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Income Tax Compliances/ Audits

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Income Tax Compliances/ Audits

Income Tax Compliances/ Audits


Income tax compliance and audits are important aspects of managing taxes for individuals and businesses in India. Here are some key aspects of income tax compliances and audits:

  1. Filing Income Tax Returns: Individuals and businesses are required to file their income tax returns (ITR) annually, disclosing their income, deductions, and taxes paid. The due date for filing ITR varies based on the taxpayer's category and income.

  2. Tax Deducted at Source (TDS): Employers and other entities are required to deduct TDS from payments made to employees and vendors and deposit it with the government. TDS returns need to be filed quarterly.

  3. Tax Collected at Source (TCS): Sellers of certain goods and services are required to collect TCS from buyers and deposit it with the government. TCS returns need to be filed quarterly.

  4. Advance Tax: Individuals and businesses are required to pay advance tax if their tax liability for the year exceeds Rs. 10,000. Advance tax needs to be paid in installments during the year.

  5. Tax Audits: Businesses with a turnover exceeding specified limits (currently Rs. 1 crore for businesses and Rs. 50 lakh for professionals) are required to undergo a tax audit conducted by a Chartered Accountant. The tax audit report needs to be filed along with the income tax return.

  6. Transfer Pricing Audit: Businesses involved in international transactions are required to undergo a transfer pricing audit to ensure that transactions with related parties are at arm's length.

  7. Compliance with Tax Notices: Taxpayers are required to comply with any notices issued by the Income Tax Department, such as scrutiny notices, assessment notices, or demand notices.

  8. Maintaining Records: Taxpayers are required to maintain books of accounts and other financial records as prescribed by the Income Tax Act.


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PAN CARD POWER BILL NOT MORE THAN 2 MONTHS OLD ADHAR CARD BANK STATEMENT

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INCOME TAX RETURN OF PROPRIETORSHIP ITR 3

ITR 3 AND ITR 4

ITR - 3

The ITR 3 Form is crucial for taxpayers earning income from a business or a profession. It plays a vital role in the Income Tax Department's efforts to collect comprehensive financial information, ensuring tax compliance.

The ITR Form 3 can be used for filing an income tax return by individuals or Hindu Undivided Families (HUFs) who meet the following ITR 3 applicability criteria:

  • Directorship: The taxpayer is a director of a company or is engaged in a business.
  • Residential Status: The taxpayer's residential status can be either resident or non-resident of India.
  • Pension Income: The taxpayer is receiving income from a pension.
  • House Property Income: The taxpayer is earning income from house property.
  • Investments in Unlisted Equity Shares: The taxpayer has investments in unlisted equity shares.
  • Income Under 'Profits and Gains of Business or Profession: The taxpayer's income is taxable under the category of 'profits and gains of business or profession.' This can include income elements such as salary, interest, commission, bonus, or remuneration.

Additionally, taxpayers can use the ITR Form 3 if their total income includes the following:

  • Income from a single-house property or multiple-house property.
  • Income from activities like lotteries, betting on races, and other legal forms of gambling as per Indian law.
  • Income from short-term or long-term capital gains.
  • Income earned from a business or profession conducted under a proprietorship firm owned by the individual or a Hindu Undivided Family (HUF).
  • Income earned from foreign assets.

Meeting these eligibility criteria allows individuals and HUFs to use the ITR Form 3 for filing their income tax returns, provided that their income falls into the specified categories mentioned above.

An individual or Hindu Undivided Family (HUF) earning income as a partner of a partnership firm engaged in a business or profession is not eligible to file ITR-3. In such cases, they should file ITR-2 instead.

The due date for filing the ITR Form 3, which is the income tax return, varies depending on whether the case is an audit case or a non-audit case for different assessment years:

  • For Assessment Year 2023-24:
  • Non-audit Cases: The due date is July 31, 2023
  • Audit Cases: The due date is October 31, 2023
  • These dates are subject to change by the income tax authorities, so it's essential to stay updated with any revisions or extensions of the due dates.

The penalties for late filing of the ITR3 form in India are as follows:

If you file your return after the due date but before December 31 of the assessment year:

  • A late filing fee of ₹ 5,000 may be levied.
  • If you file your return after December 31 of the assessment year:
  • A late filing fee of ₹ 10,000 may be levied.

It's important to note that the late filing fee may vary based on the taxpayer's total income and other factors. Additionally, if your total income is less than ₹ 5 lakh, the maximum late filing fee is capped at ₹ 1,000. Therefore, it's advisable to file your ITR form 3 on time to avoid these penalties and any potential legal consequences.

To file your income tax return (ITR) on Go legal Filing for ITR-3, the following documents are needed.

  • PAN (Permanent Account Number)
  • Aadhaar Card
  • Bank account details (account number and IFSC code)
  • Form 16, if applicable (for salaried individuals)
  • Details of your investments
  • Books of accounts (if you have a business or professional income)
  • Having these documents ready will make the ITR filing process smoother and more efficient.

The ITR 3 Form is structured into six sections, each serving a distinct purpose:

  • General Information: In this segment, you are required to provide your personal particulars, including your name, address, date of birth, email address, and PAN number. Additionally, you'll specify the assessment year and indicate whether you are filing your return as a self-assessment.
  • Income Details: This section necessitates the disclosure of your income from various sources, encompassing salaries, pensions, annuities, family pensions, and other avenues. You will also calculate your total taxable income and the corresponding tax liability.
  • Deductions and Taxes Paid: In this category, you have the opportunity to claim deductions permitted under various sections of the Income Tax Act. Additionally, you must report the taxes you have paid during the financial year, such as advance tax and self-assessment tax.
  • TDS/TCS Credit: This division mandates the inclusion of details regarding any Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) credits that are applicable to you.
  • Verification and Declaration: In this final section, you are tasked with validating your return through either a digital signature or by dispatching a physical copy of the signed return to the Centralized Processing Center (CPC). Moreover, you must make a declaration affirming that all the information furnished in the return is accurate and true to the best of your knowledge.

Go legal Filing is your ideal partner for ITR3 Form filing, offering expert guidance, accuracy, timely filing, documentation assistance, and a secure platform. We simplify the process, ensuring your compliance with tax regulations.

Filing your ITR-3 form accurately and on time is crucial. IndiaFilings makes it hassle-free with expert guidance, a user-friendly platform, document management, deduction optimization, review and verifying ITR 3 applicability, secure filing, timely reminders, and post-filing support.

Let IndiaFilings assist you in filing your ITR-3 form, allowing you to focus on your business and financial well-being. Contact us today for expert assistance in meeting your tax obligations and ensuring a smooth filing experience.






INCOME TAX RETURN OF PARTNERSHIP

ITR 3, ITR 4 AND ITR 5


INCOME TAX RETURN OF A PRIVATE LTD COMPANY

ITR 6


STATUTORY AUDITS UNDER COMPANIES ACT, 2013

STATUTORY AUDITS UNDER COMPANIES ACT, 2013

Auditing Requirements of Private Limited Company

After registering a private limited company, there are many compliances that the company has to follow under the Companies Act, 2013 (‘Act’). One such mandatory requirement a company must follow is to conduct an audit irrespective of its turnover or nature.

A company audit means the inspection of its books of account to ensure that they are correct. The company must appoint an auditor to conduct the audit. The objective of an audit of the company’s financial statements is to allow the auditor to express his/her opinion. 

The auditor will have to check various books of accounts, vouchers and bills to check if they are accurate and properly maintained. The audit of a private limited company is an annual compliance requirement under the Act and Company Law Rules.

Types of Audit Of A Private Limited Company

There are different types of audits of a private limited company carried out for various purposes. A few important types of audit of a private company are as follows:

Statutory Audit

The statutory audit is a mandatory audit that every private limited company must conduct irrespective of its profit or turnover. A company incurring loss must also conduct a statutory audit. Every private limited company must compulsorily get their annual accounts audited each financial year as per the Act and the Companies (Accounts) Rules, 2014. 

The objective of the statutory audit is to determine if a company is providing an accurate representation of its financial situation after examining the information in the books of account, bank balance and financial statements.

Internal Audit

The internal audit of the private limited company is conducted as per the suggestion of its internal management. The Act and the Companies (Accounts) Rules, 2014, provides that the prescribed companies must appoint an internal auditor to conduct an audit of their activities and functions. The prescribed private limited companies that need to conduct internal audits are: 

 

 

·        Private companies having a turnover of Rs.200 crore or more during the previous financial year

·        Private companies having outstanding borrowings or loans from Public Financial Institutions or banks exceeding Rs.100 crore or more

Internal audits are done to check the status of the company’s finances and analyse its operational efficiency. They help the internal management review the finances and make the required changes to increase efficiency in its operations.

Cost Audit

The Companies (Cost Records and Audit) Rules, 2014 prescribes that the following private limited companies must perform cost audit:

·        Private limited companies engaged in the production of goods or providing services listed in table 3(A) of the Companies (Cost Records and Audit) Rules and having:

·        An annual turnover in the previous financial year of Rs.50 crore or more from all its services or products

·        An aggregate turnover of the individual service or product of Rs.25 crore or more

·        Private limited companies engaged in the production of goods or providing services listed in table 3(B) of the Companies (Cost Records and Audit) Rules and having:

·        An annual turnover in the previous financial year of Rs.100 crore or more from all its services or products

·        An aggregate turnover of the individual service or product of Rs.35 crore or more

Appointment of an Auditor

Statutory Auditor 

Every private limited company must appoint its first auditor to conduct the statutory audit of the company within 30 days from its registration date. At the company’s first Annual General Meeting (AGM), the shareholders will confirm the appointment of the first auditor who will hold the office of auditor for a term of five years. The company can appoint only an independent practising Chartered Accountant (CA), CA firm or LLP with the majority of partners practising in India as its auditor.

Internal Auditor

The company’s internal audit can be performed by the company’s internal staff or an independent party. The internal auditor must either be a CA, cost accountant, or such other professional as the board decides. The internal auditor can even be the company employee.

Cost Auditor

The private limited companies that must conduct the cost audit as per the Companies (Cost Records and Audit) Rules, 2014 must appoint a cost auditor within 180 days of the commencement of the financial year. The company can appoint only a person who is a cost accountant in practice to conduct the cost audit. A cost accountant in practice means a person who fits the definition provided in Section 2(1)(b) of the Cost and Works Accountants Act, 1959 and includes a firm or LLP of cost accountants.

Due Date Of Private Limited Company Audit

Statutory Audit: The statutory audit must be done before the AGM of the company is conducted. The statutory auditor needs to submit the audit report to the board before the conduct of AGM. The audit report should be attached with the company’s financial statements and filed with the ROC. The due dates are as follows:

·        The audit report must be attached to Form AOC-4 (financial statement) and filed with the ROC within 30 days of the AGM.

·        The form MGT-7 (annual return of the company) must be filed within 60 days of the AGM.

·        The due date for holding AGM is before or on 30 September every year.

Internal Audit: There is no due date for conducting the internal audit. The internal auditor is required to submit a report to the board before the conduct of AGM. The auditor's report must be filed together with Form AOC-4.

Cost Audit: The cost audit report is to be submitted to the board within 30 September every year in form CRA-3. After receiving the cost audit report, the board will consider and examine the cost report. The board must submit the cost audit report with relevant information to the Central Government within 30 days of receiving the cost audit report in form CRA-4.

ROC Forms for Audit Requirements

The ROC forms that a private limited company must file in relation to the audit requirements are as follows:


   
FORMSPURPOSE OF FORM
Form ADT-1
Appointment of company auditor
Form AOC-4
Annual filing of company financial statements 
Form MGT-7
Filing of company annual return 
Form CRA-2
Appointment of cost auditor
Form CRA-3
Submission of cost audit records to the board
Form CRA-4
Filing of cost audit report

Non-filing of the above forms with the ROC and non-submission of the statutory audit report and cost audit report will attract a penalty. Thus, a private limited company must mandatorily conduct the statutory audit. They also need to conduct the internal audit and cost audit when they fulfil the requirements mentioned in the respective rules.






INCOME TAX AUDIT OF COMPANY

TAX AUDIT OF A PRIVATE LIMITED COMPANY


INCOME TAX RETURN OF PROPRIETORSHIP ITR 4

ITR - 4


 ITR-4 Return Filing

The ITR-4 Form, commonly referred to as the Sugam form, is specifically designed for taxpayers who have opted for the presumptive income scheme outlined in Section 44AD, Section 44ADA, and Section 44AE of the Income Tax Act. It is mandatory for eligible taxpayers to complete and submit this form.

However, for businesses with an annual turnover exceeding Rs. 2 Crores, ITR-3 should be used. Additionally, depending on individual circumstances, ITR-5 may also be required. IndiaFilings offers expert assistance for the ITR 4 income tax filing. Contact our experts today to ensure a smooth and accurate filing process.

Who is Eligible to file Form ITR 4 Form?

ITR 4 Form is the Income Tax Return form designed for individuals, Hindu Undivided Families (HUFs), and firms (excluding Limited Liability Partnerships or LLPs) who choose to utilize the presumptive income scheme as per Sections 44AD, 44ADA, and 44AE of the Income Tax Act.

What is a Presumptive Taxation Scheme?

The presumptive taxation scheme is designed to simplify tax compliance for certain individuals and businesses.

Under Section 44AA of the Income Tax Act, individuals and businesses engaged in specific activities are typically required to maintain detailed accounting records. However, Sections 44AD, 44ADA, and 44AE offer relief to small taxpayers by allowing them to estimate their Income at prescribed rates, reducing the burden of maintaining extensive financial records. Here's a breakdown of these schemes for users of ITR4:

Section 44AD

This scheme allows Resident Individuals, Resident Hindu Undivided Families (HUFs), and Resident Partnership Firms (excluding Limited Liability Partnerships) engaged in certain businesses to calculate their Income on an estimated basis, provided they meet specific conditions.

Section 44ADA

Resident individuals in India who are professionals in fields specified under Section 44AA(1) can use this scheme to estimate their professional Income, subject to certain conditions.

Section 44AE

This scheme is applicable to individuals, HUFs, Firms (excluding Limited Liability Partnerships), and other residents or non-residents engaged in the business of plying, leasing, or hiring goods carriages. They can estimate their Income under this scheme, provided they own not more than ten goods carriages during the previous year.

Eligibility Criteria for Filing SUGAM (ITR-4) Form

To qualify for using the ITR-4 SUGAM form, the taxpayer must meet the following criteria for the assessment year:

Total Income: The total Income should not exceed Rs. 50 lakh.

The Income should be derived from any of the following sources:

·      Income from Salary or Income from Pension.

·      Income from One House Property.

·      Interest income and/or Income from family pension taxable under Other Sources.

·      Income from a business, which is computed on a presumptive basis (Gross Turnover up to Rs. 2 crores).

·      Income from a business, computed on a presumptive basis (Income from goods carriage up to ten vehicles).

·      Income from a profession, computed on a presumptive basis under Section 44ADA (Gross receipt up to Rs. 50 lakh).

Important Notes:

When Income is computed on a presumptive basis under sections 44AD, 44AE, or 44ADA, it is presumed to have been calculated after accounting for all allowances, depreciation, losses, or deductions as per the Income-tax Act. However, individuals incurring losses after applying the proviso to sub-section 3 of Section 44AE are required to file ITR-5.

If the taxpayer needs to combine the Income of another person, such as a spouse or minor child, with their own Income, the SUGAM form can only be used if the additional Income falls within the specified income categories mentioned above.

Non-Applicability of ITR- 4 SUGAM Form

The following categories of taxpayers do not fall under the ITR 4 applicability criteria:

·      Directors of a company

·      Individuals who have held unlisted equity shares at any point during the previous year.

·      Taxpayers with assets, including financial interests, in any entity situated outside India.

·      Individuals who have signing authority in any account located outside the country.

·      Persons with Income from sources outside India.

Furthermore, the SUGAM form cannot be used by individuals who have Income of the following types during the previous year:

·      Profits and gains from business and professions that are not required to be computed under Section 44AD, 44ADA, or 44AE of the Income-tax Act. This includes Income from agency business, speculative business, commission, or brokerage income.

·      Income from more than one house property.

·      Capital gains.

·      Income derived from winning a lottery.

·      Engagement in the activity of owning and maintaining racehorses.

·      Income is subject to taxation at special rates under Section 115BBDA or Section 115BBE of the Income Tax Act.

·      Income that needs to be apportioned according to the provisions of Section 5A.

·      Agricultural Income exceeding Rs. 5,000.

·      Additionally, this return form is not suitable for individuals who have any claims related to loss, deductions, relief, or tax credits of the following nature:

Losses incurred in the past or losses intended to be carried forward under the category of "Income from house property.

·      Claims for relief under Section 9A, Section 90, or Section 91 of the Income Tax Act.

·      Loss under the Income from other sources.

·      Claims for deductions under Section 57, except for deductions related to family pension.

·      Claims for the credit of tax deducted at source in the hands of any other person.

Structure of the ITR 4 Form

The ITR 4 Form is structured into four parts for easy reporting of your Income and tax-related information:

Part A: General Information

This section of ITR 4 form includes your personal details such as name, gender, PAN number, date of birth, income tax ward, address, email address, and mobile number.

Part B: Gross Total Income from the 5 Heads of Income

In this part, you report your Income from various sources categorized into five heads: Income from business, Income from salary or pension, Income from house property, and Income from other sources. By adding all these incomes together, you calculate your gross total Income.

Part C: Deductions and Total Taxable Income

Here, you list the deductions allowed under various sections of the Income Tax Act, such as 80C, 80D, 80E, and others. These deductions are subtracted from your gross total Income to arrive at your total taxable Income.

Part D: Tax Computation and Tax Status

This section involves detailed calculations related to your tax liability. It includes factors like surcharge, relief under section 89, interest under section 234B and 234C, advance tax paid, TCS collected, refund, rebate under section 87A, cess on tax payable, and more. It computes your total tax payable, and if the total tax and interest exceed the taxes paid, it calculates the balance tax due.

For individuals reporting Income from business and opting for the presumptive income scheme under Section 44AD or 44AE, additional information needs to be provided:

·      Schedule IT: Statement of advance tax and self-assessment tax payment.

·      Schedule TCS: Statement of taxes collected at source (TCS).

·      Schedule TDS1: Statement of tax deducted at source on salary.

·      Schedules TDS2: Statement of tax deducted on Income other than salary.

·      Depending on your tax situation, you may also need to fill out supplementary schedules like TDS1, TDS2, IT, and TCS as required.

After completing all the necessary sections and schedules, you must verify and sign the return before submitting it. This ensures the accuracy and legitimacy of the information provided.

Annexure-less Return Form

When using the SUGAM return form, taxpayers are not required to upload any additional documents, including TDS certificates.

Why Choose Go Legal Filing for ITR4?

·      Expert Guidance: Benefit from the expertise of our professionals, who will guide you through the ITR 4 income tax filing process, ensuring accuracy, verifying ITR 4 applicability, and complying with tax regulations.

·      Convenience: Enjoy the ease and convenience of our online platform, allowing you to file your ITR4 from the comfort of your home or office. Say goodbye to time-consuming queues and paperwork.

·      Accuracy: Our rigorous review process guarantees that your ITR4 is free from errors, reducing the risk of potential tax-related issues in the future.

·      Timely Filing: We understand the significance of filing your taxes on time. With Go Legal Filing, you can be confident that your ITR 4 income tax form will be filed promptly, helping you avoid penalties and meet tax deadlines.

Contact Go Legal Filing today, and our dedicated team will assist you at every stage of the process.