Compliance & Taxation

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Compliance & Taxation

Preparation of Tax Audit

Tax Audit:-

Audit is the process of examining and scrutinizing the accounts of a business and profession carried out by the taxpayer from the income tax point of view. This simplifies the process of calculating income for filing income returns.

‘Audit’ is the inspection of an organization’s accounts and the production of reports.

Purpose of Tax Audit:-

Tax audit is conducted to achieve various  objectives: –

  1. To ensure proper maintenance and accuracy of accounts and their certification by the tax auditor.
  2. To report observations/discrepancies noted by the tax auditor after systematic examination of the books.
  3. To furnish prescribed information such as tax depreciation, compliance with various provisions of income tax law.


All the above enables the tax authorities to verify the correctness of the income tax return filed by the taxpayer.

What is a tax audit essentially to?

If a taxpayer’s gross business receipts in a financial year exceed Rs 1 crore, then it is necessary to conduct a tax audit. However, certain circumstances require a taxpayer to get his accounts audited. Which we have classified different situations in the tables mentioned below:

If the total expenses and receipts of an organization are more than 5% of the total sales then it is required to audit.

If the total expenses and receipts of an organization is less than 5% of the total sales and the total sales are less than Rs.10 crores then it is not required to audit.




How and when will the tax audit report be submitted?

The tax auditor will submit a tax audit report online using his login details in the capacity of a ‘Chartered Accountant’. Taxpayers will also have to add CA details in their login portal.

Once the tax auditor uploads the audit report, it must be accepted or rejected by the taxpayer on his login portal. If rejected for any reason, all the procedures have to be followed again until the audit report is accepted by the taxpayer.

You have to file the tax audit report on or before the date of filing the return of income if the taxpayer has entered into an international transaction then it is 30th November of the next year, while for other taxpayers it is 30th September of the next year.

Preparing and filing of GSTR-9 & 9C

GSTR-9 and GSTR-9C are indirect taxes of India. GSTR-9 is an annual return, which is signed by a specified authority (auditor, self or CMA) and is a reconciliation statement. An important feature of both the forms is that they can be filed only once. There is no amendment in this.

GSTR-9C is dependent on GSTR-9 annual return. Therefore auditing takes place after the annual returns. Also, taxpayers have to remember that the return can be filed only once and there is no provision to amend this return.

GSTR-9 is an annual return that is required to be filed by all registered taxpayers. GSTR-9C, on the other hand, is an annual reconciliation statement under GST which is certified by the CA and self.

GSTR 9 and GSTR 9C Exemptions : –

GSTR-9 annual return is not required to be filed by persons belonging to any one or more of the following categories of GST registered taxpayers.

  1. Casual person.
  2. Input Service Distributor.
  3. Non-resident person
  4. Persons receiving tax under Section 52 of the GST Act
  5. Online Information and Database Access Retrieval Service
  6. Entity deducting tax (TDS) under section 51 of the GST Act.

For GSTR-9C, there are the following two categories of taxpayers along with the individuals falling in the above listed category of registered taxpayers:

  1. Taxpayers registered under Composition Scheme.
  2. Taxpayers with turnover less than Rs 2 crore.

Check list to prepare GSTR-9 & 9C

A. Check sales and purchase as per audited B/s.

B. Check RCM (Reverse Chage Mechanism)
     1 Paid to Advocate under 18% RCM
     2 Paid to freight and cartage under GTA Act, @5%
     3 Paid to Director sitting fee @18%
     4 Paid to insurance/commission agent @18%

c. Check Capital goods ITC

d. Check ineligible ITC
     1 vehicle Repairing & Maintenance
     2 Staff welfare Expenses
     3 Festival Expenses

e. Check credit & debit note

f. Check amendment invoice

g. Check ITC booked in previous year but claim next year

h. Check ITC claimed but entry not booked

i. Check ITC claimed but amendment/debit & credit not next year

j. Check all expenses related ITC which is claimed or not claimed

Note: The maximum penalty for non-filing of GSTR-9 cannot exceed 25% of the total turnover in the concerned ST/UT.

Preparing and filing of GSTR Return (GSTR-1 & 3B)

A GST return is a document containing details of income/ sales and/ charges/ purchases that a GST-registered taxpayer( every GSTIN person) is needed to file with the duty executive authorities. This is used by tax authorities to calculate net tax liability. Under the GST Act, a registered dealer has to file GST returns that astronomically include.

  1. Purchases( Input)
  2. Output GST( On Sales)
  3. Input tax credit( Paid on purchases)

To file GST returns or for GST forms, check out the Clear GST software that allows the import of data from colorful Software systems similar to Tally, Busy, and custom-made Excel, to name a many. There’s also the option to use the desktop app for Tally druggies to directly upload data and files.

Who should file GST Returns?

Under the GST Tax governance, regular businesses having further than Rs. 2 crore periodic aggregate development( and taxpayers who haven’t decided on the QRMP scheme) have to file two monthly returns and one periodic return. This amounts to 25 returns each year.

Taxpayers having a turnover of less than Rs. 2 crore have the option to file returns under the QRMP scheme. The number of GSTR forms for QRMP filers is 9 each time, which includes 4 GSTR- 1 and 4 GSTR- 3B returns each and one periodic return. Note that QRMP filers have to pay duty on a monthly basis indeed though they’re filing returns quarterly or monthly.

What is GSTR 3B?

GSTR- 3B is a self-declared summary return filed every month( monthly and quarterly). Taxpayers need to report the summary numbers of sales, ITC claimed, and net duty adaptation and outstanding in GSTR- 3B.

  1. The GSTR- 3B formerly filed can’t be revised.
  2. A separate GSTR- 3B must be filed for every GST-registered person.
  3. Indeed in case of a zero liability, GSTR- 3B must be compulsorily filed -3 The GST return liability must be paid on or before the date of filing GSTR- 3B, earlier than its due date.
What is GSTR-1

GSTR-1 is a monthly or quarterly return that should be filed by every registered person, except a many as given in further sections. It contains details of all outside inventories i.e., deals. The return has an aggregate of 13 sections.

When is GSTR-1 due

The due dates for GSTR- 1 are grounded on your total turnover. Businesses with sales of over Rs. 2 crores have the option to file quarterly returns under the QRMP scheme which are due by the 13th and the 11th of the month following the applicable quarter.


Preparing and filing of TDS/TCS Return

TDS stands for Tax Deducted at Source. It is the tax amount that the government collects directly from the recipient’s income immediately when it is earned. The TDS is deducted at a certain percentage. As per the IT Act, an individual or any company can deduct this tax at the source of income if the payment for any goods or services crosses a certain amount.

The Government decides the TDS rates and thresholds for different types of goods and services for a particular financial year.

The services include the following:

1. Royalty
2. Consulting
3. Rent, etc.
4. Legal fees
5. Technical services

In a transaction where TDS is applicable, the person or firm receiving the payment is called the deductee. On the other hand, the individual or business deducting TDS from the payment is called a deductor.

What is Tax Collected at Source (TCS)

Tax collected at source (TCS) is the tax collected by the seller from the buyer on sale so that it can be deposited with the tax authorities. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the buyers. Such persons must have the Tax Collection Account Number to be able to collect TCS.

During a transaction, if a buyer deducts TDS based on the provisions in the Income Tax Act, then, in this case, TCS is not applicable.

When will a higher TCS rate apply : –

Note that as per Section 206CCA, tax at a higher rate (other than rates in the above table) will be collected from the buyer if such buyer has not filed ITR for the last two financial years before the relevant financial year in which TCS had to be collected.

The time limit to file ITR has expired. : –

The total of TCS and TDS was more than Rs.50,000 in each of these two financial years. Such a higher TCS rate will be the highest of the two times the TCS rate as per TCS chart and 5%. In special cases given under Section 206C(IG), 5% TCS applies where the authorised dealer arranges remittance out of India of Rs.7 lakhs or more in a financial year from a buyer of foreign currency remitting under Liberalized Remittance Scheme (LRS), not being the overseas tour program package. If Aadhaar or PAN is unavailable, then TCS is 10%. Such TCS is collected while debiting the buyer’s account or on receipt of money.

Preparing and filing of Income Tax Return…etc various things

An Income tax return (ITR) is a form used to file information about your income and tax to the Income Tax Department. The tax liability of a taxpayer is calculated based on his or her income. In case the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund from the Income Tax Department.

As per the income tax laws, the return must be filed every year by an individual or business that earns any income during a financial year. The income could be in the form of a salary, business profits, income from house property or earned through dividends, capital gains, interests or other sources.

Tax returns have to be filed by an individual or a business before a specified date. If a taxpayer fails to abide by the deadline, he or she has to pay a penalty.

Is it mandatory to file Income Tax Return?

As per the tax laws laid down in India, it is compulsory to file your income tax returns if your income is more than the basic exemption limit. The income tax rate is pre-decided for taxpayers. A delay in filing returns will not only attract late filing fees but also hamper your chances of getting a loan or a visa for travel purposes.

Who should file Income Tax Returns?

1. Foreign companies that enjoy treaty benefits on transactions made in India.
2. NRIs who earn or accrue more than Rs. 2.5 lakh in India in a single financial year.
3. Individuals who have assets or financial interest entities that are located outside India.
4. Those who wish to claim a refund on the excess tax deducted/income tax they’ve paid.
5. All registered companies that generate income, regardless of whether they’ve made any profit or not through the year.
6. All individuals, up to the age of 59, whose total income for a financial year exceeds Rs 2.5 lakh. For senior citizens (aged 60-79), the limit increases to Rs. 3 lakh and for super senior citizens (aged 80 and above) the limit is Rs. 5 lakhs. It is important to note that the income amount should be calculated before factoring in the deductions allowed under Sections 80C to 80U and other exemptions under section 10.

Documents required to fill ITR : –

It is important to have all the relevant documents handy before you start your e-filing process.

1. Salary slips
2. Aadhar Card, PAN card
3. Bank and post office savings account passbook, PPF account passbook
4. Form-16- TDS certificate issued to you by your employer to provide details of the salary paid to you and TDS deducted on it, if any.