How to Prepare Tax Audit 3CA-3CD and 3CB-3CD

Zen IT || How to Prepare Tax Audit 3CA-3CD and 3CB-3CD

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How to Prepare Tax Audit 3CA-3CD and 3CB-3CD

Preparing a Tax Audit Report (TAR) in India involves compliance with Section 44AB of the Income Tax Act, 1961. Chartered Accountants (CAs) are responsible for conducting and filing the tax audit report in Form 3CA/3CB and 3CD. Here’s a step-by-step guide on how to prepare a tax audit report:

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1. Understand the Applicability of Tax Audit
Tax audit is a process to ensure that the taxpayer has maintained proper books of accounts and complied with the provisions of the Income-tax Act. The key aspects of understanding the applicability of tax audit include:
Applicability of Tax Audit Under Section 44AB:

  1. Businesses:

    • Turnover exceeding ₹1 crore: Tax audit is mandatory if the total sales, turnover, or gross receipts of the business exceed ₹1 crore in the relevant previous year.
    • Increased limit of ₹10 crores: If cash transactions (both receipts and payments) are not more than 5% of total transactions, the threshold for tax audit increases to ₹10 crores.

  2. Professionals:

    • Gross receipts exceeding ₹50 lakhs: Professionals (like doctors, lawyers, architects) must get their books audited if their gross receipts exceed ₹50 lakhs in the relevant previous year.

  3. Presumptive Taxation Scheme (Section 44AD, 44ADA, 44AE):

    • Business under Section 44AD: If the taxpayer has opted for presumptive taxation and declares profits lower than 8% (or 6% for digital receipts) of turnover or gross receipts, and their income exceeds the basic exemption limit, a tax audit is required.
    • Profession under Section 44ADA: Professionals declaring income less than 50% of gross receipts and with total income exceeding the basic exemption limit need a tax audit.
    • Transporters under Section 44AE: If the taxpayer claims income less than the prescribed amount under this section, tax audit becomes mandatory.

  4. Other Specific Situations:

    • Non-residents with Indian operations: If the turnover from Indian operations exceeds the threshold, a tax audit is required.
    • Opting out of Presumptive Taxation: Taxpayers who have previously opted for the presumptive scheme under Section 44AD but wish to opt out of it are required to undergo a tax audit for the current year.
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Follow these steps to prepare the tax audit report in the software:
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Step 1:
To Import the Tax audit Report (3CD) 
1. Import From Previous Year Click Here.
2. Import From Other Client Click here.
3. Import From XML/JSON Click Here.
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Step 2:
Go to Audit >> Tax Audit >>New 3CD W.E.F 20.08.2018
1. Select the Flags >> Yes/No/NA.
2. Check mark On Annexures Which Is Applicable.
3. Click On "Annexure" Button and Fill The Annexures Or Import Form Excel >> How to Import 3CD Annexure Through Excel Template.
4. Click on "Save" button.
5. Go to "3CB-3CD or 3CA-3CD" to generate the Report or Create the JSON/XML file.


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Step 3:
Go to "3CB-3CD or 3CA-3CD" Button:
1. 3CB/3CA Report >> Generate the Separate Report.
2. 3CD Report >> Generate the Separate Report.
3. Tax Audit Consolidated Report >> To Generate Consolidated Report  or Enter the Qualification/ Observation Comments Click Here to Know the Process, and Enter the Head Office address details.
4. 3CB-3CD/3CA-3CD JSON Button>> To Generate the JSON.





Hope This Helps.

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