Budget 2020 may do away with requirement of Tax Audit
As per news Sources, it has been known that one of the proposal for Budget 2020 is doing away from requirement of Tax Audit as per section 44AB of Income Tax Act 1961. This proposal has come in picture in wake of ease of doing bussiness.
As per this section, Every person carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year, shall get his accounts of such previous year audited by a Chartered accountant.
Further, Persons covered under Sections 44AD, 44AE, 44AF, 44BB and 44BBB, who are declaring lower bussiness profits from specified percentage are also required to get their accounts audited.
Proposal against Tax Audit – What does the business community says
- The required information can be furnished by the assessee himself in the ITR. There are enough penal consequences if the taxpayers do not comply with the provisions of the Income Tax Act or submit the false or wrong information. Taking the information from the auditor can be compensated by the same information from the assessee himself.
- The most of the column in the audit reports are just compilation of the information only which assessee is otherwise also required to furnish in the ITR.
- Audit is an additional compliance burden on the assessee.
- That the quality of audit reports have been degrading and section 271 J was introduced to ensure that the audit report do not contain wrong information and errors.
- Audit provision u/s 44AB was introduced when the accounting system was manual and the third party audit was ensuring the authenticity of the books of accounts and records thereto. Now, the books mostly are computerized and the third party information is also available in digitalized format.
In line of these proposals, the central government may abolish section 44AB of Income Tax Act, 1961. This is indeed a bad news for Chartered Accountant Community as Income Tax Audit is a important part of CA practice.
What do you say Do share your opinion!
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