Budget 2020 may do away with requirement of Tax Audit


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.

Budget 2020 may do away with requirement of Tax Audit
Budget 2020 may do away with requirement of Tax Audit

Proposal against Tax Audit – What does the business community says

  1. 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.
  2. 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.
  3. Audit is an additional compliance burden on the assessee.
  4. 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.
  5. 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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8 Comments

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  1. Budget 2020 may Abolish Tax Audit

    As per news Sources, it has been known that one of the proposal for Budget 2020 is for removal 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.

    Budget 2020 may do away with requirement of Tax Audit
    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 Economy due to lack of awareness and knowledge about Taxation. Further bad news for IT authority for heavy notice and improper records in improper manner. “Bhaiya Chalni hataoge to kankar to muh m aayega”

  2. It is good to hear the proposal of abolishing the tax audit small and medium businessmen will have the advantage of increasing their turnovers. All the information which INCOME TAX wants can be filled in the I T Returns itself. Small tax consultants like me can dispense with CAs for getting their signature

  3. It is really a bad news for CA Profession. In the name of ease of doing business, it is not wise on the part of Central Government to do away with Tax Audit. Because of some CAs the Govt. should not have a biased opinion of the effectiveness of Tax Audit. Due weigtege should be given on genuine Tax Audit Reports which CAs certify on the basis of indepth audit and eases the burden on the Tax officials. Am not in favour of abolition of Tax Audit.

  4. In fact a good move towards ease of doing business. However considering the ground level situation instead of altogether abolishing tax audit, both GST and Income Tax audit needs to be covered in single form/report. The information which is not possible to verify from other sources of Government/authority then such information which is to be culled out of books is to be asked in the Audit Report.

    1. its a very bold and good decision if the Section 44-AB abolish by Modi Govt. Congratulation to Honble finance minister. Even at the time of Asstt. proceeding ,assessing officer not believing on Audit report and they make their independent enquiry through books of accounts. Audit provison is only time consuming and extra unnecessary compliance burden on tax payers.

  5. Sir It is good news for tax consultants. In my second opinion The turnover for tax audit may be increased to 5crores for business and 2.5 crores for professionals.This amendment will result in more taxes to the government and the suppression of turnover will not be there.

  6. Propasl to remove section 44AB for the sake of ease of doing business not correct. There are ways to help businesses community in Govt approvals Speed up, giving needbase finance with in time ,etc. If you remove this section again encouraging no accountability of correctness of turnover and profitability. Govt loose revenue and encouraging black money. Turnover limit can be fixed and revised based on commodity catagory given in GST Act. Some sort of verification of books required which will help authorities do e- processing.