Tax Audit Guidance Note by ICAI release: Note also clarifies Clause 44 on GST Reporting

Tax Audit is applicable since the year 1984. The provision of Section 44AB requires providing inputs useful for completing assessment of income. Audit Report in Form No. 3CA / 3CB and particulars in Form No. 3CD is required to be issued after examination of financial statements and the related record. Most of the chartered accountants in practice are conducting Tax Audit and those in service are instrumental in compilation of details therefore.

Section 44AB of the Income-tax Act contains provisions pertaining to the tax audit under the Income Tax Audit. A tax audit is an examination of a taxpayer’s books of account and other relevant record. The examination is conducted to ensure that during the tax audit, the person responsible for issuing the tax audit report is expected to verify the financial statements based on which income computation is based are true and fair and particulars furnished in form No. 3CD are true and correct. A tax audit is a measure which is initiated to curb incorrect tax practices. Tax audit is allowed to be carried out only by the practicing-chartered accountants.

This, being onerous responsibility, there was a need for offering guidance on conduct of audit and issuing of tax audit report. To address this requirement the Direct Taxes Committee of the ICAI issued “Guidance Note on Tax Audit u/s 44AB of the Income-tax Act, 1961”. This is a flagship publication of the DTC. The Guidance Note provides guidance to members for conduct of tax audit, making of report and related matters. This publication was last revised in the year 2014. Thereafter, in the year 2018, a publication titled ‘Implementation Guide w.r.t. Notification No. 33/2018 dated 20.07.2018 effective from 20.08.2018’ was released by the DTC of ICAI.

There have been substantial changes in provisions of law and clauses included in the particulars to be furnished in the Form No. 3CD since the last publication.
The DTC recognising this fact decided to bring out this Eighth edition of the Guidance Note. It has been decided to update and incorporate all the changes in the desired clauses which has been taken place in the tax laws, notifications, circulars etc. after due deliberations amongst eminent experts and suggestions received from various stakeholders.

Click here to Download the Guidance Note