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Understand Reasons that make you Liable for an Audit – 2021

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It is time for you to start preparing yourself for filing your tax returns for the financial year 2020-21. However not everyone knows if they are liable to get audited under 1 or many of the applicable tax or compliance laws in India.

One of the most commonly applicable audit laws in India for a company, firm or an individual are Statutory audit under companies act and Tax audit as per Income Tax Act. GST Audit which was applicable until FY 2019-20 has now been discontinued. 

But what makes you liable for either of this Audit?

Let’s look a simple table to understand the reasons that would make you liable for an Audit :

Basis of difference

Statutory AuditFor CompaniesStatutory AuditFor LLP’sTax Audit
ApplicabilityOnly for CompaniesOnly for LLP’sAll Legal Entities
Whom is it meant for All Companies registered under Companies Act (ROC)LLP’s whose turnover exceeds, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty five lakh rupeesAny entity whose business has a turnover of more than Rs. 5 Crore the taxpayer’s and cash receipts of which are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.
Reason for conducting AuditTo check the whether all the disclosures and compliances have been made according to the Companies ActTo check the whether all the disclosures and compliances have been made according to the LLP ActTo verify if the income and expenses disclosed during the year have been calculated as per the Income Tax act.
Audit to be conducted by ?Chartered AccountantChartered AccountantChartered Accountant
Report SubmissionShareholdersShareholdersIncome Tax Department
Nature of AuditMandatoryConditionalConditional
Due Date of Submitting Audit report*31st October31st October30th September or 30th November


To understand more details kindly contact growth@slate.ac/dhaval@slate.ac or call us at 8828125995

*Note: These are due dates provided as per the respective acts however due to COVID Government has brought extensions to the same.

Tharanath Rai

Tharanath Rai

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