Tax Audit

How to do a tax audit ?

1. Form 3CD: This form is best viewed as a detailed statement of particulars.
2. Form 3CA: This is for companies or professionals who have to carry out a tax audit mandatorily.
3. Form 3CB: This is for a business or profession that is not mandated by any other law to have a tax audit carried out.

What is a tax audit?

There are various kinds of audits being conducted under different laws such as company audit /statutory audit conducted under company law provisions, cost audit, stock audit etc. Similarly, income tax law also mandates an audit called ‘Tax Audit’.

As the name itself suggests, tax audit is an examination or review of accounts of any business or profession carried out by taxpayers from an income tax viewpoint. It makes the process of income computation for filing of return of income easier.

Income Tax Audit under Section 44AB - Criteria, Audit Report, Penalty

Before understanding what is tax audit, let us understand the term  ‘Audit’. Dictionary meaning of the term ‘Audit’ suggests that it is an official inspection of an organization’s accounts and production of report, typically by an independent body. It is also referred to as a systematic review or assessment of something.