Tax Audit

A Tax Audit is a statutory examination mandated under Section 44AB of the Income Tax Act, 1961 to ensure that taxpayers maintain proper books of accounts and accurately report their income, deductions, and tax liabilities. The purpose of a Tax Audit is to promote transparency, strengthen compliance, and prevent misreporting or tax evasion.

Our Tax Audit services are designed to deliver complete accuracy, full regulatory compliance, and risk-free reporting. We follow a structured, clause-wise, documentation-driven methodology that aligns with all current Income Tax Rules, ICDS requirements, and CBDT guidelines.

Tax Audit

Scope of Tax Audit

Our Tax Audit covers all statutory, financial, tax, reporting, and compliance requirements applicable under the Income Tax Act. The complete scope includes:

1. Examination of Books & Records

• Verification of all books of accounts, vouchers, registers, invoices, contracts, ledgers, bank statements, and supporting documents.

• Ensuring compliance with record-keeping requirements under Rule 6F (where applicable).

• Checking correctness and completeness of entries and classification.

2. Applicability & Turnover Assessment

• Determining applicability of Tax Audit under Section 44AB.

• Verifying turnover/gross receipts including multiple branches, divisions, GST figures, and consolidated operations.

• Reviewing presumptive schemes under Sections 44AD, 44ADA, and 44AE, if opted.

3. Comprehensive Reporting under Form 3CD

Full clause-wise verification and reporting of all 44 clauses, including:

• Constitution and nature of business.

• Books maintained and method of accounting followed.

• Method of inventory valuation and ICDS impact.

• Depreciation block details and asset-related reporting.

• Disallowances under Sections 40(a), 40A(3), 40A(7), 40A(9), 43B, etc.

• TDS/TCS compliance and defaults.

• Related party transactions under Section 40A(2)(b).

• Cash transactions and payments above prescribed limits.

• Employee benefit payments and statutory dues.

• Quantitative details of stock, raw material, WIP, and finished goods.

• Loans and deposits under Sections 269SS and 269T.

• Details of GST liability and other tax reconciliations.

• Specified domestic transactions and transfer-pricing applicability.

• Compliance with all relevant Income Computation and Disclosure Standards (ICDS).

4. Verification of Income & Expense Items

• Reconciliation of accounting profit with taxable income.

• Ensuring correct classification of income under various heads.

• Reviewing allowability and admissibility of expenses under the Act.

• Capital vs. revenue expenditure verification.

• Cross-checking expenses with TDS applicability.

5. Fixed Asset & Depreciation Review

• Verification of opening WDV, additions, deletions, and block of assets.

• Checking correctness of depreciation rates and additional depreciation.

• Ensuring proper documentation and compliance with tax rules.

6. Indirect Tax & Statutory Compliance Cross-Checks

• GST to books reconciliation.

• Verification of TDS/TCS returns, challans, and compliance status.

• Review of PF, ESI, and other labour law-related dues affecting tax reporting.

• Ensuring no statutory dues fall under disallowable categories.

7. Risk Assessment & Red Flag Identification

• Identifying unusual transactions, inconsistencies, cash-heavy operations, and non-compliant entries.

• Highlighting high-risk areas that may trigger scrutiny or litigation.

• Providing corrective action and strengthening internal tax controls.

8. Mandatory Ratio Analysis

• Computation and reporting of ratios as required in Form 3CD.

• Analytical review of trends, spikes, discrepancies, and operational inefficiencies.

9. Documentation & Deliverables

• Preparation and submission of Form 3CA or Form 3CB, as applicable.

• Complete and accurate filing of Form 3CD on the Income Tax portal.

• Preparation of management representation letter.

• Maintenance of full working papers supporting each clause for future reference or litigation defense.

• Providing recommendations for tax optimization and compliance improvement.