A tax audit under the Income Tax Act
Key Points of a Tax Audit Under the Income Tax Act
A tax audit under the Income Tax Act refers to an examination and evaluation of a taxpayer’s financial records, accounts, and transactions to ensure compliance with the tax laws and to verify the accuracy of income, expenses, and other tax-related details. The audit is typically conducted by a Chartered Accountant (CA) or an authorized professional, and the results are submitted to the Income Tax Department.
Key Requirements under Section 44AB:
- The auditor is required to verify whether the taxpayer has maintained books of account as prescribed under Section 44AA.
- The auditor checks if the taxpayer has followed the accounting standards and whether their income is accurately reported.
- The auditor must examine various aspects, such as:
- Revenue recognition.
- Compliance with the provisions of deductions and exemptions.
- Any unreported income.
- Whether the correct method of accounting (cash or accrual) is used.
Summary of Documents & Requirements
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