An audit is nothing more than an inspection and it is important for the business and for some certain category of individual to make their books of accounts audited. Its main purpose is to ensure that the business accepts all the tax laws which is placed by income tax act of India and tax audit makes it easy to file tax returns.
Different types of Audits
- Mail Audit- A mail audit is nothing but a request for paperwork as the internal revenue system is either missing paperwork or requires paperwork for any item.
- Office Audit- An office audit is just an inspection of the records of taxpayers by the internal revenue system from its office.
- Field Audit- A field audit is an overall tax audit which is managed by the internal revenue system.
- Correspondence Audit- It is the lowest level of audit which is conducted by the internal revenue system.
Limited Audit- Limited type of audit is a type of audit which is limited as compared to normal type of audit.
The objectives of tax audit are:
- To examine and determine any defrauding activities.
- To make sure that all the records of books of accounts are properly maintained.
- To look over whether the accounts reflect the income of the taxpayer or not.
- To make the assessing officers free from routine verification so that they can focus on other important things.
Final date of tax audit
A person need to get his account audited and must obtain audit reports before 30th September of the assessment year.
If a person is failed to get his account audited before 30th September then an assessing officer can impose a penalty and if the cause is reasonable then no penalty is imposed.
Exempted person from tax audit
- The chartered accounted to whom the task of writing and maintaining the books of accounts are assigned are exempted to audit such accounts.
- An internal type of auditor cannot be appointed as tax auditor.
- Any member who is in part time practice are not eligible to perform tax audit.
- An auditor who is assigned 25 audits in one financial year cannot accept more.