The main purpose of statutory audit is to provide an independent, true and fair picture of the financial position of the Company to the shareholders.
WHAT IS THE APPLICABILITY OF STATUTORY AUDIT?
WHO CAN BE APPOINTED AS STATUTORY AUDITOR?
A practicing chartered accountant or a Chartered accountant firm or LLP can be appointed as a statutory auditor of a company.
Statutory Audit as per Income Tax Act,1961
Tax audit is the verification of the books of accounts of an assessee to validate the income tax computation and compliance with the laws of Income Tax. Auditing of books of accounts must be carried out by a certified Chartered Accountant. In this article, we look at tax audit limit, section 44AB of the Income Tax Act and appointment of tax auditor.
The provisions relating to tax audit are provided under Section 44AD of the Income Tax Act. According to Section 44AB, tax audit is required for the following persons:
In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year. Under the Income Tax Act, “Business” simply means any economic activity carried on for earning profits. Section 2(3) has defined the business as “any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”.
In case of a profession or professional, tax audit would be required if gross receipts in the profession exceeds Rs.50 lakhs in any of the previous year. A profession or professional could be any of the following as per Rule 6F of the Income Tax Rules, 1962:
Presumptive Taxation Scheme
If a person is enrolled under the presumptive taxation scheme under section 44AD and total sales or turnover is more than Rs. 2 crores, then tax audit would be required.
Also, any person enrolled under the presumptive taxation scheme who claims that the profits of the business are lower than the profits calculated in accordance with the presumptive taxation scheme would be required to obtain a tax audit report.
The due date for completing and filing tax audit report under section 44AB of Income Tax Act is 30th September of the assessment year. Hence, if a taxpayer is required to obtain tax audit, then he or she would be required to file income tax return on or before 30th September along with the tax audit report. In case the taxpayer is also liable for transfer pricing audit, then the due date for filing tax audit is 30th November of the assessment year.