The CA Institute has issued the Revised Guidance Note on Tax Audit to help its members discharge their obligations in a timely and effective manner under the income tax law.
The Revised Guidance Note — eighth edition— was approved at a meeting of the central council of Institute of Chartered Accountants of India (ICAI) at Siliguri.
“We have in the recent council meeting approved the revised Guidance Note on Tax Audit. It’s going to be a big change as it is being done after seven or eight years”, Debashis Mitra, President of ICAI, told BusinessLine.
The format of tax audit reports have changed significantly since the last revision in year 2014, which broaden the responsibility of the chartered accountants while discharging their professional duties in this respect, sources said. Also, guidance was required on certain issues around Goods and Services Tax (GST).
Tax audit is applicable since the year 1984. The first Guidance Note was issued in 1985. The ICAI has revised its Guidance Note on Tax Audit from time to time, i.e. in the years 1989, 1998, 1999, 2005, 2014 and 2022.
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.
This being an onerous responsibility, there was a need for offering guidance on conduct of audit and issuing of tax audit report. The ICAI as regulator of audit profession went about issuing Guidance Note for tax audit from time to time.
A tax audit is a measure which is initiated to curb incorrect tax practices. Tax audit is allowed to be carried out only by practicing chartered accountants.
From time-to-time the Direct Taxes Committee of ICAI has issued the updated version of the “Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961” after incorporating the changes/ amendments in applicable laws for information and support of the Members. Section 44AB of the Income-tax Act contains provisions pertaining to the tax audit under the Income Tax Act.
Meanwhile, Mitra said the central council of ICAI will meet on August 28 to discuss a proposal on setting up a Self-Regulatory Organisation (SRO) to oversee the functioning of social auditors under the SEBI-notified framework for social stock exchanges.