Before we understand what a tax audit is, let’s discuss what an audit is first. A tax audit is a detailed verification of the books of accounts of a taxpayer. This will include aspects like earnings, deductions, compliance with tax regulations, any other discrepancies, and so on.
Provisions related to tax audits are provided. According to this section, professionals with gross professional income and businesses with a specific turnover require necessary tax audits. Therefore, to understand the concept of tax audit, it is imperative that you seek assistance from expert professionals who hold experience in this field of study.
Why Is Tax Audit Important?
The main goal of a tax audit is to ensure that the information provided by the business is correct and accurate, there’s no discrepancy from their side. All the financial statements are prepared according to the financial reporting framework.
- Primarily a tax audit is done to make sure that the company follows the tax requirements established.
- Tax audits also make it quite simple for businesses to prepare tax return without any hassle.
- It makes sure that no malicious or fraudulent practices are used.
- Tax audit will maintain books of accounts, and records regarding the revenue, profit, and expenditure. It will also save you from the last-minute mess of data and files.
- Tax audit adds credibility, and builds up the reputation of a company.
- Auditors can give the provision advice regarding improvements and identify weaknesses of the business and it can have real financial benefits for the company.
In conclusion, a tax audit refers to a review, check, inspection, and verification of the books of accounts of a company or the taxpayer and will confirm their adherence to the law and make sure that no fraudulent practices are in use.
A certified Chartered accountant will ensure the accuracy of the data provided by the taxpayers. Simply put, a tax audit is required by every taxpayer who falls under a certain category. For more info be sure to conduct thorough online research or seek direct assistance from experts.