Income Tax


Friday 25 May 2018

Income Computation and Disclosure Standards (ICDS)

              Draft of 14 Tax Accounting Standards were first issued in August 2012. However, these were revised further and 12 drafts Income Computation and Disclosure Standards (ICDSs) were issued in January 2015 for public comments. From above notification, 10 ICDSs were finalized excluding the standards on ‘Leases’ and ‘Intangible Assets’. However, in January 2016, Income-tax Simplification Committee recommended deferment of ICDS. Section 145(2) – the Central Government has power to notify “ICDS”. CBDT vide Notification dated March 31, 2015 introduced 10 ICDS to be effective from April 1, 2015 and thus, the same was applicable from AY 2016-17 onwards. On September 29, 2016 revised ICDS notified effective from AY 2017-18 and Form 3CD was amended. Recently, on March 23, 2017, CBDT has issued certain clarifications by way of FAQs. The Finance Ministry had notified ten Income Computation and Disclosure Standards (ICDS) from assessment year (AY) 2016-17 [financial year (FY) 2015-16] (hereinafter referred to as “old ICDS”). 

              Subsequent to various representations from taxpayers seeking guidance and clarifications for implementation of ICDS, the Finance Ministry, vide a Press Release 2, deferred the implementation of ICDS by one year to AY 2017-18 [FY 2016-17]. That Press Release had stated that revision of ICDS and tax audit report was also under consideration. The extent to which the new ICDS has been aligned with Indian Accounting Standards (Ind AS) also needs to be evaluated. In the wake of implementation of Ind AS from FY 2016-17, taxpayers are already engaged in configuring migration from IGAAP to Ind AS.

           The introduction of the new ICDS is a welcome step as it addresses some issues voiced by businesses. ICDS are applicable to an assessee following mercantile system of accounting. ICDS will apply for computation of taxable income under the head Profit & Gains of Business under the Income Tax Act. This is irrespective of the accounting standards i.e. either Accounting Standards or Ind-AS. It is clarified that if the tax assessee has been following standard costing method on regular basis then tax payer may continue to follow the same. ICDS is applicable to those sources of incomes which are assessable on net basis and does not apply to incomes liable to tax on gross/presumptive basis. This is because specific provisions of the Act shall prevail over ICDS. Let’s have a look on ICDS.

                                                                                                                     Prepared By
                                                                                                                     Tushar G Agrawal
                                                                                                                     (CA Student)

Monday 30 April 2018

What is TDS ? & TDS Rate F.Y. 2018-19 & A.Y. 2019-20

In this article, we will try to know the actual concept of TDS, it’s role, importance. Why & how it is carried out in the country will be the main perspective of today’s article.

Introduction :

TDS is tax deducted at source. This is nothing but a way to collect an income tax in India. It is managed by the Central Board for Direct Taxes (CBDT). Amount covered under this criteria is paid after deduction of recommended percentage or portion. Income Tax Act of 1961 controls all this. CBDT is a part of Indian revenue system which is managed by Indian Revenue Department. It is an important while conducting Tax Audits regarding disallow the some specific amount.

To collect tax from the active & enormous source of income is the actual aim of Tax Deducted at Source (TDS). This was obviously introduced under the Income Tax Act of 1961. This concept or you can use word TDS system says the person (Deductor) who is accountable for making payment of another person (Deductee) has an authority to to deduct a precise amount meaning tax at source and  credit the same into the central government account or into the account of the concerned one. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

How to pay deducted or collected tax at source ?

It is done in a very easy way.Whatever tax deducted or collected at source is deposited to the credit of the central government account by Electronic way. Actually E mode is mandatory for corporate level and those to whom provisions of section 44AB of the Income Tax Act, 1961 is applied. Second way is physical mode. It can be done with Challan 281 in the authorized bank branch. 

Main Objectives Of TDS

To avoid lump sum amount and making salaried people to pay tax in an installments. This is done to enable them to pay the tax because they earn. Collection of the tax at the time of payment of income to various professionals such as contractors. Government also requires funds each year, thus various taxes help them to get funds throughout the year. And run government easily.

Specified Rates for TDS

Specific rates are decided in the relevant provision of the Act or First Schedule to Finance Act, so taxes shall be deducted accordingly. Such a case where payment to non resident persons, ‘double taxation avoidance agreements’ are needed to withhold tax rates. This is specified under rules.

Due Date Of TDS Submission

 Quarter                                    Government Deductor                    Non-Government Deductor

    Q-1                                               15th August                                         30th July

    Q-2                                              15th November                                    30th October

   Q-3                                               15th February                                     30th January

  Q-4                                                 30th May                                              30th May

Late Fees
If TDS return is nor submitted within due date given prescribed by Finance Act, than 200/- per day late fees will be levy but subject to Maximum amount Of TDS Deduction but Deductor 

Interest will be levied at the rate of 1% per month due to delay in deduction of TDS & If the Deductor deduct the TDS but not remitted to Government than Interest will be levied at 1.5% per month till date of payment.

Note- Both Interest & Late Fees will be paid before filing the TDS return. 

Click here to Download TDS Chart for F.Y. 2018-19 & A.Y. 2019-20

Thursday 29 March 2018

Deadline, File Income Tax Return On or Before 31st March 2018

Income tax return is a document you file with the Internal revenue service or the state tax board reporting your tax board reporting your income, profit and losses of your business and other deductions as well as details about your tax refund or tax liability. If you are earning more than Rs.2,50,000/- per year then you are liable to file income tax return. 

The process is no more flexible from this year to file tax return. You are required to file return On or before 31st March 2018, its last date to file your previous return also after that return cannot be filed, but there is a option to file the return, for that to pay fix penalty or late fees of Rs 5,000/-

If you are among those taxpayers who have not yet filed their income tax return (ITR) for the financial year 2016-17, assessment year (AY) 2017-18, you must have received emails and messages from the income-tax department reminding you to file the tax return by 31 March 2018. You must remember that if you had income that was above the exempted limit during F.Y. 2015-16 & 2016-17, then it is mandatory for you to file a tax return. If you had income that was less than the threshold limit for taxes to apply, but you deposited a considerable amount of cash in your bank accounts during the demonetization period, you should file a tax return.

There is a concept called as a late tax return. The last date to file a tax return is usually 31st July of each assessment year (AY). This is the year in which income is assessed properly, tax is paid and return tax is filed for the previous year means financial year. So, for  the financial year 2016-2017 assessment year is 2017-2018. 31st July 2017 was the last date to file tax return for financial year 2016-2017. This date was later changed to 5th August 2017.  If someone has filed the tax tax return after the concerned date, then that is considered as "Belated return."

Belated returns can be filed before the end of the relevant assessment year, that is by 31st march 2018, till financial year 2015-16, taxpayers had some extra time so that they could even file belated returns before the end of two years from the end of the relevant financial year. 

You can do two things at a time.
1. File the tax return of the Financial year 2016-17 i.e., previous year,
2. File the return for financial year 2015-2016 also.

Let’s focus on one major point. Disadvantage of belated return :

You may face penalties & lose out benefits if you don’t file a tax return on given time.

For starters, there are penalties and interest levied on the income tax that was due. “The person who files a belated return for AY 2017-18 may be subject to a penalty of Rs 5,000 under Section 271F of the Income-tax Act, 1961,”Apart from the penalty, interest too may be levied under various sections. “If any tax is due, interest may have to be paid under sections 234A, 234B and 234C of the Act,”

From the next AY, 2018-19, a fixed amount of penalty will be charged on belated tax returns. “Section 271F will get replaced by section 234F, which prescribes a late fee of Rs 5,000 if the return is filed after due date and up to 31 December, and Rs 10,000 (from 1 January) up to 31 March of AY. However, if the total taxable income of a person doesn’t exceed Rs 5 lakh, late fee shall not exceed Rs 1,000”.

Besides penalty and interest, there are other disadvantages to filing tax returns late. One of these is not being able to carry forward capital losses. Certain losses like those from business and profession and short-term capital loss may not be allowed to be carried forward.

If there is any refund, it may be delayed and taxpayers will not receive interest on refund from 1 April of the AY. Interest will be paid from the date on which the tax return was furnished till the date on which refund is granted. “If return is filed within the due date, interest is paid effective 1 April of the AY to the date on which refund is granted,” for example you were eligible for a refund of Rs 10,000, you filed the ITR in June, which is before the due date (31 July); and you get a refund in September. In this case, you will get interest on the refund from April till September. But if you file late, say, in October, and you get refund in December, you will get interest on the refund only from October till December.

Penalties if you don’t even file a Belated Tax return : 

Besides the penalties and other disadvantages that a belated tax return invites, the income-tax department can send you a notice of inquiry (under section 142(1)) or a notice of income escaping assessment (section 148). Through these notices, it can seek clarification on why the tax return was filed late, and you will be asked to file the return online as per the date specified in the notice. There may also be penalties.

If you don’t receive any notice and you have a genuine reason for not having filed the return, “you may send a written request to the AO (assessment officer) for filing a return,” said Gupta. You can do this even after the last date, that is 31 March of the AY, but the permission will depend on AO’s discretion.

If you don’t reply to the notice or don’t file your return within the stipulated time mentioned there, your problem can escalate, depending on the tax due. “If the person has taxable income and still doesn’t file a tax return, then in addition to penalty for non-filing of return, the person may also be subject to a penalty for under-reporting of income at 50% of the tax payable on under-reported income,”can be initiated in some cases.

Thursday 15 March 2018

Basic Rights of an Employee in India

Basic rights each & every Indian employee should know 

If you are an employee  in private or government sector, It's your duty to know your primary rights. Knowing about our rights is the major step towards avoiding many issues in professional life so that you can enjoy your work life as well as personal life. Also, it is a sign which explains that you are a smart employee no matter, wherever you are working. In to days article, we will discuss very important 10 rights which every Indian employee should know. This article may help you to know legal statements, what law states about your rights, how can you get a proper help if you need. 

1. Leave is the right of each Employees-
Employee gets different kind of leaves during his/her working period, according to the reason he/she provides. Leaves are categorized into following main three criteria. 

a). Casual Leave : This leave is an incidental leave provided to an employee in case of emergency such as family issue, to attend meetings called by school for child’s welfare. In any casual seen, this one or two day leave is provided to an employee by an employer. Another type comes under casual leave section is Sick leave. Obviously one may get sick at any time due to unconditional health issues, by modified lifestyle or anything serious. So, you have the right to get sick leave and as an employee of any firm, organization you can apply for sick leave without any hesitation. Another leave under casual section is ‘Privileged leave.’ This is the leave which you need to plan in advance. If you have earned any extra leaves during working period then you can take advantage of this leave. Generally for going on trips with family or friends, this leave is provided to each & every employee because it’s very difficult to arrange tours in one or two days. Other leaves is one of the type which is paid, unpaid or half paid according to duration & reason. 

b). Medical Certificate for one-day sick leave : In case of sick leave of 2-3 days, you are supposed to show a medical certificate as a proof according to rules & regulations. But if a sick leave is just about a day then it is not necessary for you to show a medical certificate. Also leave can be provided to an employee if she/he is on notice period, only on the basis of a genuine reason such as maternity, health issues, declared by 'Delhi High Court.'

c). Maternity leave is a statutory right of female employee. Period of maternity leave has been already decided by maternity benefit act. 

d). Encashment leave : Basically this concept is nothing but the converting a bond into a money. As an employee you have the right to get many leaves as mentioned above but sometimes what happens you may not use all these leaves due to no emergency or whatever may be the reason. Result of this condition turns into ‘remaining leaves.’ So you can make a best use of encashment leave concept here. You can get your remaining leaves converted into money. This is known as leave encashment. Amount of money is obviously depend your salary. You can use this policy to get money after retirement as well. 

2. Protection from Sexual Harassment at Workplace-
Protection should be provided to all employees from sexual harassment, especially female employees. If any of such illegal activity happens at workplace, then employers &  managers are supposed to take a quick actions immediately. 

No one should consent to the inappropriate behavior at workplace. If anyone harasses someone then he/she is punishable under Indian penal code. Any woman who is aggrieved can seek remedy under the sexual harassment of women Act 2013 (Prevention, prohibition, redressal ).

Under this law, employers are supposed to generate a policy act against sexual harassment. Any organization should have this policy to provide healthy & safe environment to the employees. Policy must define constitutes of sexual harassment & what are penalties for that, policy should always follow "impartiality" during investigation. 

Law states that internal complaint committee should be established for firms/companies which should include a panel of ten or more employees as a committee member. Also, district local complaint committee can be formed under the law for other organizations.

It is an employers responsibility to nominate member for internal complaint committee. It generally consists of a senior woman, two other employees  and a non government member.

3. Maternity Benefit-
Maternity benefit act was established with respect to the employment of women. This law, Maternity Benefit (amendement) 2016 passed by Rajya sabha in august 2016 and has been passed by Lok sabha in march 2017. 

Earlier the law mandated this benefit for pregnant women for 12 weeks , which has been raised to 26 weeks according to the changes made in the law. Earlier, of these 12 weeks, 6 weeks leave was for post natal care which has also been raised to 8 weeks now. 

Employees also have the right of taking additional  one month leave(paid). This special policy provided by law because many a times, complications may arise due to pregnancy, delivery, premature birth, miscarriage, tubectomy operation( two weeks in this case).

According to maternity benefit act, employer should not employ a woman in the six weeks in case, she is following a date of delivery or miscarriage. No empoyer can dismiss her in case if she is absent in the scenario mentioned above. 

Employee cannot be dismissed if she is on maternity leave. Even something disadvantageous can't be done to the condiotion of her employment while she is on maternal leave.

Employee should always remember that, if she is dismissed, still she can claim maternity benefit from employee/firm/organization. 

4. Gratuity-
It is an amount provided to an employee based on his service duration who have rendered service for at least 5 years. Even though there is pension and provident fund secures ones life, still gratuity is a right of each & every employee. It is very important for social security. This is provided as a lump-sum amount which is nothing but the benefit provided to an employee as a gratitude.                          

If any employee terminate job, resign due to some emergency issue or other, due to death of any employee, gratuity is paid to the employee or to his/her family (if one is no more). This amount is increased with an increase in salary of the employee.

5. Provident fund-
Employment provident fund (EPF) is a scheme through which an employer gets an amount which can be used for future. This scheme is for all salaried employees managed by the Employee Provident Fund Organisation of India.  Company having employees more than 20 can register with the EPFO.  Law states that Employer & employee have to contribute 12 % from their salary so that they can get it after retirement.  According to law, no employer can deduct whole PF contribution of any employee & if he does so then he/she will be eligible for penalty.  If you are working in a private sector or government sector then it is necessary for you to contribute for PF.  15,000/- a month and you can contribute for PF. Once you become a part of EPF then you are not allowed to stop contributing. 

6. Working hours-
Well, working hours have already been decided by the 'Shop and Establishment Act.' This law is active in each & every state. Law says, 9 hours per day & maximum 48 hours per week as a working hours. Regulations realted to working hours is managed by Shop and Establishment Act.  Work hours can be extended upto 54 hours a week depending upon the working load & inspector should be informed this with the appropriate notice. Overtime should not be more than 150 hours per year.

7. Right to get Insurance-
Employee State Insurance Act 1948 states that every employee get insurance if he/she face any serious issue regarding health such as injury or medical condition during the course of employment.

8. Right to go on Strikes-
Employees have the right to go on strikes even without giving any notice for their demands. Dispute Industrial Act 1947 plays an important role in case of strikes. Rules & regulations must be followed by employee and employer too during such a scenario. 

9. Right to Equal pay for equal work-    
Right to Equal pay for equal work is a statutory right for employees. No male female partiality should be followed by any employer in case of payment.  Even temporary staff gets an equal amount for the work or task they perform during work. 

10. Written Employment Agreement-
It is a well drafted & designed Letter. Company must provide you a written agreement letter before you start  working and employee should properly read and understand each term, condition. It is a legal document which explains important things about your employment. It contains everything such as rights and obligations of employee, company for the safety and security purpose.  Every Employee should know the importance of agreement. If any situation such as dispute between you and employer occurs in future, then you can resolve the issue with the help of agreement as all the required things are mentioned in the agreement. 

Sunday 4 February 2018

Key Points Highlighting Union Budget 2018-19

On Thursday, 1st February 2018, Finance minister Arun Jaitley has declared and presented the union budget of 2018-2019. It’s interesting to see what kind of changes we can observe in this budget because this is the first union budget after GST implication in the the country. Point to be noted is Agriculture, health, rural development and basic infrastructure is highlighted but salaried people, investors and job creators are seems to be avoided at some level. This is the major key point explaining the fact that, this budget will focus on improvement of basic infrastructure of the country. Educational sector is blessed with some good schemes which is not actually bad. Still one question  arises after going through whole budget,  whether this is the strategy for upcoming elections or what ?  Most of the population of country such as salaried people are seems to be unhappy with this. Of course there are some significant announcements we have to discuss. A special scheme has been launched to control the air pollution in Delhi. This scheme is promising because,  Delhi has secured the top rank in the list other polluted cities from India. Also digital education system, digital marketing strategies for the digital India are also focused. 

Focus of the budget is to cover poor population in the country thus the Scheme Called 'National Health Protection scheme' has also been declared. One thing which is catching every ones attention is poor people will get the advantage of this budget. Now to Discuss On Direct Tax (Income Tax) 

1. No change in Tax Rate. All persons including individuals, HUF, Firms and Companies to pay same tax
2. Education Cess is being increased from 3 to 4 % to be known as Education and Health Cess.
3. Corporate tax has been reduced in certain amount such as 30% to 25% for companies having turnover upto Rs. 250 crore, On Domestic Company Only.
4. Capital gain at 10%, if Capital gain is more than 1 lakh, But no Tax upto 31 Jan 2018 on capital gain u/s 10(38) on listed Shares, This section has been withdrawn with effective Date of 01 Feb, 2018,  Tax on STT paid long term capital Gain 112A. Further such tax will be liable for TDS
5. Medical Reimbursement  of Rs 15,000 under Section 17(2) are being withdrawn & Transportation allowance of Rs 19,200 for salaried people is to be replaced by Standard Deduction of  Rs. 40,000, This Deduction is also applicable to Pensioners.
6. Provision of Section 43CA, 50C and 56(2)(x) being amended to allow 5%  of sale consideration in variation vis a vis stamp duty value. On account of location, disadvantage etc.
7. Provision of section 40(ia) and 40A(3) and 40A(3A)are being made applicable to Charitable Trust . Hence expenditure incurred without deduction of tax and in cash will not be eligible as application of income under section 10(23C) and section 11(1)(a).
8. Agriculture Commodity Derivates income /loss  also not to be considered as speculative under section 43(5).
9. Income Computation and Disclosure Standards (ICDS) being given statutory backing in view of decision of Delhi High Court decision.
10. Marked to market loss computed as per ICDS to be allowed under section 36.
11. Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA.
12. Construction Contract income to be computed on percentage completion method as per ICDS.
13. Valuation of Inventory including Securities  to be as per ICDS.
14. Interest on compensation, enhanced compensation. Claim or enhancement claim and subsidy, incentives to be taxed in the year of receipt only as per new Section 145B.
15. Conversion of stock in trade to capital asset to be charged as business income in the year of conversion on Fair Market value on the date of conversion.
16. 54EC benefit of investment in Bonds to be restricted to Capital gain on land and building only. Further period of holding being increased from 3 years to 5 years.
17. PAN to be obtained by all entities  including HUF other than individuals in case aggregate of financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such entities also to obtain PAN.
18. All companies irrespective of income to file return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact weather it has tax liability of Rs 3,000 or not.
19. Assessments to be E assessment under new section 143(3A)
20. No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.
21. Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @ 30%.
22. Penalty  for non filing financial return as required under section 285BA being increased to Rs 500 per day.
23. Government to contribute 12% Employees' Provident Fund for new employees for 3 years, Only Women can Contribute 8% to EPF upto first 3 year & for man as earlier policy no change.
24. 100% deduction will be allowed to Farmer Producer Company.
25. Mediclaim Benefits for Senior Citizen upto 80,000/, this is an additional benefit of Rs 50,000/- given by government.
26. Interest on FD, Saving Bank, Post office or any upto 50000/- allowed as Deduction u/s 80TTA only for Senior citizen & for other upto Rs 10,000 as earlier no change. 
27. Projected fiscal deficit upto 2019 will be 3.3% & upto Mar 2018 will be 3.5%

The budget focuses on the needs of the rural areas, hence the definition of 'Navbharat' can be strengthened. The 'Aayushyaman Bharat Yojana' can provide great medical care to the poor and this will be a milestone in upcoming era. One positive aspect of this budget is, government has reduced the corporate rates on micro, small and medium scale industries. Government says that, the budget is helpful in increasing the progress of basic stuff.

Let's focus on some important other announcements -

Increase in TV, Mobile phones rates, Last year, 8.27 crore populations has paid the tax. This year,  number of this population will increase. There is an increase in the Income tax with Rs. 90 thousand crore. Parliament members will be happy with the increased salary from April 2018. There will be increase in the payment of President, vice president & Governor. Two government insurance company will be established in the share market.Investment of Rs.7148 crore for Clothing industry. Expansion of railway routes in Mumbai upto 90 km. All railway station, railways will have CCTV cameras & wifi connection..Number of airports will increase by 5 %. Upgradation of 600 railway station in all over the country.Development in the production industry-Arun Jaitley. India's Economy will be on the 7th rank.Indirect taxation system has become easier due to GST.Digital education system will be focused. Training will be provided to 13 lakh teachers. Providing  training to workers,  for Mumbai-Ahemadabad bullet project has been started  at vadodara. Womens will get Ujjwala gas connection. Rs.600 crore invested for TB treatment. Eklavya school will be opened for Aadivasi Children. Investment for 24 Medical colleges in all over country.Through, National Defence conservation fund new scheme for safety of passenger will be launched soon.Investment of Rs. 600 crore on Pure water scheme.

Other schemes such as, Swaccha Bharat Abhiyan will play a crucial role for constructing the toilets in needed areas. Mudra yojana will be helpful for 10.38 crore people. In upcoming year,70 lakhs Job opportunity will be developed says Jaitley. 50 lakhs youngsters will be provided with the training for job. Investment of Rs.3700 crore as a loss compensation after demonetization. This is the promising factor seen in the budget. New Employees will get 12% amount in their E-PF. 187 schemes will be approved for cleaning project of river Ganga. 40% people in the country will get health insurance. Every year, Rs 5 lakhs will be invested on each & every family for medical services. Donation of  Rs.1 crore for educational field. ‘Operation flood to be launched like Operation green. Approval of Loan of Rs.75 crore for Saving groups by government. 4 crore house will get free electricity /power connection under Pradhan Mantri Sobhagya Yojana. Expectation of economic growth to be 7.5 percent. Rs.11 lakhs crore reserved for agriculture loan. Investment of Rs.500 crore for Operation Green. Livestock & fishery industries to be blessed with Rs.10,000 crore. This is wonderful for the growth of sea food industries. 42 food parks will be established throughout the country says finance minister. Investment of Rs. 1400 crore for food processing industries. Marketing of agricultural product is needed & government will take the responsibility of that. 

Food oil, olive oil, peanuts oil vegetable oil,  material required for manufacturing of ear machines, solar panels will get cheaper. Major factor to be noted in the recent budget is, the government proposed the provision of the economic development of Industry, self employment. f and for this purpose, more than one lakh crores than last year has been invested.

Many people are saying  this year’s budget is seems to be disappointing in many ways but it is definitely promising in many sectors says finance minister. it is needed for basic economy development. Modi government has focused on the development of rural areas & poor people. This the the key factor explaining each and everything about budget. Medical services, health, education, agriculture is on the top. 

Thursday 25 January 2018

CA IPCC Result November 2017

On 25th January, 2017 ICAI notify the result Date, those exam which was held in November 2017 likely to be declare on 28th January,2018 at 6 p.m. but it may be declare soon around 4 p.m.

We wish you all the Best to all the Students who was appear for the CA-IPCC Exam November,2017 & pray to almighty to pass you with flying colours.

You can check your result on following website easily,
a. icaiexam.icai.org
b. caresults.icai.org
c. icai.nic.in

Click here to Download the Official Notification Issued by ICAI

Monday 8 January 2018

Everything you need to know about VAT Audit

VAT Audit, a process of checking the total paid tax by audit officers. Tax is collected from dealer/manufacturer or any importer which is levied by government. According to rules & guidelines provided by sales tax department, the officers issue a notice to the selected 10-20 percent dealers with respect to region. The dealers need to respond to the notice in a defined period or else has to face the actions taken by the officers. A financial audit may show that the financial records must be agree with the basic and important documents. There are different reasons and situations that may cause false result such as taxable sales are nowhere recorded, invoice receipts are duplicate or forged, products/goods have been taken from stock and not recorded, given discounts may reduce the taxable value incorrectly.

Motive of auditing is to bring the non performing asset into account and raise the tax revenue in government treasury. For this purpose some important legal formalities are required such as correct registration of the dealer, maintaining the accounting records, documents of business activities and other risk factors posed by the dealer are taken into consideration. Authorised auditors has to conduct the investigation according to the strict rules and instructions given by the department. Also has to treat the dealer in a kind way and also has to gain the personal information and assuring the dealer about it being confidential.  If the auditor fails to get co-operation or dealer not giving proper information or any unusual issues arised from the dealer’s side, the auditor has to report the scenario of the case to the investigation section.

As we know, the VAT Audit is broadly classified into three main categories i.e., general, refund and specific audit. In general audit a broad coverage of around five years tax payments of VAT dealers is declared. In case of urgent references late registrations, cancellation of registration or emergency situation specific audit is carried out. While performing audit a proper plan and program need to set up along with arranging an appointment with dealer,  doing mock drills to successfully carry out the audit without revealing the confidential information in public. In specific time period. The allotment for audits depends upon the annual tax, paid by the VAT dealer. For example,  the payable  tax of Rs 10 lakhs & more  should required only 5 days for auditing and Rs 2 lakhs-10 lakhs should require 3 days and annual tax payable below 2 lakhs should not extend more than two days.  The officers according to grade are initially allotted number of audit visit per month, say like deputy commissioner has four audit visits per month, assistant  commissioner have eight visits per month, the sale tax officer has to complete ten audit visits per month, to hot the actual target.  Actual management of Audit activity is an interesting part to be discussed. The actual & proper management of VAT audit section is the responsibility of additional commissioner sales tax. Planning  & achieving the VAT audit revenue target in the respective geographical region with the help of  joint commissioner VAT administration. Commissioner has to look for policy matters related to business audit and generating the general audit cases according to region. Joint and Deputy commissioner carries out different activities such as confirmation of satisfactory audit programs, maintaining control register for the cases allocated to his section, reviewing overall audit results achieved, conducting quarterly staff meetings to share opinions, views regarding areas & audit techniques. Responsibility of the sales tax officer ensuring the team audit program is completed.

The auditor has to frame a structural questionnaire to gain the detailed information from the dealers during the interviews This include professional as well as personal questions which can sometimes be irritating and disturbing, like all the “W” questions, who is the owner of the firm, who is providing the information to fill on VAT returns, what do you understand by VAT etc and  many more concerned questions.  Before completing the audit, the officers need to submit visit report till date. Also, if there are any queries or unresolved issues with the VAT dealers that has not been cleared on the visit should be referred to the immediate supervising authority and the final decision has to be notified to the VAT dealer within ten days and has to be recorded on Form Audit 6 as per regulation. The supervising authority retains all the daily visit reports analyze data, declarations and resolves the issues in specified time by submitting the final report.  After auditing any fraud cases investigated need to taken into consideration and strict actions are taken against that person or firm. Auditor plays vital role in identifying a potential fraud case, quantifying the fraud amount which need to be recollected back, collecting the data of the involved people in that case.

In case of fraud, the investigated fraud amount has to be paid back by the dealer also a legal investigation and prosecution in the court and the subjected financial penalties and punishments are liable on the dealers.  The VAT Auditors are having proper, special and technical  training about the VAT fraud cases which are handled by specialist fraud investigation team.  The online data of the tax need to be updated at the Mahavikas-official website of sale tax department of India, when it is updated. Till then the account data has to be maintained in book format(Offline data) provided by the authority.  The data submitted should be precise yet should fulfill all the requirements of the department. So that it helps the auditors to access the data easily. The level of documentation should be decreased to a minimum level by the auditors. This VAT audit may be the last audit because of GST i.e., Goods and Service Tax has been implemented in India on 1st July, 2017 governed by a GST council. This is the tax which is applicable throughout India. It is an indirect tax has already replaced all the other taxes which were earlier levied by state & central government, in all over India.