Tax Audit also helps as Vighna-Harta!
Arjuna (Fictional Character): Krishna, the festival of Ganesh Chaturthi fills our hearts and homes with joy and blessings. Similarly, I’ve heard that conducting an income tax audit brings its own set of blessings and eases the financial journey for businesses. Can you elaborate on this?
Krishna (Fictional Character): Arjuna, you’ve touched upon an interesting parallel. Ganpati Bappa and Income Tax Audits have come in month of September. Just as Lord Ganesh Ji is invoked at the beginning of new ventures to remove obstacles or ‘vighnas,’ an income tax audit serves to remove uncertainties and ambiguities in the financial statements of a business. It paves the way for financial transparency and trust, akin to how Lord Ganesh Ji paves the way for success and wisdom.
Arjuna (Fictional Character): Krishna, how does undergoing an income tax audit solve issues and make things easier for businesses?
Krishna (Fictional Character): Arjuna, conducting a tax audit can resolve several key issues:
- Faceless Assessments: An audit places you in a better position during faceless assessments by lending credibility to your financial statements.
- Reviewing Critical Transactions: The audit process often includes a review of transactions, For Example- between related parties, stock details which are filed in Clause 23 and Clause 35 of Income Tax Audit Report. Hence the critical points in Scrutiny Process are already checked during audit and also reported by the auditor.
- Ease of Return Filing: With all your financials scrutinized, filing your tax returns becomes a simpler process.
- Enhanced Financial Management: The insights gained from an audit can significantly improve budgeting and financial planning, paving the way for more effective business strategies.
- Compliance Check: An audit confirms your adherence to various tax laws, thereby avoiding legal repercussions. Investor and Stakeholder
- Confidence: Audited financial statements can boost the confidence of investors and other stakeholders.
- Facilitation of Loans and Funding: Financial institutions often consider audited statements as a more reliable base for extending credit facilities.
Arjuna (Fictional Character): Krishna, What if one does not conduct this audit?
Krishna (Fictional Character): Arjuna, generally, Income Tax is applicable for all those asssesee who’s turnover is exceeds Rs 1 Cr u/s 44AB, however % of cash payments, receipts, 44AD provisions should also be checked while determining applicability
The penalty for non conduct of audit is Rs 1,50,000/- or 0.5% of turnover whichever is lower.
Arjuna (Fictional Character): Krishna, what should one take away from this?
Krishna (Fictional Character): Arjuna, the journey of conducting an income tax audit is similar to our annual Ganesh Chaturthi celebration. Just like preparing a Ganpati mandal requires weeks of meticulous planning and effort, an audit begins with thorough preparations, be it scrutinizing sales, examining purchases, or analysing TDS and TCS, reconciliation of AIS, 26AS with books of accounts.
Each day leading up to the final audit report serves a significant purpose, resembling how Lord Ganesh graces us for 10 days with His divine presence. The process might not be easy, but the blessings that come with it are manifold. Finally, when the tax audit report is uploaded, it is akin to the moment of Ganpati Visarjan. This final act signifies that the cycle is complete, and we are left with enhanced wisdom and fewer obstacles in our financial path. The rigorous yet fulfilling process enriches your business, clears the way for smoother operations, and bestows you with invaluable insights, much like how Lord Ganesh Ji removes ‘vighnas’ and blesses us with wisdom.