Audit Limit of 60 for Tax Audit is per Assessment year – ICAI

ANNOUNCEMENT

Modification in the Council Guidelines No. 1-CA(7)/02/2008 dated 8th August, 2008 as contained in Appendix No. (34) to the Chartered Accountants Act, 1949

The Council of the Institute at its 331st meeting held in February, 2014 decided to increase the specified number of tax audits from 45 to 60 and an Announcement dated 11.2.2014 in this regard was hosted on the website of the Institute. The Council subsequently at its 333rd meeting held in May, 2014 decided that the specified limit of 60 would relate to an assessment year as against the existing stipulation of a financial year.

In view of the aforesaid decisions of the Council, the existing Para 6 of Chapter VI of the Council Guidelines No. 1-CA(7)/02/2008 dated 8th August, 2008 as contained in Appendix No. (34) to the Chartered Accountants Act, 1949 stands modified as under:-

1. In para 6.1 (a) and (b), the figure “45” pertaining to specified number of tax audit assignment has been substituted by the figure “60”.

2. In para 6.0 and 6.1, the words “in a financial year” have been substituted by the words “relating to an assessment year”.

3. In para 6.1.6, the words “in each financial year” have been substituted by the words “relating to each assessment year”.

As already announced the revised limit of 60 tax audits would be applicable w.e.f. 1st April, 2014. The above announcement is published for information of the members at large.

(T. Karthikeyan)
Secretary

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Revised Para 6.0 and 6.1  of Council Guidelines No. 1-CA(7)/02/2008 dated 8th August, 2008 Related to Increase in Tax Audit limit are as follows :-

Chapter VI

Tax Audit assignments under Section 44 AB of  the Income-tax Act, 1961

6.0 A member of the Institute in practice shall not accept, relating to an assessment year, more than the “specified number of tax audit assignments” under Section 44AB of the Income-tax Act, 1961.

Provided that in the case of a firm of Chartered Accountants in practice, the “specified number of tax audit assignments” shall be construed as the specified number of tax audit assignments for every partner of the firm.

Provided further that where any partner of the firm is also a partner of any other firm or firms of Chartered Accountants in practice, the number of tax audit assignments which may be taken for all the firms together in relation to such partner shall not exceed the “specified number of tax audit assignments” in the aggregate.

Provided further that where any partner of a firm of Chartered Accountants in practice accepts one or more tax audit assignments in his individual capacity, the total number of such assignments which may be accepted by him shall not exceed the “specified number of tax audit assignments” in the aggregate.

Provided also that the audits conducted under Section 44AD, 44AE and 44AF of the Income Tax Act, 1961 shall not be taken into account for the purpose of reckoning the “specified number of tax audit assignments”.

6.1 Explanation:

For the above purpose, “the specified number of tax audit assignments” means –

      (a)  in the case of a Chartered Accountant in practice or a proprietary firm of Chartered Accountant, 60 tax audit assignments, relating to an assessment year, whether in respect of corporate or non-corporate assesses.

      (b)  in the case of firm of Chartered Accountants in practice, 60 tax audit assignments per partner in the firm, relating to an assessment year, whether in respect of corporate or non-corporate assesses.

6.1.1 In computing the “specified number of tax audit assignments” each year’s audit would be taken as a separate assignment.

6.1.2 In computing the “specified number of tax audit assignments”, the number of such assignments, which he or any partner of his firm has accepted whether singly or in combination with any other Chartered Accountant in practice or firm of such Chartered Accountants, shall be taken into account.

6.1.3 The audit of the head office and branch offices of a concern shall be regarded as one tax audit assignment.

6.1.4 The audit of one or more branches of the same concern by one Chartered Accountant in practice shall be construed as only one tax audit assignment.

6.1.5 A Chartered Accountant being a part time practicing partner of a firm shall not be taken into account for the purpose of reckoning the tax audit assignments of the firm.

6.1.6 A Chartered Accountant in practice shall maintain a record of the tax audit assignments accepted by him relating to each assessment year in the format as may be prescribed by the Council.

(Compiled by CA Sandeep Kanoi- Source- ICAI)

Tax Audit Limit for Business Rs. 2 Crore & for Profession Rs. 1 Crore