34 Tax Audit Checklist

8/12/2019 34 Tax Audit Checklist

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Tax Audit Checklist

Clause Clauses under Form 3CD Step recommended WP Ref By

FR! 3CD

P A R T " A

1 Name of the Assessee #

2 Address # Check the address as per

Income Tax record and obtain

any evidence available in this

regard.

If there is any change in the

address till the date of si$nin$

of the report% check that newaddress is mentioned in orm

!C".

! #ermanent Acco$nt N$mber % &erify from the #A Card or any

other doc$ment.

' (tat$s % Company)irm)A*# etc.

+ #revio$s ,ear -nded % !1starch

/ Assessment ,ear % 200

P A R T & B

3 4a5 If firm or Association of #ersons6

indicate names of partners)members and their profit sharing

ratios.

% &erify from the #artnership

"eed)A*# agreement.

4b5 If there is any change in the

partners or members or in their

profit sharing ratio since the lastdate of the preceding year6 the

partic$lars of s$ch change.

% do

'ote% In case of any change attach

copy of partnership deed with theIncometax ret$rn if re7$ired.

8 4a5 Nat$re of b$siness or profession

4if more than one b$siness orprofession is carried on d$ring the

previo$s year6 nat$re of everyb$siness of profession5.

% In respect of each class of

b$siness6 it is necessary to

mention whether assessee isman$fact$rer6 dealer6 service

provider6 etc.

4b5 If there is any change in the

nat$re of b$siness or profession6the partic$lars of s$ch change.

% 9eview a$dited :alance (heet

and other relevant records toascertain whether there is any

apparent change in the b$sinesscarried o$t by the assessee6

which may need to behighlighted $nder this cla$se. In

partic$lar6 examine whether any

b$siness or activity has beendiscontin$ed6 any new activity

has been commenced or whether

#age 1 of 2;


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Tax Audit Checklist


there has been any expansion ofthe existing b$siness.

Additional activity started with

in the same b$siness carried on

by the assessee does not meanchange in nat$re of b$siness orprofession e.g. if the assessee is

in the b$siness of man$fact$ring

shirts also starts man$fact$re oftro$sers.

*btain management

representation.

or change in b$siness besides


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c5 "isclos$re of significantacco$nting policies and

changes in s$ch policieswith the res$ltant impact6 if

material on acco$nts ofyear of change or

s$bse7$ent year.d5 "isclos$re of prior period

and extraordinary items orchange in acco$nting

estimate in #rofit @ ive appropriate note)working

4existing note if any needsamendment5.

12 A >ive the following partic$lars ofthe capital asset converted into

stockintrade%

&erify any fixed asset convertedinto stock in trade. >ive the

necessary details.

4a5 "escription of capital assetD4b5 "ate of ac7$isitionD

4c5 Cost of ac7$isitionD4d5 Amo$nt at which the asset is

converted into stockintrade

1! Amo$nts not credited to the profit

and loss acco$nt6 being

%

4a5 The items falling within thescope of section 28D

% -n7$ire whether any item of

#age ' of 2;


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income chargeable $nder G#rofitand >ains of :$siness of

#rofessionB has not been creditedto the profit and loss acco$nt.

(ection 28 covers % #rofits and gains of

b$siness or profession Compensation received on

termination ofemployment6 agency6 etc.

Income of trade orprofessional or similar

association from specific

services to members -xport incentives

#er7$isites received d$ring

the co$rse of b$siness

Interest6 salary6 bon$s6rem$neration6 etc. receivedby a partner from firm6

which is allowable $ndersection '0:.

Amo$nt received $nderkey manBs ins$rance policy

Th$s6 if any s$ch item is taken to

any acco$nt directly in the

:alance (heet6 it will be covered

$nder this cla$se.

9eview the a$dited sched$les

and financial statements to

determine whether s$ch incomehas been credited directly to

reserves or retained as a credit$nder the head Gc$rrent liabilities

and provisionsB or any otherhead.

*btain management

representation.

4b5 The proforma credits6drawbacks6 ref$nds of d$ty

of c$stoms or excise6 orservice tax6 or ref$nd of

sales tax or val$e added taxwhere s$ch credits6

drawbacks or ref$nds areadmitted as d$e by the

a$thorities concernedD

% *btain a sched$le indicating the

details of the following claims

admitted as due (y the

concerned authorities (ut not

credited to the profit and lossaccount) The sched$le sho$ld

also indicate the year in which it

was admitted as d$e. #roforma credits

"$ty drawbacks

-xcise)C$stom d$tyref$nds

(ales tax ref$nds (ervice tax ref$nds

&AT ref$nds

*btain an $nderstanding of the

relevant acco$nting policies

Hrefer cla$se 114a5. Agree the sched$le with the

#age + of 2;


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claim papers and relevantcorrespondence files. $rther

ens$re that the claims have beenadmitted as d$e by the concerned

a$thorities. 9eview the relevant assessment

orders to determine whether any

s$ch claims are d$e.

*btain management

representation.

4c5 -scalation claims accepted

d$ring the previo$s yearD

% *btain a sched$le indicating

details of escalation claimsaccepted d$ring the year b$t not

credited to the profit and lossacco$nt. The sched$le sho$ld

also indicate the year in which itwas accepted as d$e. Certain

instances of escalation claimsmay be in relation of contract

with government c$stomers andother sales to c$stomers having

escalation cla$se in contracts.



Hrefer cla$se 114a5.

Agree the claims accepted with

contracts and other relevant

doc$ments and ens$re that

claims have been accepted by theconcerned a$thorities.

*btain management

representation.

4d5 Any other item of incomeD % -n7$ire whether any item of

income chargeable to tax $nder

heads of income other thanG#rofits and >ains of :$siness or

#rofessionB has not been creditedto profit and loss acco$nt.

9eport all items of income which

are credited to expense heads

with a note that this has noimpact on the net profit.


and financial statements to

determine whether s$ch incomehas been credited directly to

reserves or retained as a credit

$nder the head Gc$rrent liabilities

and provisionsB or any otherhead.

*btain management

representation.

4e5 capital receipt6 if any. % -n7$ire whether any capital

receipt ha s not been credited to

#age / of 2;


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profit and loss acco$nt. orinstance6 capital receipts may be

in the nat$re of grants)s$bsidies6

Note% In case of noncompete fees

directly taken to reserves orcapital acco$nt report the

same in cla$se 1!4a5 also.

$rnish details of gifts received

d$ring the year.

(hare premi$m acco$nt.

(hare forfeit$re.

Capital reserve arising on merger

and demerger.

$rnish details of the amo$nt of

capital nat$re received or

receivable on transfer of

technology6 knowhow6 andpatent d$ring the financial year

and treatment thereof inacco$nts.



Hrefer cla$se 114a5.


and financial statements todetermine whether s$ch capital

receipt has been credited directlyto reserves or retained as a credit

$nder the head Gc$rrent liabilities

and provisionsB or any otherhand.

*btain management

representation.

1'

4a5

4b54c5

4d5

#artic$lars of depreciation

allowable as per the IncometaxAct61;/1 in respect of each asset

or block of assets6 as the case may

be6 in the following form %"escription of asset)block of

assets9ate of depreciation.

Act$al cost or written downval$e6 as the case may be.

Additions)ded$ctions d$ring theyear with datesD in the case of any

addition of an asset6 date p$t to$seD incl$ding ad$stments on

acco$nt of4i5 odified &al$e Added

Tax credit claimed andallowed $nder the

Central -xcise 9$les61;''6 in respect of assets

ac7$ired on or after 1st

arch6 1;;'6

4ii5 Change in rate of

% *btain a sched$le providing the

relevant details indicated in the

aforesaid cla$se in respect ofeach asset or block of assets. In

partic$lar6 ens$re that thefollowing have been incl$ded %

=ritten down val$e at thebeginning of the year.

Assets ac7$ired d$ring theyear have been segregated

between the assets p$t to$se for less than 180 days

and those $sed for morethan 180 days

"ed$ctions d$ring the year

represent the sale proceeds

of assets sold 9ates of depreciation.

4i5 9efer Appendix 1and Appendix 1A as

the case may be.4ii5 Appendix 1A is

applicable in respect of

#age 3 of 2;


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4e5

4f5

exchange of c$rrency6and

4iii5 ($bsidy or grant orreimb$rsement6 by

whatever name called."epreciation allowable.

=ritten down val$e at the end ofthe year.

#ower >enerationcompanies.

-ven in a case where thea$ditee has decided not to

claim depreciation in partor f$ll6 give f$ll details of

depreciation allowable.

9eview assessments completed)

prior year tax ret$rns to examinethe basis adopted in earlier years

for determination of depreciationallowable. Also ascertain

whether any aggressive positionshave been adopted by the clinet

and examine implicationsthereof.

or additions d$ring the year

ens$re that the classification ofassets or block of assets and the

rates of depreciation is in

accordance with there7$irements of the Income Tax

Act6 1;/1.

Agree the written down val$e at

the beginning of the year to theret$rn of income of the

immediately proceding year.

Agree the additions with the

a$dited sched$les and ens$re that

ade7$ate tests have been carriedo$t for Gact$al costB capitaliedand the dates the assets were Gp$t

to $seB. *btain a reconciliation tothe additions as per the a$dited

sched$les6 where necessary.Certain instances of s$ch

reconciling items may be capitalexpendit$re on scientific

research6 leaseholdimprovements6 etc.

-ns$re that the policies followed

are consistent with the

re7$irements of the Income TaxAct6 1;/1.

or assets ac7$ired d$ring the

year6 obtain an $nderstanding of

the acco$nting policy for thefollowing %

odvat credit -xchange fl$ct$ation

incl$ding in respect of

realied gains) losses6$nrealied gain)losses and

treatment of forward

exchange contracts.

($bsidy or grant orreimb$rsement.

#age 8 of 2;


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"epreciation capitalied.

Any expendit$re which does not

relate to ac7$isition of #@ b$tcapitalied as part of

preoperative expense. -ns$re capitalisation of interest

in respect of borrowed capital asper (ection !/4154iii5.

Agree the amo$nts incl$ded as

ad$stments on acco$nt of

modvat6 change in exchangerates and s$bsidy)grant with the

a$dited sched$les and otherrelevant s$pporting doc$ments.

Check the implications of section

'!A of Income Tax Act.

Agree the ded$ctions d$ring theyear with a$dited sched$les and

ens$re that s$ch amo$ntreconciles with the amo$nt

considered for determining theprofit)loss on assets sold6

discarded etc.

9eview the depreciation

comp$tation and ens$re thearithmetical acc$racy of the

depreciation allowable and thewritten down val$e at the end of

the year.

-ns$re that additionaldepreciation $)s !24ii54a5 iscompiled and red$ced from

="&.

1+ Amo$nts admissible $nder

sections4a5 !!A:

4b5 !!A:A

4c5 !!AC 4wherever applicable54d5 !+

4e5 !+A::4f5 !+AC

4g5 !+CCA4h5 !+CC:

4i5 !+"45 !+""

4k5 !+""A4l5 !+-J

4a5 "ebited to the profit and

loss acco$nt 4showing theamo$nt debited and

ded$ction allowable $ndereach section separately5D

4b5 not debited to the profit and

loss acco$nt.

%

%

%

*btain a sched$le giving details

of ded$ction admissible $nder

the relevant sections6 indicatingseparately6 the amo$nts debited

to profit and loss acco$nt and notdebited to profit and loss

acco$nt. The relevant sectionsare as follows%

!+ -xpendit$re on scientificresearch

!+CCA -xpendit$re by wayof payment to associations and

instit$tions for carrying o$tr$ral development

programmes.

!+CC: -xpendit$re by way

of payment to associations andinstit$tions carrying o$t

programmes of conversationof nat$re reso$rces.

!+" Amotisation of certainpreliminary expenses.

!+""

#age ; of 2;


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!+""A

9eview the comp$tation of the

amo$nts admissible $nder theaforesaid sections and agree the

same with the a$dited sched$les6financial statements and otherrelevant s$pporting doc$ments.

*btain management

representation.

1/ 4a5 Any s$m paid to an employee asbon$s or commission for services

rendered6 where s$ch s$m wasotherwise payable to him as

profits or dividend H(ection !/4154ii5.

% $rnish details of bon$s or

commission6 if any6 to an

employee for services renderedwhich otherwise was payable as

profits or dividend.

Normal bon$s or commission to

employees incl$ding directorseven as percentage of profits is

not covered $nder this s$bcla$se$nless the same was otherwise

payable as profits or dividend.

4b5 Any s$m received from

employees towards contrib$tionsto any provident f$nd or

s$perann$ation f$nd or any other

f$nd mentioned in section 242'54x5 and d$e date for payment and

the act$al date of payment to the

concerned a$thorities $ndersection !/4154va5.

% $rnish details of any s$m

received from the employees

towards the contrib$tion to%a5 #rovident $nd

b5 -(I $ndc5 ($perann$ation $nd

d5 Any other f$nd for the

welfare of employees. $rnish details of d$e date of

payment and act$al dates of

payment for the amo$nt receivedfrom employees towards vario$s

f$nds stated in above para.

The d$e date of # Contrib$tion

is 1+ days and in case of -(IContrib$tion is 21 days from the

end of the month to which salaryrelates.

9efer to Circ$lar No. -1284I5

/0 III dated 1;.0!.1;/' as

modified by circ$lar -11)128)3!dated 2'.10.3! iss$ed by the

concerned a$thorities granting +days of grace period for payment

for payment of # Contrib$tion .The d$e date will be determined

accordingly.

13 Amo$nts debited to the profit andloss acco$nt6 being %

%

4a5 expendit$re of capital nat$reD % $rnish detail of following

expendit$re debited to #rofit @


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f$lly or partly written off in#@< Acco$ntD

c5 (cientific 9esearch-xpenses @ Technical

Know ?ow eesDd5 =rite of advance paid for

capital expendit$re) capitalproect.

e5 ees or -xpendit$reconnected with increase in

a$thorised capital6 iss$e ofbon$s shares6 travelling @

other expenses connected

with p$rchase of capitalassets etc.

f5 Amo$nt debited on acco$nt

of preliminary expenses

4!+"56 &9( expenses4!+""A56 erger)"emergerexpenses 4!+""5.

Check the following head of

acco$nts min$tely%

a5 (tore @ spare partscons$med

b5 9epair @ aintenancec5 isc. -xpenses

d5


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?owever to the extent ofpersonal element in the said

expendit$re6 the same sho$ld bereported here also.

-xpenses of personal nat$re paid$nder a contract$al obligationneed not be disclosed.

Agree with the a$dited sched$les

s$pporting the comments in thea$ditorBs stat$tory report.

9eview the relevant acco$nts to

ens$re that no other expendit$re

of personal nat$re has beencharged to the profit and loss

acco$nt.

*btain management

representation.

4c5 expendit$re onadvertisement in any

so$venir6 broch$re6 tract6pamphlet or the like6

p$blished by a political

partyD

% $rnish details of the expenses

inc$rred on advertisement if any

p$blished for a political party

$rnish details of expendit$re

inc$rred on advertisement inso$venir6 broch$re6 tract6

pamphlet or o$rnal p$blished bytrade $nion6 labo$r $nion or any

other body formed by politicalparty.

Agree the sched$le with the

relevant s$pporting doc$ments.Note % #olitical parties wo$ldincl$de both national and regional

parties6 which are approved by the-lection Commission.

9eview the advertisement6 sales

promotion and other relevantacco$nts to ens$re that all s$ch

expendit$re has been

appropriately disclosed.

*btain management

representation.

4d5 expendit$re inc$rred at cl$bs %4i5 as entrance fees

and s$bscriptionsD

4ii5 as cost for cl$b

services and

facilities $sedD

$rnish the detail of expenses

made to cl$bs $nder followingheads%

-ntrance fees ($bscriptions

Catering :ills 9esidential

Accommodation Charges -xpendit$re towards $se of

cl$b services and facilitiesi.e. health cl$b. :ar.

Conference @entertainment expenses etc.

9eimb$rsement of cl$b

#age 12 of 2;


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payments to directors)employeessho$ld be incl$ded in the above

statement.

($bscriptions and other

payments made to serviceorganiations like iants6 Maycees etc.

wo$ld not be incl$ded $nder this

cla$se.

#ayments made to credit

agencies like "iners Cl$b wo$ldnot be incl$ded $nder this cla$se.

#ayments to cl$bs wo$ld incl$de

payments to >ymkhanas.

9eview the relevant acco$nts

and ens$re that all expendit$re

inc$rred at cl$bs has beenappropriately disclosed.

*btain management

representation.

4e5 4i5 expendit$re by way of

penalty or fine forviolation of any law for

the time being in forceD4ii5 any other penalty

or fineD4iii5 expendit$re

inc$rred for any p$rpose

which is an offence orwhich is prohibited bylawD

% $rnish the detail of expendit$re

by way of penalty or fine debitedd$ring the financial year.

$rnish detail of compensation

debited for breach of contract

d$ring the financial year.

$rnish copies of penalty orders

passed d$ring the financial year

$nder relevant laws6 which areapplicable to assessee.

$rnish detail of gifts given to

government officials.

$rnish details of expendit$re

inc$rred s$ch as protectionmoney6 extortion money6 reg$lar

hafta,bribe etc.

$rnish detail of penalty debited

which are in the nat$re ofinterest $nder any stat$e.

9eview the legal and

professional fees6 rates and taxes6sales tax paid or any other taxespaid6 general charges acco$nt

and other relevant acco$nts and

ens$re that all s$ch expendit$rehas been appropriately disclosed.

*btain management

representation.

Lns$pported expendit$re may

need to be reviewed to determine

whether it needs to be incl$ded$nder Gexpendit$re6 which is an

offence or prohibited by lawB.

4f5 amo$nts inadmissible % $rnish detail of Interest6

#age 1! of 2;


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$nder section '04a5D royalty6 fees for technical knowhow6 services and other s$ms6

which are payable o$tside India6on which tax has not been paid

or ded$cted or ded$cted and paidat rate less than the prescribed

rate.

$rnish detail of expenses

payable as reimb$rsement ofexpenses o$tside India on which

tax has not been ded$cted or paidat so$rce.

$rnish details of payment6

which is chargeable $nder the

head salaries payable o$tsideIndia and on which Tax has not

been ded$cted.

$rnish any interest6

commission6 brokerage6 fees forprofessional services or for

technical services6 amo$ntpaid)payable to contractor and

rent6 royalty on which tax hasnot ded$cted or ded$cted at rate

less than the prescribed rate orafter ded$ction of T"( is not

deposited within the d$e date4Ignore late deposit of T"( cases

if the same is deposited by theend of financial year5. H(ection

1;'C6 1;'A6 1;'?6 1;'I6 1;'M

and section ;4154vii5 @ ;4154vi5.

$rnish any payment made

towards a provident f$nd or

other f$nd established for thebenefit of employees for which

tax has not been ded$cted atso$rce.

$rnish any tax act$ally paid $)s

104CC5.

$rnish ringe benefit tax

4below the line or above the

line5. $rnish (ec$rities transaction tax

if debited to #rofit @


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Tax Audit Checklist


9eview all expenses payable and

provision for expenses for '!:

@ T"( defa$lt.

$rnish details of Income Tax @

=ealth Tax debited to #@ive details w.r.t.opening balance) credit

availed)credit $sed) closingbalance of all Cenvat acco$nt as

per Acco$nt books and -xcise

record with reconciliation.4ii5 >o thro$gh the

reconciliation and report the

difference $nder the respectivecla$se of !C".

4b5 #artic$lars of income or

expendit$re of prior periodcredited or debited to the profit

and loss acco$nt.

% $rnish a detail of

income)expendit$re relating toprior period credited) debited to

the profit and loss acco$ntd$ring the year.

Agree the details with a$dited

sched$les and relevant

s$pporting doc$ments.

9eview the items $nder the head

prior period ad$stment and thenotes to the acco$nts to ens$re

all s$ch expendit$re)income hasbeen disclosed in the above

sched$le.

In order to ascertain the correct

meaning of term P#rior #eriod

ItemJ refer to the text of

Acco$nting (tandard + iss$edby ICAI.

*btain managementrepresentation.

2! "etails of any amo$nt borrowed

on h$ndi or any amo$nt d$ethereon 4incl$ding interest on the

amo$nt borrowed5 repaid6otherwise than thro$gh an

acco$nt payee che7$e H(ection

/;".

% *btain a sched$le of borrowing

and repayments 4incl$dinginterest5 of h$ndi loans otherwise

than by acco$nt payee che7$es.

Agree the details with the

a$dited sched$les and relevants$pporting doc$ments.

*btain management

representation.

*btain a sched$le of borrowingand repayments 4incl$ding

interest5 of h$ndi loans otherwise

#age 21 of 2;


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Tax Audit Checklist


than by acco$nt payee che7$es.


a$dited sched$les and relevants$pporting doc$ments.

*btain managementrepresentation.

'ote % As per the ICAI in the

absence of concl$sive orsatisfactory evidence a s$itable

comment in the report as s$ggestedin cla$se 134h5 sho$0ld be made. %

As per the ICAI in the absence ofconcl$sive or satisfactory evidence

a s$itable comment in the reportsho$ld be made.

2' 4a5O #artic$lars of each loan or depositin an amo$nt exceeding the limit

specified in section 2/;(( taken

or accepted d$ring the previo$syear%

%

4i5 name6 address and

permanent acco$ntn$mber 4if available with

the assessee5 of thelender or depositorD

% *btain a sched$le of loans and

deposits of 9s.206000 or moretaken or accepted d$ring the year

giving the relevant details as perthe aforesaid cla$se.

4ii5 amo$nt of loan ordeposit taken or

acceptedD

% The amount of Rs) /0%0001" or

more is to (e computedinclusi*e of openin$ Balance in

the party account and for the

purpose of prepayment also%

amount credited as interest)

For the purpose of this clause%

loan1deposit -ould include%

amon$ others% the follo-in$#

a+ Security Deposits from

staff% a$ents% customers

-ith or -ithout interest

(+ 2oans from financial

institutions)

c+ Ad*ance in the nature ofloan deposit)

d+ Fixed deposit from pu(lic)



4iii5 whether the loan or

deposit was s7$ared $p

d$ring the previo$s yearD

% 9eview the loan6 deposit and

other relevant acco$nts to ens$reall s$ch partic$lars have been

appropriately disclosed.

4iv5 maxim$m amo$nt

o$tstanding in theacco$nt at any time

% *btain certificate from

management that loans accepted

d$ring the year and their

#age 22 of 2;


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Tax Audit Checklist


d$ring the previo$s yearD repayment has been thro$gh anacco$nt payee che7$es)draft.

Note %

4v5 whether the loan ordeposit was taken or

accepted otherwise thanby an acco$nt payee

che7$e or an acco$ntpayee bank draft.

% 4i5 As per the ICAIinformation of each loan or

deposit of 9s.206000 or morealone wo$ld be re7$ired by

this cla$se and where eachs$ch loan or deposit is less

than 9s.206000 and aggregatealone exceeds 9s.2060006 the

partic$lars need not be

f$rnished.O 4These partic$lars need not be

given in the case of a >overnment

Company6 a banking company or

a corporation established by aCentral6 (tate or #rovincial Act5.

4ii5 Advance received

against agreement of sale of

goods is not a loan)deposit.

4iii5


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Tax Audit Checklist


from)to :ank6 >ovt.6 >ovt.company.

4c5 =hether a certificate has been

obtained from the assesseeregarding taking or accepting loan

or deposit6 ore repayment of thesame thro$gh an acco$nt payee

che7$es or an acco$nt payee bankdraft 4,es)No5

The partic$lars 4i5 to 4iv5 at 4b5and the Certificate at 4c5 above

need not be given in the case of a

repayment of any loan or deposittaken or accepted from

>overnment6 >overnment

company6 banking company or a

corporation established by aCentral6 (tate or #rovincial Act

2+ 4a5 "etails of bro$ght forward loss ordepreciation allowance6 in the

following manner6 to the extentavailable %

*btain a sched$le indicating the

details as per the aforesaid

cla$se. The cla$se will cover thefollowing %

(erial N$mber :$siness loss 4(ection 325

Assessment ,ear Lnabsorbed depreciation

Nat$re of loss)allowance 4in

r$pees5

(pec$lation loss 4(ection 3!5

Amo$nt as ret$rned 4in r$pees5


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Tax Audit Checklist


holding of the company has takenplace in the previo$s year d$e to

which the losses inc$rred prior tothe previo$s year cannot be

allowed to be carried forward interms of section 3;.

to see whether there was anychange in shareholding affecting

the benefit of C) loss 4(ection3;5.

"etails of shareholding beobtained at the end of !1starchof all the years $pto !1st arch

200/ to verify whether '; or

more shareholding has changedd$ring the period from the year

for which loss is carried forwardand $pto !1starch 200/.

Any change in shareholding on

acco$nt of death of a shareholder

or gift by the shareholder to therelative and as per second

proviso 4applicable in case

shareholder is a foreign holdingcompany5 be ignored.

2/ (ectionwise details ofded$ctions6 if any6 admissible

$nder Chapter &IA.

% This is an exha$stive cla$se to

cover all eligible ded$ctions

available $nder chapter &IA ofIncome Tax Act6 1;/1.


sectionwise details of

ded$ctions claimed $nderChapter &IA.

-ns$re that ded$ctions claimed

by the client are admissible$nder Chapter &IA.



If the assessee is claiming

ded$ction $nder a partic$lar

section for the first time6 f$rnisha note giving reasons as to how

the assessee is 7$alified for s$cha ded$ction with d$e evidence

and that the assessee hascompiled with all the conditions

laid down in the relevant section.4with the necessarydoc$mentary evidence5.

9eview assessments completed)

prior year tax ret$rns to examinethe basis adopted in earlier years.

&erify the basis and comp$tation

of ded$ctions.

*btain management

representation.

,mportant

In case any report $)s 80IA) 80I: or

any other section of chapter &IA isiss$ed by any other Chartered

Acco$ntant then go thro$gh the

#age 2+ of 2;


26/29

Tax Audit Checklist


same to verify whether the amo$ntarrived is in accordance with the

#rovisions of the relevant (ection.

23 4a5 =hether the assessee hascomplied with the provisions of

Chapter Q&II: regardingded$ction of tax at so$rce and

regarding the payment thereof tothe credit of the Central

>overnment 4,es)No5

% *btain a sched$le indicating thedetails as per the aforesaidcla$se.


relevant s$pporting doc$mentsand ret$rns s$bmitted for the

p$rpose.

>o thro$gh the 7$arterly T"(

ret$rns filed.

4b5 If the provisions of Chapter Q&II: have not been complied with6

please give the following detailsO6namely%

4i5 Tax ded$ctible and notded$cted at all

4ii5 (hortfall on acco$nt oflesser ded$ction than

re7$ired to be ded$cted4iii5 Tax ded$cted late

4iv5 Tax ded$cted b$t not paid tothe credit of the Central

>overnmentP#lease give the details of cases

covered in 4i5 to 4vi5 above.J


ens$re that tax has been

ded$cted as per Q&II: e.g.salaries6 interest on sec$rities6

other interest6 dividends6royalties6 payments to non

residents6 payments tocontractors and s$bcontractors

etc.

Above detail sho$ld also incl$de

partic$lars of tax ded$cted in thefinancial year b$t paid to the

>ovt. in s$bse7$ent year.

9eport cases where T"( has not

been ded$cted or ded$cted at

lesser rates than applicable. T"( is re7$ired to be ded$cted

on the component of service tax

also.,mportant note re$ardin$ Tax

Audit

(cr$tinie balances appearing at theend of the period of the following

acco$nt heads caref$lly%15 #rovision for

expenses.25 *$tstanding liabilities.

!5 :ill ad$stables.'5 *ther liabilities or any

other acco$nt opened in books

which is similar in nat$re to

above.The above acco$nts normally

comprise of credit entriespertaining to provision for

expenses made. ($ch expensesmay fall into following

categories%a5 >overnment taxes

and stat$tory d$es.

b5 (taff payments.c5 -xpenses liable to

#age 2/ of 2;


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Tax Audit Checklist


T"( ded$ction.d5 *ther items.

i5 >overnment taxes andstat$tory d$es have to

be reported $)s '!:.This cla$se will also

incl$de bon$s andincentive to staff by

vario$s name called.ii5 The expenses

which are liable toT"( are to be reported

in the T"( cla$se 4in

case of defa$lts5 andalso sim$ltaneo$sly in

cla$se 134l5 of tax

a$dit report to the

extent applicable.iii5 $rther

sometime the interest

payable to parties isalso incl$ded in the

above head which isliable to T"(.

iv5 or CA9*p$rposes one m$st go

thro$gh the tax a$ditreport of last year and

if items which wereliable to T"( are

reported b$t the T"(has not been ded$cted

and paid till !1starch

then the same willhave to be reported in

CA9* also.

28 4a5 In the case of a trading concern6

give 7$antitative details ofprincipal items of goods traded%

4i5 *pening stockD4ii5 #$rchases d$ring the

previo$s yearsD

4iii5 (ales d$ring theprevio$s yearD

4iv5 Closing stockD

4v5 (hortage)excess6 ifany

%

%

%

%%%


details as per the aforesaidcla$se.

Agree the details with a$dited

sched$les and the stock records

maintained by the company.


ens$re all s$ch partic$lars havebeen appropriately disclosed.

$rnish the reasons for

short)excess with proper

explanation and state whether itis normal or abnormal as per

ind$stry standards.

*btain management

representation.

4b5 In the case of a man$fact$ring

concern6 give 7$antitative detailsof the principal items of raw

%

#age 23 of 2;


28/29

Tax Audit Checklist


materials6 finished prod$cts andbyprod$cts%

A. 9aw aterial %4i5 *pening (tockD

4ii5 #$rchases d$ring theprevio$s yearD

4iii5 Cons$mption d$ringthe previo$s yearD

4iv5 (ales d$ring theprevio$s yearD

4v5 Closing stockD4vi5O ,ield of finished

prod$ctsD

4vii5O #ercentage of yieldD 4viii5O (hortage)excess6 if

any.

$rnish details as re7$ired.

:. inished prod$cts):yprod$cts%

4i5 *pening (tockD

4ii5 #$rchases d$ring theprevio$s yearD

4iii5 R$antityman$fact$red d$ring

the previo$s yearD4iv5 (ales d$ring the

previo$s yearD4v5 Closing stockD

4vi5 (hortage)excess6 ifany.

$rnish details as re7$ired.

O Information may be given to the

extent available.

2; In the case of a domestic

company6 details of tax on

distrib$ted profits $nder section11+* in the following form%

4a5 Total amo$nt ofdistrib$ted profitsD

4b5 total tax paid thereonD4c5 dates of payment with

amo$nts.

% $rnish the date of payment of

tax on dividend with the copies

of receipted Challans6 showingthe date6 amo$nt and name of the

bank.

Agree the details referred to the

a$dited sched$les and relevant


!0 =hether any cost a$dit wascarried o$t6 if yes6 enclose a copy

of the report of s$ch a$dit H(eesection 1!;4;5.

% Check if cost a$dit is applicableD

check whether the a$dit has been

carried o$t d$ring the year.

If the Cost a$dit is not carried by

the time Tax A$ditor gives thereport6 state the fact accordingly.

*btain a copy of the report if any

cost a$dit was carried o$t d$ring

the year.

*btain management

representation.

!1 =hether any a$dit was cond$cted$nder the Central -xcise Act6

% -n7$ire @ obtain


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Tax Audit Checklist


1;''6 if yes6 enclose a copy of thereport of s$ch a$dit.

department.

!2 Acco$nting ratios with

calc$lations as follows %4a5 >ross #rofit)T$rnoverD

4b5 Net #rofit)T$rnoverD4c5 (tockintrade)T$rnoverD

4d5 aterialcons$med)inished goods

prod$ced.

% *btain a sched$le indicating the

aforesaid ratios. &erify the sched$le for

arithmetical acc$racy andcalc$lations.

>ive details of any change on the

basis of calc$lations of ratio as

compared to the preceding year.

Agree the val$es $sed for

calc$lating the ratios to thea$dited sched$les and relevant


As different interpretations are

possible of the items like grossprofit6 net profit etc.6 it is

recommended that a noteexplaining the basis adopted by

the company be provided.

Documents

34 Tax Audit Checklist