Budget Update 2020 for Tax Audit
Abolishment of Tax Audit in India under INCOME TAX
As per the recent trens, Govt. is focusing on ease of doing business in India, and in order to accomplish the 5 trillion economy objective, Government may abolish the Tax Audit requirement in India under section 44AB of Income Tax Act.
Budget Update 2020 for Tax Audit
The explanation provided by different resources in this context are -
1. The purpose of Tax Audit is to provide assurance fron third party (CA), regarding the correctness of accounts and information submitted to the department.
2. However, in today's technological world, everyone is maintaining data in a computerised way, and there are various resources available for the department to get information about the business transactions.
3. So, it is recommended by some to abolish the 44AB, to remove the extra burden on the businesses. After abolishment, businesses are required to submit the information that is currently furnished by CA in the audit report.
IMPACT OF 44AB ABOLISHMENT
The abolishment of this section has various negative impacts on the businesses as well as on the economy also -
1. Although the data is maintained electronically, but there is requirement of SYSTEM AUDIT, in order to know the Tax evasion by the large organisations.
2. As the scams related to Tax are increasing day by day, it is very bad idea to abolish this section. In the presence of CA Audit, many type of problems are found, that are negatively effect the interest of stakeholders. Audit Report is the only resource for the investors to ensure authenticity regarding books of accounts.
3. From the past few years NPA's of the banks are increasing, and there are many examples of the scam done by various companies. Thus, if this section will remove, such activities surely increase. Even Banks require Audit Report to santion Loan, fix credit limits for the businesses.
Budget Update 2020 for Tax Audit
CONCLUSION
Although the Tax Audit creates a little bit extra burden over the businesses, But it is exempted for small one's (having turnover upto 2 crore, if they are showing income of 8% /6 % of their Gross sales; but the benefits of the Tax audit to the Department, Banks, and other stakeholders are quite high. So, the Government should have to analyse this decision from various viewpoints.
As per the recent trens, Govt. is focusing on ease of doing business in India, and in order to accomplish the 5 trillion economy objective, Government may abolish the Tax Audit requirement in India under section 44AB of Income Tax Act.
Budget Update 2020 for Tax Audit
The explanation provided by different resources in this context are -
1. The purpose of Tax Audit is to provide assurance fron third party (CA), regarding the correctness of accounts and information submitted to the department.
2. However, in today's technological world, everyone is maintaining data in a computerised way, and there are various resources available for the department to get information about the business transactions.
3. So, it is recommended by some to abolish the 44AB, to remove the extra burden on the businesses. After abolishment, businesses are required to submit the information that is currently furnished by CA in the audit report.
IMPACT OF 44AB ABOLISHMENT
The abolishment of this section has various negative impacts on the businesses as well as on the economy also -
1. Although the data is maintained electronically, but there is requirement of SYSTEM AUDIT, in order to know the Tax evasion by the large organisations.
2. As the scams related to Tax are increasing day by day, it is very bad idea to abolish this section. In the presence of CA Audit, many type of problems are found, that are negatively effect the interest of stakeholders. Audit Report is the only resource for the investors to ensure authenticity regarding books of accounts.
3. From the past few years NPA's of the banks are increasing, and there are many examples of the scam done by various companies. Thus, if this section will remove, such activities surely increase. Even Banks require Audit Report to santion Loan, fix credit limits for the businesses.
Budget Update 2020 for Tax Audit
CONCLUSION
Although the Tax Audit creates a little bit extra burden over the businesses, But it is exempted for small one's (having turnover upto 2 crore, if they are showing income of 8% /6 % of their Gross sales; but the benefits of the Tax audit to the Department, Banks, and other stakeholders are quite high. So, the Government should have to analyse this decision from various viewpoints.
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