A Necessary Guide to Income Tax Audit with Vital Documents

A Quick Guide for Income Tax Audit with Required Documents

To simplify the income tax audit procedures, individuals having business or professional income are required to maintain specific documents that ensure accurate reporting and prevent tax evasion. This process aids the government in revenue generation and scrutinizing intricate financial transactions.

The following crucial documents are required-

Journal Notebook

This record becomes mandatory when accounts follow the mercantile accounting system.

Cash Notebook

This document records daily cash inflows and outflows, maintaining a cash balance at the conclusion of a designated period, typically not more than a month.

Credit Debit Ledger

All credits and debits are documented in this ledger.

Duplicate Copies of Invoices and Receipts

In cases where invoices or receipts amount to Rs. 25,000 or above, it's mandatory to keep duplicate copies of issued invoices and given receipts. If expenses are below Rs. 50 and invoices or receipts aren't generated, signed payment vouchers should be retained.

Original Receipts and Bills

Original invoices and receipts must be kept to substantiate incurred expenses. If the cash book provides complete expenditure details, payment vouchers are adequate.

Furthermore, these financial documents are required:

Trial Balance: Gives a brief overview of ledger balances.

Benefit and Deficit Statements: Summarize income and expenses over the fiscal year.

Account Sheet: Displays assets, liabilities, and equity.

Opting for presumptive taxation under Section 44D or 44ADA might exempt individuals from maintaining books of accounts and audits if certain conditions are fulfilled. However, asserting profits below the specified limit could necessitate bookkeeping and auditing.

For Medical Tax Practitioners, Along with the Aforementioned Requirements:

Daily Case Register: In Form No. 3C.

Inventory Records: As of the year's first and last days.

Accounting software can simplify this process by utilizing a ledger to automatically generate essential accounts on grounds of entered debit and credit transactions.

Auditors Fill out Specific Forms:

Income Tax Form 3CD: For audits under various laws (Income Tax Act, Companies Act, etc.).

Income Tax Form 3CA: When a company undergoes audits mandated by other laws.

Income Tax Form 3CB: For individuals exclusively audited for income tax.

This list is not absolute; additional forms might be needed based on specific laws applicable to taxpayers.

Comments

Why Small Firms Should Consider Gen Payroll Software?

Businesses in this competitive era would be required to manage the payroll. Payroll software has multiple operations such as paying employees, following tax laws, managing employee benefits, filing important documents, and keeping accurate records. Businesses that manage tasks manually or with spreadsheets can result in inappropriate compliance and issues, wasting time in doing operations. Gen Payroll software arrives to manage payroll with accuracy and resolve the issues that come therein. The merits and demerits of Gen Payroll software are mentioned below. Gen Payroll Software Gen Payroll is a payroll management software made by SAG Infotech . It eases and automates the process of payroll. The software’s features are tracking employee attendance, calculating salaries, ensuring compliance with laws like PF (Provident Fund), ESI (Employee State Insurance), and TDS (Tax Deducted at Source), as well as generating payslips. Businesses, whether small or large, can use this software. ...

How ITR Software Assists Individuals in Filing Tax Returns

Every assessee's process of income tax return (ITR) filing is significant, as it contributes to Indian's economy. The Income Tax Department has made efforts to facilitate this approach in recent years, but numerous people still see themselves steering a difficult financial system, multiple tax deductions, miscellaneous exemptions, and changing tax laws. This complexity can turn what must be an easy task into a significant challenge. In this context, income tax software evolves into an important partner, presenting a useful variety of accuracy, efficiency, and reassurance. The software enables return filing that permits taxpayers to handle their financial responsibilities when complying with the law. 1. Accurate Tax Calculations An incorrect income tax calculation of taxes could result in messages from the Income Tax Department or missed refunds. The tax software helps in finding taxable income and tax deductions that you may be allowed, like insurance or home loans. The co...

Major GST & Filing Updates 2025: Must-Know for Businesses

In 2025, India made amendments to its Goods and Services Tax (GST) system, which was introduced in 2017. The primary purpose of this amendment is to ensure that businesses and individuals comply with tax regulations, reduce tax fraud, and streamline tax management through the use of technology. The GST Network (GSTN) and the Central Board of Indirect Taxes and Customs (CBIC) have implemented new processes and software systems to streamline the tax return filing procedure for individuals. These improvements aim to simplify the tax filing process, minimise errors, and ensure that all taxpayers, as well as tax professionals, fulfil their tax obligations responsibly. Updates for the same have been given, and the impact they have had on business, accounting, and GST software providers. GSTR‑3B Locking Mechanism Introduced from July 2025 In 2025, an amendment was introduced regarding how businesses report their taxes using GSTR-3B. Now, the details of sales made by businesses, referred to as...

SAG Infotech: Need Tax Software (Call 0141-4072000)

Search This Blog