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 as regards tax audit under the income tax law. 

The Revised Guidance Note for 2023 — the ninth edition — provides a comprehensive roadmap to navigate the complexities of tax audits in a strategic and informed manner and also delves into the intricacies of audit procedures.

The CA Institute has revised its Guidance Note keeping in view the amendments made up to Finance Act 2023  and tax audit forms applicable as on date (Form 3CA/3CB/3CD), sources said.

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.

Tax audit has been 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, 2022, and now in 2023.

A tax audit is an examination of a taxpayer’s books of account and other relevant records. 

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. 

Onerous responsibility

This being an onerous responsibility, there was a need for offering guidance on conduct of audit and issuing of tax audit report. 

The Institute of Chartered Accountants of India (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.