Tax Audit Checklist

Clause Clauses under Form 3CD Step recommended WP Ref By

FR! 3CD
P A R T " A
1 Name of the Assessee #
2 Address # Check the address as per
Income Tax record and obtain
any evidence available in this
regard.
If there is any change in the
address till the date of si$nin$
of the report% check that new
address is mentioned in orm
!C".
! #ermanent Acco$nt N$mber % &erify from the #A Card or any
other doc$ment.
' (tat$s % Company)irm)A*# etc.
+ #revio$s ,ear -nded % !1
st
.arch
/ Assessment ,ear % 2001211
P A R T & B
3 4a5 If firm or Association of #ersons6
indicate names of partners)
members and their profit sharing
ratios.
% &erify from the #artnership
"eed)A*# agreement.
4b5 If there is any change in the
partners or members or in their
profit sharing ratio since the last
date of the preceding year6 the
partic$lars of s$ch change.
% 2 do 2
'ote% In case of any change attach
copy of partnership deed with the
Income2tax ret$rn if re7$ired.
8 4a5 Nat$re of b$siness or profession
4if more than one b$siness or
profession is carried on d$ring the
previo$s year6 nat$re of every
b$siness of profession5.
% In respect of each class of
b$siness6 it is necessary to
mention whether assessee is
man$fact$rer6 dealer6 service
provider6 etc.
4b5 If there is any change in the
nat$re of b$siness or profession6
the partic$lars of s$ch change.
% 9eview a$dited :alance (heet
and other relevant records to
ascertain whether there is any
apparent change in the b$siness
carried o$t by the assessee6
which may need to be
highlighted $nder this cla$se. In
partic$lar6 examine whether any
b$siness or activity has been
discontin$ed6 any new activity
has been commenced or whether
#age 1 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
there has been any expansion of
the existing b$siness.
Additional activity started with
in the same b$siness carried on
by the assessee does not mean
change in nat$re of b$siness or
profession e.g. if the assessee is
in the b$siness of man$fact$ring
shirts also starts man$fact$re of
tro$sers.
*btain management
representation.
or change in b$siness besides
<*9 go thro$gh the following %
Any notes given in Notes
to Acco$nts.
Any notes given by :oard
of "irectors in their report.
Compare the (egment
9eporting of this year with
last year.
Compare 7$antitative
details of this year with last
year.
; 4a5 =hether books of acco$nt are
prescribed $nder section ''AA6 if
yes6 list of books so prescribed.
% Applicable for assessee carrying
profession for the time being.
4b5 :ooks of acco$nt maintained.
4In case books of acco$nt are
maintained in a comp$ter system6
mention the books of acco$nt
generated by s$ch comp$ter
system5
% Check complete list of all
primary books of acco$nts
maintained by the assessee.
Check whether books of
acco$nts have been generated
from comp$ter system or not.
*btain management
representation.
4c5 <ist of books of acco$nt
examined.
% "isclose the list of books of acco$nt
examined.
10 =hether the profit and loss
acco$nt incl$des any profits and
gains assessable on pres$mptive
basis6 if yes6 indicate the amo$nt
and the relevant section 4''A"6
''A-6 ''A6 '':6 ''::6
''::A6 ''::: or any other
relevant section5.
% >enerally Not applicable.
?owever go thro$gh the
consolidated #rofit @ <oss acco$nt
to see whether it incl$des any s$ch
profit.
11 4a5 .ethod of acco$nting employed
in the previo$s year.
% 9eview Acco$nting policies
from a$dited acco$nts. Check
whether assessee is following
.ercantile or Cash method of
acco$nting.
=hile following .ercantile
#age 2 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
basis of acco$nting6 check
whether any item of income or
expense is acco$nted for on
cash basis. (ince ?ybrid
method of acco$nting is not
allowed6 state the nat$re and
amo$nts of s$ch items.
4b5 =hether there has been any
change in the method of
acco$nting employed vis2a2vis the
method employed in the
immediately preceding previo$s
year.
% (cr$tiniAe the last week of last
monthBs Co$rnal vo$chers
thoro$ghly to see provisions for
expenses made @ whether they
are on same basis as in earlier
year. #ayment vo$chers for first
two months of s$bse7$ent year
sho$ld be scr$tiniAed to verify
the correctness thereof.
-ns$re that following heads of
acco$nts are scr$tiniAed
thoro$ghly and compared with
earlier year to check whether
acco$nting is on same basis as in
earlier years.D
9ef$nd for income2tax6
sales tax6 etc.
-xport incentives
Claims for loss or damage
>rants)($bsidies
Interest on delayed
payments
"etermine whether there has
been any change in the method
of acco$nting employed vis2E2vis
the method employed in the
immediately preceding year.
4c5 If answer to 4b5 above is in the
affirmative6 give details of s$ch
change6 and the effect thereof on
the profit or loss.
% -ns$re that any change in the
method of acco$nting employed
is appropriately disclosed and the
effect thereof on the profit)loss is
also disclosed.
*btain management
representation.
4d5 "etails of deviation6 if any6 in the
method of acco$nting employed
in the previo$s year from
acco$nting standards prescribed
$nder section 1'+ and the effect
thereof on the profit or loss.
% Check whether there is any
deviation from the Acco$nting
(tandard 4IT5 F I @ Acco$nting
(tandard 4IT5 F II notified
$nder section 1'+425 of IT Act
regardingD
a5 $ndamental acco$nting
ass$mption of Accr$al6
Consistency @ >oing
Concern.
b5 #r$dence6 ($bstance over
form @ .ateriality in
acco$nting policies.
#age ! of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
c5 "isclos$re of significant
acco$nting policies and
changes in s$ch policies
with the res$ltant impact6 if
material on acco$nts of
year of change or
s$bse7$ent year.
d5 "isclos$re of prior period
and extraordinary items or
change in acco$nting
estimate in #rofit @ <oss
Acco$nt and report the
effect thereof on profit @
loss.
-ns$re that deviation from s$ch
standards is appropriately
disclosed and the effect thereof
on the profit)loss is also
indicated.
12 4a5 .ethod of val$ation of closing
stock employed in the previo$s
year.
% Closing stock wo$ld incl$de raw
material6 finished goods6 work in
progress6 stores6 spare and loose
tools and shares)$nits in case of
investment companies..
Change in the method of
val$ation of opening and closing
stock6 incl$ding effect of change6
is now covered $nder cla$se 11.
Agree the method of val$ation
with a$dited working papers and
a$dited financial statements.
4b5 "etails of deviation6 if any6 from
the method of val$ation
prescribed $nder section 1'+A6
and the effect thereof on the profit
or loss.
% "eviation normally occ$rs in case
of stock of 9aw .aterial6 (tores6
=I# etc. only and in case of
finished goods to the extent of cost
of raw material etc. comprised
therein which are val$ed net of
&AT. Altho$gh there may not be
any impact d$e of Cenvat and &AT.
>ive appropriate note)working
4existing note if any needs
amendment5.
12 A >ive the following partic$lars of
the capital asset converted into
stock2in2trade%2
&erify any fixed asset converted
into stock in trade. >ive the
necessary details.
4a5 "escription of capital assetD
4b5 "ate of ac7$isitionD
4c5 Cost of ac7$isitionD
4d5 Amo$nt at which the asset is
converted into stock2in2trade
1! Amo$nts not credited to the profit
and loss acco$nt6 being 2
%
4a5 The items falling within the
scope of section 28D
% -n7$ire whether any item of
#age ' of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
income chargeable $nder G#rofit
and >ains of :$siness of
#rofessionB has not been credited
to the profit and loss acco$nt.
(ection 28 covers %
2 #rofits and gains of
b$siness or profession
2 Compensation received on
termination of
employment6 agency6 etc.
2 Income of trade or
professional or similar
association from specific
services to members
2 -xport incentives
2 #er7$isites received d$ring
the co$rse of b$siness
2 Interest6 salary6 bon$s6
rem$neration6 etc. received
by a partner from firm6
which is allowable $nder
section '0:.
2 Amo$nt received $nder
key manBs ins$rance policy
Th$s6 if any s$ch item is taken to
any acco$nt directly in the
:alance (heet6 it will be covered
$nder this cla$se.
9eview the a$dited sched$les
and financial statements to
determine whether s$ch income
has been credited directly to
reserves or retained as a credit
$nder the head Gc$rrent liabilities
and provisionsB or any other
head.
*btain management
representation.
4b5 The proforma credits6
drawbacks6 ref$nds of d$ty
of c$stoms or excise6 or
service tax6 or ref$nd of
sales tax or val$e added tax
where s$ch credits6
drawbacks or ref$nds are
admitted as d$e by the
a$thorities concernedD
% *btain a sched$le indicating the
details of the following claims
admitted as due (y the
concerned authorities (ut not
credited to the profit and loss
account) The sched$le sho$ld
also indicate the year in which it
was admitted as d$e.
2 #roforma credits
2 "$ty drawbacks
2 -xcise)C$stom d$ty
ref$nds
2 (ales tax ref$nds
2 (ervice tax ref$nds
2 &AT ref$nds
*btain an $nderstanding of the
relevant acco$nting policies
Hrefer cla$se 114a5I.
Agree the sched$le with the
#age + of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
claim papers and relevant
correspondence files. $rther
ens$re that the claims have been
admitted as d$e by the concerned
a$thorities.
9eview the relevant assessment
orders to determine whether any
s$ch claims are d$e.
*btain management
representation.
4c5 -scalation claims accepted
d$ring the previo$s yearD
% *btain a sched$le indicating
details of escalation claims
accepted d$ring the year b$t not
credited to the profit and loss
acco$nt. The sched$le sho$ld
also indicate the year in which it
was accepted as d$e. Certain
instances of escalation claims
may be in relation of contract
with government c$stomers and
other sales to c$stomers having
escalation cla$se in contracts.
*btain an $nderstanding of the
relevant acco$nting policies
Hrefer cla$se 114a5I.
Agree the claims accepted with
contracts and other relevant
doc$ments and ens$re that
claims have been accepted by the
concerned a$thorities.
*btain management
representation.
4d5 Any other item of incomeD % -n7$ire whether any item of
income chargeable to tax $nder
heads of income other than
G#rofits and >ains of :$siness or
#rofessionB has not been credited
to profit and loss acco$nt.
9eport all items of income which
are credited to expense heads
with a note that this has no
impact on the net profit.
9eview the a$dited sched$les
and financial statements to
determine whether s$ch income
has been credited directly to
reserves or retained as a credit
$nder the head Gc$rrent liabilities
and provisionsB or any other
head.
*btain management
representation.
4e5 capital receipt6 if any. % -n7$ire whether any capital
receipt ha s not been credited to
#age / of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
profit and loss acco$nt. or
instance6 capital receipts may be
in the nat$re of grants)s$bsidies6
Note% In case of non2compete fees
directly taken to reserves or
capital acco$nt report the
same in cla$se 1!4a5 also.
$rnish details of gifts received
d$ring the year.
(hare premi$m acco$nt.
(hare forfeit$re.
Capital reserve arising on merger
and demerger.
$rnish details of the amo$nt of
capital nat$re received or
receivable on transfer of
technology6 knowhow6 and
patent d$ring the financial year
and treatment thereof in
acco$nts.
*btain an $nderstanding of the
relevant acco$nting policies
Hrefer cla$se 114a5I.
9eview the a$dited sched$les
and financial statements to
determine whether s$ch capital
receipt has been credited directly
to reserves or retained as a credit
$nder the head Gc$rrent liabilities
and provisionsB or any other
hand.
*btain management
representation.
1'
4a5
4b5
4c5
4d5
#artic$lars of depreciation
allowable as per the Income2tax
Act61;/1 in respect of each asset
or block of assets6 as the case may
be6 in the following form %2
"escription of asset)block of
assets
9ate of depreciation.
Act$al cost or written down
val$e6 as the case may be.
Additions)ded$ctions d$ring the
year with datesD in the case of any
addition of an asset6 date p$t to
$seD incl$ding adC$stments on
acco$nt of2
4i5 .odified &al$e Added
Tax credit claimed and
allowed $nder the
Central -xcise 9$les6
1;''6 in respect of assets
ac7$ired on or after 1
st
.arch6 1;;'6
4ii5 Change in rate of
% *btain a sched$le providing the
relevant details indicated in the
aforesaid cla$se in respect of
each asset or block of assets. In
partic$lar6 ens$re that the
following have been incl$ded %
2 =ritten down val$e at the
beginning of the year.
2 Assets ac7$ired d$ring the
year have been segregated
between the assets p$t to
$se for less than 180 days
and those $sed for more
than 180 days
2 "ed$ctions d$ring the year
represent the sale proceeds
of assets sold
2 9ates of depreciation.
4i5 9efer Appendix 1
and Appendix 1A as
the case may be.
4ii5 Appendix 1A is
applicable in respect of
#age 3 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
4e5
4f5
exchange of c$rrency6
and
4iii5 ($bsidy or grant or
reimb$rsement6 by
whatever name called.
"epreciation allowable.
=ritten down val$e at the end of
the year.
#ower >eneration
companies.
2 -ven in a case where the
a$ditee has decided not to
claim depreciation in part
or f$ll6 give f$ll details of
depreciation allowable.
9eview assessments completed)
prior year tax ret$rns to examine
the basis adopted in earlier years
for determination of depreciation
allowable. Also ascertain
whether any aggressive positions
have been adopted by the clinet
and examine implications
thereof.
or additions d$ring the year
ens$re that the classification of
assets or block of assets and the
rates of depreciation is in
accordance with the
re7$irements of the Income Tax
Act6 1;/1.
Agree the written down val$e at
the beginning of the year to the
ret$rn of income of the
immediately proceding year.
Agree the additions with the
a$dited sched$les and ens$re that
ade7$ate tests have been carried
o$t for Gact$al costB capitaliAed
and the dates the assets were Gp$t
to $seB. *btain a reconciliation to
the additions as per the a$dited
sched$les6 where necessary.
Certain instances of s$ch
reconciling items may be capital
expendit$re on scientific
research6 leasehold
improvements6 etc.
-ns$re that the policies followed
are consistent with the
re7$irements of the Income Tax
Act6 1;/1.
or assets ac7$ired d$ring the
year6 obtain an $nderstanding of
the acco$nting policy for the
following %
2 .odvat credit
2 -xchange fl$ct$ation
incl$ding in respect of
realiAed gains) losses6
$nrealiAed gain)losses and
treatment of forward
exchange contracts.
2 ($bsidy or grant or
reimb$rsement.
#age 8 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
"epreciation capitaliAed.
Any expendit$re which does not
relate to ac7$isition of #@. b$t
capitaliAed as part of
preoperative expense.
-ns$re capitalisation of interest
in respect of borrowed capital as
per (ection !/4154iii5.
Agree the amo$nts incl$ded as
adC$stments on acco$nt of
modvat6 change in exchange
rates and s$bsidy)grant with the
a$dited sched$les and other
relevant s$pporting doc$ments.
Check the implications of section
'!A of Income Tax Act.
Agree the ded$ctions d$ring the
year with a$dited sched$les and
ens$re that s$ch amo$nt
reconciles with the amo$nt
considered for determining the
profit)loss on assets sold6
discarded etc.
9eview the depreciation
comp$tation and ens$re the
arithmetical acc$racy of the
depreciation allowable and the
written down val$e at the end of
the year.
-ns$re that additional
depreciation $)s !24ii54a5 is
compiled and red$ced from
="&.
1+ Amo$nts admissible $nder
sections2
4a5 !!A:
4b5 !!A:A
4c5 !!AC 4wherever applicable5
4d5 !+
4e5 !+A::
4f5 !+AC
4g5 !+CCA
4h5 !+CC:
4i5 !+"
4C5 !+""
4k5 !+""A
4l5 !+-J
4a5 "ebited to the profit and
loss acco$nt 4showing the
amo$nt debited and
ded$ction allowable $nder
each section separately5D
4b5 not debited to the profit and
loss acco$nt.
%
%
%
*btain a sched$le giving details
of ded$ction admissible $nder
the relevant sections6 indicating
separately6 the amo$nts debited
to profit and loss acco$nt and not
debited to profit and loss
acco$nt. The relevant sections
are as follows%
2 !+ -xpendit$re on scientific
research
2 !+CCA -xpendit$re by way
of payment to associations and
instit$tions for carrying o$t
r$ral development
programmes.
2 !+CC: -xpendit$re by way
of payment to associations and
instit$tions carrying o$t
programmes of conversa2tion
of nat$re reso$rces.
2 !+" Amotisation of certain
preliminary expenses.
2 !+""
#age ; of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
2 !+""A
9eview the comp$tation of the
amo$nts admissible $nder the
aforesaid sections and agree the
same with the a$dited sched$les6
financial statements and other
relevant s$pporting doc$ments.
*btain management
representation.
1/ 4a5 Any s$m paid to an employee as
bon$s or commission for services
rendered6 where s$ch s$m was
otherwise payable to him as
profits or dividend H(ection !/415
4ii5I.
% $rnish details of bon$s or
commission6 if any6 to an
employee for services rendered
which otherwise was payable as
profits or dividend.
Normal bon$s or commission to
employees incl$ding directors
even as percentage of profits is
not covered $nder this s$b2cla$se
$nless the same was otherwise
payable as profits or dividend.
4b5 Any s$m received from
employees towards contrib$tions
to any provident f$nd or
s$perann$ation f$nd or any other
f$nd mentioned in section 242'5
4x5 and d$e date for payment and
the act$al date of payment to the
concerned a$thorities $nder
section !/4154va5.
% $rnish details of any s$m
received from the employees
towards the contrib$tion to%
a5 #rovident $nd
b5 -(I $nd
c5 ($perann$ation $nd
d5 Any other f$nd for the
welfare of employees.
$rnish details of d$e date of
payment and act$al dates of
payment for the amo$nt received
from employees towards vario$s
f$nds stated in above para.
The d$e date of # Contrib$tion
is 1+ days and in case of -(I
Contrib$tion is 21 days from the
end of the month to which salary
relates.
9efer to Circ$lar No. -1284I5
/02 III dated 1;.0!.1;/' as
modified by circ$lar -11)128)3!
dated 2'.10.3! iss$ed by the
concerned a$thorities granting +
days of grace period for payment
for payment of # Contrib$tion .
The d$e date will be determined
accordingly.
13 Amo$nts debited to the profit and
loss acco$nt6 being %2
%
4a5 expendit$re of capital nat$reD % $rnish detail of following
expendit$re debited to #rofit @
<oss Acco$nt%
a5 Capital -xpendit$reD
b5 Capital Items which are
#age 10 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
f$lly or partly written off in
#@< Acco$ntD
c5 (cientific 9esearch
-xpenses @ Technical
Know ?ow eesD
d5 =rite of advance paid for
capital expendit$re) capital
proCect.
e5 ees or -xpendit$re
connected with increase in
a$thorised capital6 iss$e of
bon$s shares6 travelling @
other expenses connected
with p$rchase of capital
assets etc.
f5 Amo$nt debited on acco$nt
of preliminary expenses
4!+"56 &9( expenses
4!+""A56 .erger)"emerger
expenses 4!+""5.
Check the following head of
acco$nts min$tely%
a5 (tore @ spare parts
cons$med
b5 9epair @ .aintenance
c5 .isc. -xpenses
d5 <egal @ #rofessional
If in yo$r opinion6 any item of
expendit$re debited to the #@<
Acco$nt is not of capital nat$re
b$t there is possibility of holding
s$ch a view6 f$rnish details with
yo$r views on the same.
*btain an $nderstanding of the
capitaliAation policy followed by
the client.
If any amo$nt reported as
capital expendit$re is in the
nat$re of fixed asset item incl$de
the same in cla$se No.1'.
*btain management
representation letter.
4b5 expendit$re of personal
nat$reD
% Lnder section 22341A54c5 of the
Companies Act6 1;+/6 the
a$ditor is re7$ired to en7$ire
whether personal expenses have
been charged to the reven$e
acco$nt. If there is any s$ch
comment in the a$ditorBs
stat$tory report then obtain a
sched$le of personal expenses
debited to the profit and loss
acco$nt.
In case of expendit$re inc$rred
at cl$b the same are to be
reported $nder cla$se 134d5.
#age 11 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
?owever to the extent of
personal element in the said
expendit$re6 the same sho$ld be
reported here also.
-xpenses of personal nat$re paid
$nder a contract$al obligation
need not be disclosed.
Agree with the a$dited sched$les
s$pporting the comments in the
a$ditorBs stat$tory report.
9eview the relevant acco$nts to
ens$re that no other expendit$re
of personal nat$re has been
charged to the profit and loss
acco$nt.
*btain management
representation.
4c5 expendit$re on
advertisement in any
so$venir6 broch$re6 tract6
pamphlet or the like6
p$blished by a political
partyD
% $rnish details of the expenses
inc$rred on advertisement if any
p$blished for a political party
$rnish details of expendit$re
inc$rred on advertisement in
so$venir6 broch$re6 tract6
pamphlet or Co$rnal p$blished by
trade $nion6 labo$r $nion or any
other body formed by political
party.
Agree the sched$le with the
relevant s$pporting doc$ments.
Note % #olitical parties wo$ld
incl$de both national and regional
parties6 which are approved by the
-lection Commission.
9eview the advertisement6 sales
promotion and other relevant
acco$nts to ens$re that all s$ch
expendit$re has been
appropriately disclosed.
*btain management
representation.
4d5 expendit$re inc$rred at cl$bs 2 %
4i5 as entrance fees
and s$bscriptionsD
4ii5 as cost for cl$b
services and
facilities $sedD
$rnish the detail of expenses
made to cl$bs $nder following
heads%
2 -ntrance fees
2 ($bscriptions
2 Catering :ills
2 9esidential
Accommodation Charges
2 -xpendit$re towards $se of
cl$b services and facilities
i.e. health cl$b. :ar.
Conference @
entertainment expenses etc.
9eimb$rsement of cl$b
#age 12 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
payments to directors)employees
sho$ld be incl$ded in the above
statement.
($bscriptions and other
payments made to service
organiAations like <ions Cl$b6
9otary Cl$b6 >iants6 Maycees etc.
wo$ld not be incl$ded $nder this
cla$se.
#ayments made to credit
agencies like "iners Cl$b wo$ld
not be incl$ded $nder this cla$se.
#ayments to cl$bs wo$ld incl$de
payments to >ymkhanas.
9eview the relevant acco$nts
and ens$re that all expendit$re
inc$rred at cl$bs has been
appropriately disclosed.
*btain management
representation.
4e5 4i5 expendit$re by way of
penalty or fine for
violation of any law for
the time being in forceD
4ii5 any other penalty
or fineD
4iii5 expendit$re
inc$rred for any p$rpose
which is an offence or
which is prohibited by
lawD
% $rnish the detail of expendit$re
by way of penalty or fine debited
d$ring the financial year.
$rnish detail of compensation
debited for breach of contract
d$ring the financial year.
$rnish copies of penalty orders
passed d$ring the financial year
$nder relevant laws6 which are
applicable to assessee.
$rnish detail of gifts given to
government officials.
$rnish details of expendit$re
inc$rred s$ch as protection
money6 extortion money6 reg$lar
hafta, bribe etc.
$rnish detail of penalty debited
which are in the nat$re of
interest $nder any stat$e.
9eview the legal and
professional fees6 rates and taxes6
sales tax paid or any other taxes
paid6 general charges acco$nt
and other relevant acco$nts and
ens$re that all s$ch expendit$re
has been appropriately disclosed.
*btain management
representation.
Lns$pported expendit$re may
need to be reviewed to determine
whether it needs to be incl$ded
$nder Gexpendit$re6 which is an
offence or prohibited by lawB.
4f5 amo$nts inadmissible % $rnish detail of Interest6
#age 1! of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
$nder section '04a5D royalty6 fees for technical know
how6 services and other s$ms6
which are payable o$tside India6
on which tax has not been paid
or ded$cted or ded$cted and paid
at rate less than the prescribed
rate.
$rnish detail of expenses
payable as reimb$rsement of
expenses o$tside India on which
tax has not been ded$cted or paid
at so$rce.
$rnish details of payment6
which is chargeable $nder the
head salaries payable o$tside
India and on which Tax has not
been ded$cted.
$rnish any interest6
commission6 brokerage6 fees for
professional services or for
technical services6 amo$nt
paid)payable to contractor and
rent6 royalty on which tax has
not ded$cted or ded$cted at rate
less than the prescribed rate or
after ded$ction of T"( is not
deposited within the d$e date
4Ignore late deposit of T"( cases
if the same is deposited by the
end of financial year5. H(ection
1;'C6 1;'A6 1;'?6 1;'I6 1;'M
and section ;4154vii5 @ ;4154vi5I.
$rnish any payment made
towards a provident f$nd or
other f$nd established for the
benefit of employees for which
tax has not been ded$cted at
so$rce.
$rnish any tax act$ally paid $)s
104CC5.
$rnish ringe benefit tax
4below the line or above the
line5.
$rnish (ec$rities transaction tax
if debited to #rofit @ <oss
acco$nt or if not debited to #rofit
@ <oss Acco$nt.
In case (TT component is
adC$sted in the cost of
investment)sale price then
appropriate amo$nt shall also be
disclosed as amo$nt not debited
to #rofit @ <oss Acco$nt.
$rnish any amo$nt paid on
acco$nt of rate or tax levied on
profits 4incl$ding any tax paid on
profit o$tside India5.
#age 1' of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
9eview all expenses payable and
provision for expenses for '!:
@ T"( defa$lt.
$rnish details of Income Tax @
=ealth Tax debited to #@<
Acco$nt d$ring the year.
Agree the details with a$dited
sched$les and other relevant
s$pporting doc$ments.
*btain management
representation.
4g5 interest6 salary6 bon$s6
commission or
rem$neration inadmissible
$nder section '04b5)
'04ba5 and comp$tation
thereofD
% Applicable only for partnership
firms.
4h5 4A5 whether a certificate has
been obtained from the
assessee regarding
payments relating to
any expendit$re
covered $nder section
'0A4!5 that the
payments were made by
acco$nt payee che7$es
drawn on a bank or
acco$nt payee bank
draft6 as the case may
be6 4,es)No5
4:5 amo$nt inadmissible
$nder section '0A4!56
read with r$le /""
Hwith break2$p of
inadmissible amo$ntsI
% *btain a sched$le of all
payments made in excess of
9s.206000 made in cash. If s$ch
payments are exempt $nder any
of the cla$ses 4a5 to 4l5 of 9$le
/""6 indicate in the sched$le.
-ns$re that the conditions for
specific exemption $nder any of
the cla$ses 4a5 to 4l5 of 9$le /""
are satisfied. -ns$re that the
sched$le indicates the
comp$tation of disallowance as
per section '0A4!5.
#ayments exceeding 9s.206000
otherwise than by Acco$nt payee
che7$e or draft will attract 100N
disallowance.
$rnish details of *$tstanding
-xpenses of the financial year
for which payments are made in
s$bse7$ent year at the time in
excess of 9s. 206000)2 otherwise
than by a Acco$nt payee
che7$e)draft.
This sho$ld incl$de payments to
staff by way of salary6 travel
allowance etc.
*nly reven$e payments wo$ld
be covered. #$rchase of fixed
assets for which cash payments
are made in excess of 9s.206000
wo$ld not be covered.
#ayment for p$rchase of raw
materials and stocks wo$ld be
covered.
As per the ICAI6 in case no
proper evidence for verification
of the payments by Acco$nt
#age 1+ of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
payee che7$e or draft is
available the report sho$ld
comment that it is not possible
for $s to verify whether the
payments in excesss of
9s.206000 have been made
otherwise than by Acco$nt payee
che7$e or bank draft as the
necessary evidence is not in the
possession of the assessee.
9eview the payments in the cash
book and adC$stments to
advances)deposits to ens$re that
all cash payments exceeding
9s.206000 have been incl$ded in
the sched$le.
*btain certificate from a$ditee
that all payments exceeding
206000)2 for expenses if made by
che7$e) draft are made by
Acco$nt payee che7$e or
Acco$nt payee draft.
4i5 provision for payment of
grat$ity not allowable $nder
section '0A435D
% $rnish a copy of the order of
the Commissioner of Income
Tax granting recognition to the
grat$ity f$nd.
$rnish certificate that the
contrib$tion made does not
exceed permissible limit as per
r$les 10! @ 10' of Income Tax
9$les.
*btain a sched$le indicating the
provision for payment of grat$ity
not allowable $nder section
'0A435..
Agree the amo$nts provided with
the a$dited sched$les6 financial
statements and other relevant
s$pporting doc$ments and
ens$re that all s$ch expendit$re
hs been appropriately disclosed.
=hether contrib$tions have been
made to approved grat$ity f$nd6
review the copy of the tr$st deed
and r$les.
*btain management
representation.
-n7$ire whether CIT or 9#C
has withdrawn the exemption
d$ring the year.
&erify that the # Tr$st
recogniAed by CIT is also
recogniAed by # a$thorities.
4C5 any s$m paid by the
assessee as an employer not
% *btain a sched$le indicating the
s$m paid by the assessee as an
#age 1/ of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
allowable $nder section
'0A4;5D
employer6 not allowable $nder
section '0A4;5 i.e. towards
setting $p or formation or
contrib$tion to any f$nd6 tr$st6
company6 etc. other than D
2 9ecognised provident f$nd
2 Any # for exemption is
withdrawn by CIT.
2 9ecognised grat$ity f$nd
2 9ecognised s$perann$ation
f$nd
2 As re7$ired by or $nder
any other law.
Agree the details with a$dited
sched$les and other relevant
s$pporting doc$ments.
9eview the staff welfare and
other relevant acco$nts to ens$re
that all s$ch s$ms not allowable
$nder section '0A4;5 have been
appropriately disclosed.
*btain management
representation.
4k5 partic$lars of any liability of
a contingent nat$re.
% $rnish the detail of contingent
liabilities debited to the profit
and loss acco$nt indicating the
nat$re of the demand and the
reasons for making provisions in
the acco$nts.
9eview the a$dited acco$nts6 in
partic$lar the notes to the
acco$nts to ens$re that all
liabilities of a disp$ted nat$re
have been identified for f$rther
disc$ssion.
'ote # As per the ICAI these are
normally expenses connected with
disp$ted claims which will be
revealed only on the basis of the
scr$tiny of correspondence relating
to cases pending in a co$rt of law.
4l5 amo$nt of ded$ction
inadmissible in terms of
section 1'A in respect of the
expendit$re inc$rred in
relation to income which
does not form part of the total
income.
i5 >o thro$gh the ret$rn filed and
assessment order for last 2 to !
year to verify details and
categories of exempt income.
ii5 *btain management
representation as to income
which it is going to claim as
exempt in this year.
iii5 >o thro$gh the expenses
disallowed in the earlier year.
iv5 *btain details of expenses
pertaining to exempt income
s$ch as interest on f$nds
borrowed6 personal cost6 rent6
#age 13 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
traveling and other
administrative cost.
*+ ,n case there are no direct
expenses then disallo-ance
has to (e -orked out as per
Rule .D)
vi5 If adhoc expenses are stated
then give note)disclaimer.
vii5 In case of company having
$ndertaking of the nat$re of
10A)10:)10C then the
appropriate note be given
disclosing both income and
expendit$re as per the A$dit
9eport iss$ed $)s 10A)10:.
4m5 amo$nt inadmissible $nder
the proviso to section !/415
4iii5.
4a5 *btain details of
fixed asset which are ac7$ired
by borrowing loans.
4b5 In case of f$nds of
C)C acco$nt $sed and which
cannot be correlated determine
interest cost as per A(21/.
18 #artic$lars of payments made to
persons specified $nder section
'0A4254b5.
% *btain a sched$le from the client
indicating the following%
2 <ist of persons specified
$nder section '0A4254b5
2 "etails of payments made
to persons specified in
above list.
Agree the sched$le with D
2 9elevant contracts)
agreements with specified
persons.
2 9elevant s$pports for
payments made to s$ch
specified persons.
9eview the relevant acco$nts to
identify any payments made to
persons specified $nder section
'0A4254b5.
Compare the detail shown $nder
Tax A$dit with the 9elated
#arty (ched$le of I>AA#.
*btain management
representation.
Notes %
4i5 (alaries and
per7$isites etc paid to
directors or persons having
s$bstantial interest in the
company sho$ld be incl$ded
in the list referred to above.
4ii5 (ince disallowance in
#age 18 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
this case is at the discretion of
the Income Tax *fficer the
total amo$nt paid to s$ch
persons sho$ld be indicated
in the sched$le.
4iii5 As per the ICAI6 in the
case of a large company6 it
may not be possible to verify
the list of all persons covered
by this section therefore the
information s$pplied by the
assessee can be relied $pon. It
has f$rther stated that it may
be diffic$lt to identify all
payments in each and every
case where the vol$me of
transactions is rather h$ge
and vol$mino$s6 and
therefore6 it may be necessary
to restrict the scr$tiny only to
s$ch payments in excess of
certain monetary limits
depending $pon the siAe of
the concern and vol$me of
the b$siness of the assessee.
4iv5 ($ggested disclos$re
where the information is not
available with client is as
follows %

The company does not have
necessary information in
respect of the following %
4a5 directors and
their relatives of
companies having a
s$bstantial interest in
the companyD and
4b5 any person6 in
whose b$siness or
profession6 the directors
or their relatives have a
s$bstantial interest as
defined in the
explanation to (ection
'0A4254b5.
1; Amo$nts deemed to be profits
and gains $nder section !!A: or
!!A:A or !!AC.
% >o thro$gh the relevant sections.
20 Any amo$nt of profit chargeable
to tax $nder section '1 and
comp$tation thereof.
% *btain a sched$le indicating
amo$nt of profit chargeable to
tax $nder the aforesaid cla$se
and the comp$tation thereof.
Agree the details with a$dited
sched$les and other relevant
s$pport doc$ments.
#age 1; of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
9eview the relevant acco$nts to
ens$re that all s$ch s$ms have
been appropriately disclosed.
*btain management
representation.
21
O
4i5 In respect of any s$m referred to
in cla$se 4a564b564c564d564e5 or 4f5
of section '!:6 the liability for
whichD
4A5 pre2existed on the first day
of the previo$s year b$t
was not allowed in the
assessment of any
preceding previo$s year
and was
4a5 paid d$ring the
previo$s yearD
4b5 not paid d$ring the
previo$s yearD
4:5 was inc$rred in the
previo$s year and was
4a5 paid on or before the
d$e date for
f$rnishing the ret$rn
of income or the
previo$s year $nder
section 1!;415D
4b5 not paid on or before
the aforesaid date.
%
*btain a sched$le indicating the
following information in respect
of the items referred to in cla$se
4a56 4b56 4c56 4d56 4e5 and 4f5 of
section '!: %
2 <iability at the beginning
of the year
2 Amo$nt paid d$ring the
year incl$ding the date of
payment
2 Amo$nt not paid d$ring
the year
Agree the amo$nts and dates
with a$dited sched$les and
relevant s$pporting doc$ments.
*btain a sched$le in respect of
the items mentioned above6
specifically indicating the
following %
2 <iability inc$rred d$ring
the year
2 Amo$nt paid on or before
the d$e date for f$rnishing
the ret$rn of income $nder
section 1!;415 along with
date of payment.
2 Amo$nt not paid on or
before the aforesaid date.
The expenses6 which are
capitaliAed6 wo$ld also be
covered $nder this cla$se.
Check that all the fig$re shown
in annex$re are in agreement
with I>AA#.
In case there is any mismatch of
fig$res with books of acco$nts6
prepare reconciliation for the
same.
Take the copies of challan to
verify that amo$nts payable as
on last day of the financial year
are paid in s$bse7$ent year.
To verify if any conversion of
interest into loan or f$nded
interest has taken place d$ring
#age 20 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
the year.
Agree the amo$nts and dates
with a$dited sched$les and
relevant s$pporting doc$ments.
O (tate whether sales tax6 c$stoms
d$ty6 excise d$ty or any other
indirect tax6 levy6 cess6 impost
etc. is passed thro$gh the profit
and loss acco$nt.
22 4a5 Amo$nt of .odified &al$e
Added Tax credits availed of or
$tilised d$ring the previo$s year
and its treatment in the profit and
loss acco$nt and treatment of
o$tstanding .odified &al$e
Added Tax credits in the
acco$nts.
% 4i5 (tate the treatment
given in the books to .odvat)
Cenvat. >ive details w.r.t.
opening balance) credit
availed)credit $sed) closing
balance of all Cenvat acco$nt as
per Acco$nt books and -xcise
record with reconciliation.
4ii5 >o thro$gh the
reconciliation and report the
difference $nder the respective
cla$se of !C".
4b5 #artic$lars of income or
expendit$re of prior period
credited or debited to the profit
and loss acco$nt.
% $rnish a detail of
income)expendit$re relating to
prior period credited) debited to
the profit and loss acco$nt
d$ring the year.
Agree the details with a$dited
sched$les and relevant
s$pporting doc$ments.
9eview the items $nder the head
prior period adC$stment and the
notes to the acco$nts to ens$re
all s$ch expendit$re)income has
been disclosed in the above
sched$le.
In order to ascertain the correct
meaning of term P#rior #eriod
ItemJ refer to the text of
Acco$nting (tandard2 + iss$ed
by ICAI.
*btain management
representation.
2! "etails of any amo$nt borrowed
on h$ndi or any amo$nt d$e
thereon 4incl$ding interest on the
amo$nt borrowed5 repaid6
otherwise than thro$gh an
acco$nt payee che7$e H(ection
/;"I.
% *btain a sched$le of borrowing
and repayments 4incl$ding
interest5 of h$ndi loans otherwise
than by acco$nt payee che7$es.
Agree the details with the
a$dited sched$les and relevant
s$pporting doc$ments.
*btain management
representation.
*btain a sched$le of borrowing
and repayments 4incl$ding
interest5 of h$ndi loans otherwise
#age 21 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
than by acco$nt payee che7$es.
Agree the details with the
a$dited sched$les and relevant
s$pporting doc$ments.
*btain management
representation.
'ote % As per the ICAI in the
absence of concl$sive or
satisfactory evidence a s$itable
comment in the report as s$ggested
in cla$se 134h5 sho$0ld be made. %
As per the ICAI in the absence of
concl$sive or satisfactory evidence
a s$itable comment in the report
sho$ld be made.
2' 4a5O #artic$lars of each loan or deposit
in an amo$nt exceeding the limit
specified in section 2/;(( taken
or accepted d$ring the previo$s
year%2
%
4i5 name6 address and
permanent acco$nt
n$mber 4if available with
the assessee5 of the
lender or depositorD
% *btain a sched$le of loans and
deposits of 9s.206000 or more
taken or accepted d$ring the year
giving the relevant details as per
the aforesaid cla$se.
4ii5 amo$nt of loan or
deposit taken or
acceptedD
% The amount of Rs) /0%0001" or
more is to (e computed
inclusi*e of openin$ Balance in
the party account and for the
purpose of prepayment also%
amount credited as interest)
For the purpose of this clause%
loan1deposit -ould include%
amon$ others% the follo-in$#
a+ Security Deposits from
staff% a$ents% customers
-ith or -ithout interest
(+ 2oans from financial
institutions)
c+ Ad*ance in the nature of
loan deposit)
d+ Fixed deposit from pu(lic)
Agree the details with the
a$dited sched$les and other
relevant s$pporting doc$ments.
4iii5 whether the loan or
deposit was s7$ared $p
d$ring the previo$s yearD
% 9eview the loan6 deposit and
other relevant acco$nts to ens$re
all s$ch partic$lars have been
appropriately disclosed.
4iv5 maxim$m amo$nt
o$tstanding in the
acco$nt at any time
% *btain certificate from
management that loans accepted
d$ring the year and their
#age 22 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
d$ring the previo$s yearD repayment has been thro$gh an
acco$nt payee che7$es)draft.
Note %
4v5 whether the loan or
deposit was taken or
accepted otherwise than
by an acco$nt payee
che7$e or an acco$nt
payee bank draft.
% 4i5 As per the ICAI
information of each loan or
deposit of 9s.206000 or more
alone wo$ld be re7$ired by
this cla$se and where each
s$ch loan or deposit is less
than 9s.206000 and aggregate
alone exceeds 9s.2060006 the
partic$lars need not be
f$rnished.
O 4These partic$lars need not be
given in the case of a >overnment
Company6 a banking company or
a corporation established by a
Central6 (tate or #rovincial Act5.
4ii5 Advance received
against agreement of sale of
goods is not a loan)deposit.
4iii5 <oan taken from
financial instit$tions are
covered $nder this cla$se.
4iv5 (ec$rity deposits
against contracts etc. will be
covered by the definition of
GdepositB and the information
for the same will have to be
provided.
4b5 #artic$lars of each repayment of
loan or deposit in an amo$nt
exceeding the limit specified in
section 2/;T made d$ring the
previo$s year %2
%
4i5 name6 address and
permanent acco$nt
n$mber 4if available with
the assessee5 of the
payeeD
% *btain a sched$le of loans and
deposits of 9s.206000 or more
repaid d$ring the year giving the
relevant details as per the
aforesaid cla$se.
4ii5 amo$nt of the
repaymentD
% Agree the details with the
a$dited sched$les and other
relevant s$pporting doc$ments.
4iii5 maxim$m amo$nt
o$tstanding in the
acco$nt at any time
d$ring the previo$s year.
% 9eview the loan6 deposit and
other relevant acco$nts to ens$re
all s$ch partic$lars have been
appropriately disclosed.
4iv5 whether the repayment
was made otherwise than
by acco$nt payee che7$e
or acco$nt payee bank
draft.
% *btain management
representation.
'ote %
i5 9efer note 4i5 to 4v5 above.
ii5 *btain a certificate from the
assessee as prescribed in above
cla$se.
iii5 This cla$se is not applicable in
respect of loan taken and repaid
#age 2! of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
from)to :ank6 >ovt.6 >ovt.
company.
4c5 =hether a certificate has been
obtained from the assessee
regarding taking or accepting loan
or deposit6 ore repayment of the
same thro$gh an acco$nt payee
che7$es or an acco$nt payee bank
draft 4,es)No5
The partic$lars 4i5 to 4iv5 at 4b5
and the Certificate at 4c5 above
need not be given in the case of a
repayment of any loan or deposit
taken or accepted from
>overnment6 >overnment
company6 banking company or a
corporation established by a
Central6 (tate or #rovincial Act
2+ 4a5 "etails of bro$ght forward loss or
depreciation allowance6 in the
following manner6 to the extent
available %
*btain a sched$le indicating the
details as per the aforesaid
cla$se. The cla$se will cover the
following %
(erial N$mber 2 :$siness loss 4(ection 325
Assessment ,ear 2 Lnabsorbed depreciation
Nat$re of loss)allowance 4in
r$pees5
2 (pec$lation loss 4(ection 3!5
Amo$nt as ret$rned 4in r$pees5 2 <oss $nder the head capital gains.
4(ection 3'5
Amo$nt as assessed 4give
reference to relevant order5
9emarks
$rnish the information as to
when ret$rns of income for
which the above bro$ght forward
loss)depreciation arises were
filed and whether they were filed
in time as provided $nder section
1!;415 or late 4any extension
granted by C:"T to be
indicated5.
Agree the basis and details with
the ret$rn of income6 assessment
orders etc. and other relevant
s$pporting doc$ments.
If there are differences in fig$res
as per ret$rns filed and as
assessed6 also f$rnish separately
reconciliationBs and whether
matters are pending in appeals
and)or rectification or $nder
revision proceedings6 etc. if
appeal is decided b$t order
giving effect thereof is not
received6 indicate the same.
Take the copies of all relevant
orders.
4b5 =hether a change in share2 In case of all $nlisted company
#age 2' of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
holding of the company has taken
place in the previo$s year d$e to
which the losses inc$rred prior to
the previo$s year cannot be
allowed to be carried forward in
terms of section 3;.

to see whether there was any
change in shareholding affecting
the benefit of C) loss 4(ection
3;5.
"etails of shareholding be
obtained at the end of !1
st
.arch
of all the years $pto !1
st
.arch
200/ to verify whether ';N or
more shareholding has changed
d$ring the period from the year
for which loss is carried forward
and $pto !1
st
.arch 200/.
Any change in shareholding on
acco$nt of death of a shareholder
or gift by the shareholder to the
relative and as per second
proviso 4applicable in case
shareholder is a foreign holding
company5 be ignored.
2/ (ection2wise details of
ded$ctions6 if any6 admissible
$nder Chapter &IA.
% This is an exha$stive cla$se to
cover all eligible ded$ctions
available $nder chapter &I2A of
Income Tax Act6 1;/1.
*btain a sched$le indicating the
section2wise details of
ded$ctions claimed $nder
Chapter &IA.
-ns$re that ded$ctions claimed
by the client are admissible
$nder Chapter &IA.
Agree the details with the
a$dited sched$les and other
relevant s$pporting doc$ments.
If the assessee is claiming
ded$ction $nder a partic$lar
section for the first time6 f$rnish
a note giving reasons as to how
the assessee is 7$alified for s$ch
a ded$ction with d$e evidence
and that the assessee has
compiled with all the conditions
laid down in the relevant section.
4with the necessary
doc$mentary evidence5.
9eview assessments completed)
prior year tax ret$rns to examine
the basis adopted in earlier years.
&erify the basis and comp$tation
of ded$ctions.
*btain management
representation.
,mportant
In case any report $)s 80IA) 80I: or
any other section of chapter &IA is
iss$ed by any other Chartered
Acco$ntant then go thro$gh the
#age 2+ of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
same to verify whether the amo$nt
arrived is in accordance with the
#rovisions of the relevant (ection.
23 4a5 =hether the assessee has
complied with the provisions of
Chapter Q&II2: regarding
ded$ction of tax at so$rce and
regarding the payment thereof to
the credit of the Central
>overnment 4,es)No5
% *btain a sched$le indicating the
details as per the aforesaid
cla$se.
Agree the details with the
relevant s$pporting doc$ments
and ret$rns s$bmitted for the
p$rpose.
>o thro$gh the 7$arterly T"(
ret$rns filed.
4b5 If the provisions of Chapter Q&II2
: have not been complied with6
please give the following detailsO6
namely%2
4i5 Tax ded$ctible and not
ded$cted at all
4ii5 (hortfall on acco$nt of
lesser ded$ction than
re7$ired to be ded$cted
4iii5 Tax ded$cted late
4iv5 Tax ded$cted b$t not paid to
the credit of the Central
>overnment
P#lease give the details of cases
covered in 4i5 to 4vi5 above.J

9eview the relevant acco$nts to
ens$re that tax has been
ded$cted as per Q&II2: e.g.
salaries6 interest on sec$rities6
other interest6 dividends6
royalties6 payments to non2
residents6 payments to
contractors and s$b2contractors
etc.
Above detail sho$ld also incl$de
partic$lars of tax ded$cted in the
financial year b$t paid to the
>ovt. in s$bse7$ent year.
9eport cases where T"( has not
been ded$cted or ded$cted at
lesser rates than applicable.
T"( is re7$ired to be ded$cted
on the component of service tax
also.
,mportant note re$ardin$ Tax
Audit
(cr$tiniAe balances appearing at the
end of the period of the following
acco$nt heads caref$lly%
15 #rovision for
expenses.
25 *$tstanding liabilities.
!5 :ill adC$stables.
'5 *ther liabilities or any
other acco$nt opened in books
which is similar in nat$re to
above.
The above acco$nts normally
comprise of credit entries
pertaining to provision for
expenses made. ($ch expenses
may fall into following
categories%
a5 >overnment taxes
and stat$tory d$es.
b5 (taff payments.
c5 -xpenses liable to
#age 2/ of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
T"( ded$ction.
d5 *ther items.
i5 >overnment taxes and
stat$tory d$es have to
be reported $)s '!:.
This cla$se will also
incl$de bon$s and
incentive to staff by
vario$s name called.
ii5 The expenses
which are liable to
T"( are to be reported
in the T"( cla$se 4in
case of defa$lts5 and
also sim$ltaneo$sly in
cla$se 134l5 of tax
a$dit report to the
extent applicable.
iii5 $rther
sometime the interest
payable to parties is
also incl$ded in the
above head which is
liable to T"(.
iv5 or CA9*
p$rposes one m$st go
thro$gh the tax a$dit
report of last year and
if items which were
liable to T"( are
reported b$t the T"(
has not been ded$cted
and paid till !1
st
.arch
then the same will
have to be reported in
CA9* also.
28 4a5 In the case of a trading concern6
give 7$antitative details of
principal items of goods traded%
4i5 *pening stockD
4ii5 #$rchases d$ring the
previo$s yearsD
4iii5 (ales d$ring the
previo$s yearD
4iv5 Closing stockD
4v5 (hortage)excess6 if
any
%
%
%
%
%
%
*btain a sched$le indicating the
details as per the aforesaid
cla$se.
Agree the details with a$dited
sched$les and the stock records
maintained by the company.
9eview the relevant acco$nts to
ens$re all s$ch partic$lars have
been appropriately disclosed.
$rnish the reasons for
short)excess with proper
explanation and state whether it
is normal or abnormal as per
ind$stry standards.
*btain management
representation.
4b5 In the case of a man$fact$ring
concern6 give 7$antitative details
of the principal items of raw
%
#age 23 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
materials6 finished prod$cts and
by2prod$cts%
A. 9aw .aterial %
4i5 *pening (tockD
4ii5 #$rchases d$ring the
previo$s yearD
4iii5 Cons$mption d$ring
the previo$s yearD
4iv5 (ales d$ring the
previo$s yearD
4v5 Closing stockD
4vi5O ,ield of finished
prod$ctsD
4vii5O #ercentage of yieldD
4viii5O (hortage)excess6 if
any.
$rnish details as re7$ired.
:. inished prod$cts):y2prod$cts
%
4i5 *pening (tockD
4ii5 #$rchases d$ring the
previo$s yearD
4iii5 R$antity
man$fact$red d$ring
the previo$s yearD
4iv5 (ales d$ring the
previo$s yearD
4v5 Closing stockD
4vi5 (hortage)excess6 if
any.
$rnish details as re7$ired.
O Information may be given to the
extent available.
2; In the case of a domestic
company6 details of tax on
distrib$ted profits $nder section
11+* in the following form%2
4a5 Total amo$nt of
distrib$ted profitsD
4b5 total tax paid thereonD
4c5 dates of payment with
amo$nts.
% $rnish the date of payment of
tax on dividend with the copies
of receipted Challans6 showing
the date6 amo$nt and name of the
bank.
Agree the details referred to the
a$dited sched$les and relevant
s$pporting doc$ments.
!0 =hether any cost a$dit was
carried o$t6 if yes6 enclose a copy
of the report of s$ch a$dit H(ee
section 1!;4;5I.
% Check if cost a$dit is applicableD
check whether the a$dit has been
carried o$t d$ring the year.
If the Cost a$dit is not carried by
the time Tax A$ditor gives the
report6 state the fact accordingly.
*btain a copy of the report if any
cost a$dit was carried o$t d$ring
the year.
*btain management
representation.
!1 =hether any a$dit was cond$cted
$nder the Central -xcise Act6
% -n7$ire @ obtain <*9 and copy of
report of a$dit cond$cted by -xcise
#age 28 of 2;
Tax Audit Checklist
Clause Clauses under Form 3CD Step recommended WP Ref By
1;''6 if yes6 enclose a copy of the
report of s$ch a$dit.
department.
!2 Acco$nting ratios with
calc$lations as follows %2
4a5 >ross #rofit)T$rnoverD
4b5 Net #rofit)T$rnoverD
4c5 (tock2in2trade)T$rnoverD
4d5 .aterial
cons$med)inished goods
prod$ced.
% *btain a sched$le indicating the
aforesaid ratios.
&erify the sched$le for
arithmetical acc$racy and
calc$lations.
>ive details of any change on the
basis of calc$lations of ratio as
compared to the preceding year.
Agree the val$es $sed for
calc$lating the ratios to the
a$dited sched$les and relevant
s$pporting doc$ments.
As different interpretations are
possible of the items like gross
profit6 net profit etc.6 it is
recommended that a note
explaining the basis adopted by
the company be provided.
#age 2; of 2;