profession

As per Rule 6F of the Income Tax Rules 1962, Profession means any of the following:

  • Accountant
  • Architect
  • Interior Decorator
  • Authorized Representative
  • Film Artist- Actor, Editor, Director, Music Director, Cameraman, etc.
  • Engineer
  • Legal Professional -Advocate or Lawyer
  • Technical Consultant
  • Medical Professional- Doctor, Physiotherapist or Nursing and Paramedical Staff

Levy of Penalty

If tax audit is applicable to the assessee but assesse does not file the tax audit in the stipulated time period, then penalty will be levied which will be lower from the following:

  • 5% of Turnover or
  • 1,50,000

Types of Tax Audit Reports-

Two types of tax audit reports are there

Due Date for Filing the Tax Audit

Due date for preparation, submission and filing the tax audit report via prescribed forms is on or before the 30th September of particular financial year. For example, the due date for filing the tax audit report for the financial year 22-23 is 30th September, 2023.

Penalty for Non-Compliance of Tax Audit

If the assessee fails to get the accounts audited by the Chartered Accountant and does not file or any delay in filing the tax audit report, it attracts a penalty of amount which is lower of the following:

  • 5% of Turnover or
  • 1,50,000

However, penalty may be waived off by the Income Tax Authorities if there is a genuine reason for non-filing of audit report or any delay in filing the tax audit report. Among the permitted reasons are:

  • Delay caused by resignation of the tax auditor
  • Delay caused by death or physical inability of the partner responsible for accounts
  • Delay caused by labour issues such as strikes or lock-outs
  • Delay caused by loss of accounts due to theft or fire, or incidents that are not under the assessee’s control
  • Natural calamities

Process of Filing Tax Audit Reports

Limited Liability

Generally in other business if your business fails to pay the dues to your creditors, banks, etc then business owners are liable to pay it from their personal assets but the same is not in case of the company. In case of the company if company fails to pay its dues, then party cannot demand it from the personal assets of the shareholders. Shareholders are liable for only amount they invested at the start of the business. Loss of remaining amount is only suffered by the person who paid the amount to the company

Management and ownership separation

It is a uniquefeature which is available in company only that management and ownership both are the separate. Sometimes business owners only invest and do not manage it or after a period they want to continue to invest in their business and enjoy the profits but handover the management to others like employees, managing partners etc. But issue arises to them is that they continue to liable for the wrongdoings or acts of the person managing the business. But the same is not in the case of the company. In case of the company business owners are not liable at all for the acts of others. The person who is at the fault will be solely responsible for his acts.

Centrally registered

Instead ofstate registration, it is registered with the central government due to which your company is worldwide recognizable, and its data and registration can even be verified from the Government site which make it more trustworthy and reliable.

Management and Reliability

Any person can verify the registration of the company from the website of the Government and the name of the directors which build the confidence in the customers and make the entity more reliable.

Loan availability

 There are various criteria of the banks which are checked while sanctioning of the loan and the same is also applicable in the case of the company. But company is preferred over other forms of business as it is registered by Central Government and banks even also provides collateral free loans to the companies..

Foreign Direct Investment (FDI)and Domestic Investment (DI) Allowed

 Not all the businesses are allowed to take FDI or DI. But company is allowed to take FDI and DI and invest it in the business which make it easier for the businesses to grow and expand their business easily by getting the investment.

Unique name

As everyone found in India that a same business name is used by various entities which make it difficult for entity to create a brand of their business, expand their business nationwide or worldwide and make difficult for the customer to identify the original entity and other person take its benefit by starting the business with the same name. This issue is tackled by the Company form of business. Once a name registered for the company, it cannot be registered by any other person or entity. Hence businesses enjoy the unique name and avoid the chances of delicacy.

Startup Benefits

Startup is the scheme of the government to give incentives and support the new businesses. Government gives the 3 years income tax exemption to the entity registered under the startup. Reduced the government fee for applying trademark, patent, copyright, etc. Government also made a seed fund specifically for the startups to provide collateral free loans and subsidies. But not every form of business can register itself in the startup. Only Company and LLPare the forms of business which can register and take the benefits of the startups.


It is a very important feature of company. When other forms of business are transferred or a partner is introduced in the firm then it requires to surrender the existing registrations including GST, PAN, TAN, EPF, ESI, etc and it will finish the track record of the business but in case of company if the owners want to transfer its business or want to introduce the partner/shareholder, there will be no change in the constitution and no need to surrender existing registrations and apply fresh registrations. It maintains the track record of the company and increases the Goodwill of the company.

Documents Required
  • Books of Accounts of the Assessee
  • Balance Sheet along with its Schedules
  • Profit and Loss Account along with its Schedules
  • Preceding Financial Year Balance Sheet
  • Preceding Financial Year Profit and Loss Account
  • TDS Returns and challans
  • ESI returns and challans
  • EPF returns and challans
  • Digital Signature of the Assessee
  • Digital Signature of the Chartered Accountant
  • Other Documents if applicable
Details Required
  1. Income Tax Credentials of the Assessee
  2. Income Tax Credentials of the Chartered Accountant (as Tax Professional)
  3. GST Login Credentials
  4. Nature of Business
  5. Business Activity
  6. Other details, if applicable

Process of Company Registration

COMPLIANCESPRO has a separate team which is expert in completing this complex process very easily and helps you to get the company registered within 3 daysonly in a very reasonable price.

Documents & Details required for company incorporation in very simple terms
Documents Required
  • Bank Statement
  • Electricity Bill
  • Telephone Bill
  • Mobile Bill
  • Passport
  • Driving License
  • Voter’s Identity Card
  •  Electricity Bill or
  • Telephone Bill
  • (Not older than 2 Month)
Details Required
  1. Company Name
  2. Company Email Id and Phone No
  3. Business Activity
  4. Directors Name
  5. Shareholders Name
  6. All Directors and Shareholders Details:
  • Email ID and Mobile Number
  • Place of Birth (District & State)
  • Nationality
  • Qualification
  • Current Employment: Salaried/ Businessman/ Other
  • Duration of Stay at Present Address
  • Capital Amount
financial accounting


  • Audited Notes to Accounts

  • Tax Audit Report

  • Unique Document Identification Number

  • Audited Balance sheet

  • Audited Profit & Loss Account