Analysis of Tax Audit – Forms 3CA, 3CB, 3CD & 3CE

Income tax rules require few taxpayers to revise their accounts 44AB. The auditor must present the audit report in a specified audit form together with detailed information.

Audit Forms

The review report must be presented in one of the following forms:

Form 3CA – For taxpayers engaged in business or profession and already authorized to have their accounts revised under other laws (ie, other than tax).
An undertaking is obliged to have its accounts revised on the basis of the 2013 Act. Thus, it will form 3CA.

Form 3CB – For taxpayers who carry out a business or profession but are not required to have their accounts revised under other laws.

Information about Form 3CA

Section 1

  • Name and address of the taxpayer together with the fixed number of the account,
  • Name of Auditor (Individual / Company as applicable)
  • Laws whose accounts have been audited (eg: Companies)
  • Date of Audit Report
  • Profit and loss account/income and expenses (start date and closing date)
  • Balance sheet date

Section 2

  • Declaration of attaching forms 3CD along with the audit report

Section 3

  • Review comments / Qualities found in information related to Form 3CD

Section 4

  • Place and date of signature of the audit report
  • Name, address and membership number of the auditor
  • Stamp/seal of an accountant

Information about Form 3CB

Section 1

  • Balance sheet date
  • Profit and loss account/income and expenses (start date and closing date)
  • Name and address of the taxpayer together with the fixed number of the account

Section 2

Section 3 (a)

  • Audit Comments / Abilities / Comments / Discrepancies

Section 3 (b)

Statement by the auditor regarding –

  • To get all the information and explanations necessary for the audit
  • Ensuring that the organization (including branch offices) maintains proper accounting
  • Balance sheet and profit and loss account gives a true and fair view

Section 4

  • Declaration of attaching forms 3CD along with the audit report

Section 5

  • Audits / Discrepancies found in information related to Form 3CD

Section 6

  • Place and date of signature of an audit report
  • Name, address and membership number of the auditor
  • Stamp/seal of the accountant

Form 3CE – Audit Report for Non-residents and Foreign Companies

Residents of non-residents and foreign companies who receive patents or fees for technical services from the government or Indian concerns must have their accounts revised.

Information about Form 3CE

Section 1

  • Name and address of foreigners together with the fixed number of the account
  • Financial year, where the auditor has conducted the audit

Section 2

  • A statement to obtain all the information and explanations necessary for the audit

Section 3

  • Certification of permanent establishment / permanent establishment in India.

Section 4

  • Statement of income from royalties/fees for technical services under Chapter 44 for the relevant food year.

Section 5

  • Signature and name of auditor together with stamp/seal

Due date to receive the audit report

  • A taxpayer must receive an audit report no later than 30 September of the assessment year concerned. By 2017-18, the audit report will be available until September 30, 2018.
  • The auditor will submit an tax audit report to the taxpayer electronically, which must be approved by the taxpayer before it will be filed.

Penalty interest because the audit report is not submitted

Food Representative may impose a penalty on u / s 271B if the taxpayer does not get his accounts audited or file the audit report. The minimum reduction may be 0.5% of total sales, turnover or gross tax, which may rise to Rs. 1,50,000. However, if a taxpayer gives a reasonable reason for a violation, no penalty will be imposed.

[frontpage_news widget=”879″ name=”Certicom – A Group of Chartered Accountants – Articles”]

 

Presumptive Taxation for Business and Profession

Section-1:-  Businesses

1. Selection of legal entities

when you start your business is which legal entity it should be installed as. Depending on the nature and size of the company, some legal options are available:

As such, there is no legal rule that “business” must be formed to start a business. Importing a business has its own pros and cons. Generate a business enhances consistent work. If your business is growing rapidly and becomes unmanageable, it helps to understand it in special legal entities who will own their own PAN and want to submit a special tax return. Otherwise, you can choose to continue to trade as sole owner.

2. Maintenance of accounting accounts

If a company meets any of the following criteria, it is necessary to keep the books under the income tax line:

  • Revenues are more Rs. 1,20,000
  • Total sales, sales or gross receipts are more than Rs. 10,00.000

one of three previous years. This situation has also been relaxed for individuals and HUF as they will be bound by the commission to maintain accounting only if:

  • Revenues are more than Rs 2.5 lakhs
  • Total sales, sales or gross receipts are greater than 25 sheets in each of the three previous years.

3. Tax investigations

For companies with gross receipts of more than 1crore during the financial year, they are responsible for tax audits. The due date of the application for an audit report pursuant to Art. September 30th of the assessment year. The report will be submitted electronically using Form 3CD. For taxpayers subject to tax assessment, the due date for application for income is also 30 September of the assessment year.

4. Due date

  • The due date for application for tax assessment report – September 30 during the assessment year
  • The payment date for filing of an application (if tax assessment is in effect) – September 30 in the year of assessment
  • Maturity for filing an application (if a tax review is not applicable) – July 31 during the assessment year

5. Presumptive taxation

Presumptive taxation for companies is covered by section 44AD of the Income Tax Act. Any company that has a turnover of less than Rs 2 crore may choose to tax with advance notice. They must declare a profit of 8% for an unprecedented digital business or 6% for digital business, either. The following companies are excluded from existing taxes:

  •  Life insurance companies
  • Commission of any kind
  • Running the business of asking, hire or rent a carriage of goods

B. Benefits of Presumptive taxation

  • National Fund set up by the government
  • Prime Minister’s Archives
  • In prepayment under Section 44AD, your net income is considered to be 8% of your turnover and you pay taxes on that income
  • If your receipts are in digital form (not cash) then only 6% of your income is net income and you pay tax on that income
  • You do not need to maintain accounting records
  • You do not need to get the accounting records revised
  • You must pay an advance tax – but instead of estimating revenue and paying taxes every quarter, you can pay all your pre-tax before March 31st. A contribution tax, where taxpayers have chosen the contingency plan, will pay before March 15 the relevant financial year if you expect your income tax liability to be higher than Rs.10,000 in

Section II: Professionals

1. Professions for the purpose of Indian tax laws

  • Engineering
  • Legal
  • Architectural profession
  • Accountant
  • Medical
  • Technical consultant
  • Interior decoration

2. Calculation of taxable income

A professional could easily find taxable “income under Profit and Profit from Business  income taxes or Occupation” by reducing all occupational expenses from this gross income from the profession. Expenditure related to industries could be a salary (if you hire someone), rent the premises where you have your profession, internet charges, mobile phone expenses, public travel, lunch (officially), etc.

Here is how we determine her taxable income from business :

Particulars Amount (in Rs)
Gross receipts 15,00,000
(-) Profession-related expenses
Internet and mobile 25,000
Salary 3,00,000
Rent 1,50,000
Lunch expenses 24,000
Travel expenses 1,50,000
Net Income 8,51,000

3. Taxation

As a professional, the form applies to you ITR 3. You will be responsible for registering your return no later than July 31st. Unless you are audited under the Income Tax Act.
4. Value period for tax investigations

You may be responsible for requesting a tax assessment if your total earned income exceeds 25 lakhs during a financial year. If books are not audited, it can reduce penalties up to 0.5% of total income of Rs 1.5 lakhs, whichever is lower

5. Presumptive taxation

An expert who has gross income up to Rs 50 lakhs can choose the proposed tax plan as he can immediately offer 50% of gross income as taxable income and pay taxes according to his wheat on such income. Once he has opted for this system, he can not claim any occupational expenses as a deduction again.

Particulars Tax liability with Presumptive taxation Tax liability without Presumptive taxation
Income Rs. 30,00,000 Rs. 30,00,000
Expenses Rs. 15,00,000 (50% of income is eligible for deduction) Rs. 3,00,000
Taxable income Rs. 15,00,000 Rs. 27,00,000
Tax liability Rs. 2,62,500 (excluding cess) Rs. 6,22,500 (excluding cess)

[frontpage_news widget=”2153″ name=”Financial Solutions”]

[frontpage_news widget=”879″ name=”Certicom – A Group of Chartered Accountants – Articles”]

Income Tax Returns e-filing – Which ITR Should I File?

The following infographic will help you find out what type of income tax credit applies to you for the FY 2017-18.

ITR form

ITR-1 or SAHAJ

This deposit shall be used by an individual whose total income for the 2018-19 assessment year includes:-

  • Income from salaries/pensions; or
  • Income from one housing (with the exception of cases where losses have been transferred from previous years); or
  • Revenues from other sources (excluding winnings and income from hats)

Who can not use ITR 1 Form?

  • If your total income exceeds Rs 50 lakhs.
  • If you have a foreign asset
  • If you have an agricultural income that is more than Rs. 5,000,
  • If you have a taxable profit
  • If you have income from business or profession
  • If you have income from more than one housing

ITR-2

ITR 2 is used by an individual or Hindu non-family family, whose total income for AY 2018-19 contains:

  • Income from salaries/pensions; or
  • Income from the housing; or
  • Revenue from other sources (including winnings from lotteries and income from horses).

(The total income of the above shall be more than Rs 50 Lakhs)

  • Income from capital income; or
  • Income of an individual as a member of the company
  • Foreign assets / Foreign income
  • Agricultural income more than Rs 5,000

Furthermore, if income from other people such as a spouse, child, etc. Being a club with income from a rating agency, this deposit can be used as such income falls into any of the above categories.

  • Who cannot use this backup form
  • This deposit should not be used by an individual whose total income for AY 2018-19 is income from business or occupation.

To describe these types of income, you may need to use ITR-3 or ITR-4.

ITR-3

The current ITR3 form is used by an individual or Hindu non-family member who has income from his own business or is in a profession. Those who have income from the following sources are eligible to register ITR 3:

  • Respond to a company or profession
  • A return may include income from a housing, wages/pensions and income from other sources

ITR-4 or Sugam

The current ITR 4 applies to individuals and HUF who have income from business or profession and have chosen the proposed income insurance scheme under Chapter 44, 44ADA, 44A 44AA and the 44AE section of the Income Tax Act. However, if the company’s turnover exceeds Rs 2 crores, the taxpayer must register ITR-3.

ITR-5

ITR 5 is for companies, LLPs (Limited Liability Partnership), AOPs (Individuals) and Bois (Body of Individuals)

ITR-6

For companies other than those requiring an exemption under Chapter 11 (Income from property held for charitable or religious purposes)

This subscription must only be submitted electronically.

ITR-7

For individuals, including companies that need to submit according to Art. Article 139 Or paragraph 4. Article 139 Or paragraph 4. Article 139 Or paragraph 4. Article 139

  • Delivered under the provisions of Article 139. (4A) of any person who receives income from property that is subject to a trust or other statutory obligations in whole for charity or religious use or for the sole purpose of such purpose.
  • Delivered in accordance with the provisions of Article 139. (4B) to a political organization if total income without providing for paragraph 139 is higher than the maximum amount not subject to income tax.
  • Back according to Section 139 (4C) is required to be filed by –
    • scientific research
    • New Agency
    • organization or organization referred to in section 10 (23A)
    • institution referred to in section 10 (23B);
    • fund or institution or university or other educational institution or other hospital or other medical institution.
    • Required according to Article 139 (4D) to all universities, universities or other institutions that are not required to return income or loss under other provisions of this section.

[frontpage_news widget=”879″ name=”Certicom – A Group of Chartered Accountants – Articles”]