Skip to main content

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

Popular posts from this blog

GST Collection of August 2024 Reaches INR 1.75 Lakh Crore

Concerning the financial front, gross GST collections for August 2024 show a strong 10% growth, reaching approximately ₹1.75 lakh crore.  This surge, driven by robust domestic consumption, led to a 9.2% increase in GST revenues from domestic transactions to approximately ₹1.25 lakh crore. Revenue from imported goods also saw a substantial rise of 12.1%, totalling ₹49,976 crores.  Despite the overall growth, there was a slight decrease from the ₹1.82 lakh crore collected in July 2024 when compared month-on-month. However, industry experts remain optimistic.  They point out that the 10% year-on-year increase at the commencement of the festive season is a strong indicator of sustained and potentially growing consumption in the upcoming months. The government's ongoing efforts to simplify the GST process, especially through measures such as adjusting rates to lower working capital expenses, have been positively acknowledged.  This dedication is also evident in the ₹...

Gen Online Payroll Software for Small Business in India

In today's digital world, every person and businessperson works very hard to manage data manually, which can be a time-consuming and labour-intensive task, particularly when information needs to be constantly updated and verified. Likewise, managing large volumes of employee-related data can be a challenging and overwhelming task for HR professionals. Therefore, to address the workload and complexity of these tasks, the IT sector has developed Payroll software. In recent years, we have seen a huge growth in the number of Payroll software options. Yes, there are many types of HR Payroll software available in the Indian market at present. If you're looking for a reliable and popular payroll software option, you can choose Gen Online Payroll software, brought to you by SAG Infotech.  Whether the business is medium or small, Gen Payroll software can make managing numerous important tasks of a human resources manager hassle-free. The Online Payroll software assigns a unique ID t...

GST: Assessees Must E-file Their Tax Returns by 30th Nov 2024 to Claim Pending ITC

If you are a GST-registered assessee you need to consider the due date to avail of any due Input tax credit or revised errors/omissions for the FY 2023-24 is November 30, 2024, via submitting the appropriate GST forms. Missing the due date can produce an outcome of a financial loss as the unclaimed ITC could not be used to offset your output tax obligation. What is the Method to Claim the Due ITC or Revised GST Errors for the FY 2023-24 It was stressed by the tax experts that the GST law specifies the procedure to claim the due ITC via GSTR-3B and amend errors in GSTR-1. Filing GSTR-1: Errors induced in GSTR-1 can be rectified by making amendments in the following GSTR-1 filings. Filing GSTR-3B: Via the GSTR-3B return the obligated ITC can merely be claimed. November 11, 2024, was the due date to submit the GSTR-1, and November 20, 2024, is for GSTR-3B without any penalty. Both the outcomes can be provided till November 30, 2024, as per the late fees. R...