TAX AUDIT

Tax Audit

Audit refers to an official inspection or unbiased investigation of a firm’s or companies financial statements or reports as well as the production of reports, typically by an autonomous body. There are various types of audits under different laws such as company audit, statutory audit, cost audit, stock audit, etc. Similarly, an audit compensated under Income Tax is termed ‘Tax Audit’. A tax audit is an inspection or study of accounts of any firm or trade executed by taxpayers. It eases the income estimation for filing the ITRs.

Objectives of Tax Audit

Tax audits are conducted with a few predetermined objectives which are as follows:

  • To ensure total maintenance and correctness of records of tax accounts of the party along with the approval on the same by the auditor.
  • To report important information such as tax shrinkage, agreement of various provisions of income tax law, and so on.
  • To report the observations or discrepancies caught by tax auditor after a methodical examination of the records of account
  • To enable tax officials ensure the accuracy of income tax returns filed by the firm or business.
  • To estimate and verify the total income and ease the claim for deductions.
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