- CA Neha R Kashyap
- | Income Tax - Articles |
- 15 Sep 2023
- 61,593 Views
- 3 comments
In India, Limited Liability Partnerships (LLPs) are subject to both tax and statutory audits. These audits serve distinct purposes and are mandatory under specific conditions. This article delves into the requirements and implications of tax and statutory audits for LLPs for the financial years 2022-23 and 2023-24.
LLP Tax Audit:
Purpose: A tax audit for an LLP primarily focuses on verifying the accuracy and completeness of the financial and tax-related information reported in the LLP’s tax returns. The main objective is to ensure compliance with tax laws and regulations.
Mandatory Requirement: LLPs are required to conduct a tax audit under the Income Tax Act, 1961, if they meet certain prescribed criteria, such as exceeding a specified turnover threshold. The tax audit is mandatory for LLPs that fall under these criteria.
Conducted by: A tax audit is typically conducted by a qualified chartered accountant or a tax professional who examines the financial records and tax returns of the LLP to calculate the taxable income and identify any discrepancies.
Report: At the end of the tax audit, the auditor issues a tax audit report, commonly known as Form 3CD, which contains various details related to the audit findings, tax compliance, and other relevant information.
Statutory Audit for LLP:
Purpose: A statutory audit for an LLP is a broader examination of the financial statements and accounting records of the LLP to assess the accuracy, fairness, and compliance with accounting standards and statutory requirements.
Mandatory Requirement: Statutory audits for LLPs are mandatory as per the Limited Liability Partnership Act, 2008, and Rules made thereunder. All LLPs, regardless of their turnover, are required to undergo a statutory audit.
Conducted by: A statutory audit is conducted by an independent qualified chartered accountant who is appointed by the LLP’s partners. The auditor’s independence is essential to provide an objective assessment.
Report: At the conclusion of the statutory audit, the auditor issues a Statutory Audit Report that includes an opinion on whether the financial statements give a true and fair view of the LLP’s financial position and whether they comply with relevant laws and accounting standards.
| Topic | Information |
|---|---|
| LLP Financial Audit Requirements | – LLPs with annual revenues of at least Rs. 40 lakhs or contributions of at least Rs. 25 lakhs must have their financial records audited as per the Limited Liability Partnership (LLP) Act and the Income Tax Act. |
| Tax Audit Applicability for AY 2023-24 | – Businesses: – If the gross receipts or turnover of a business exceeds Rs. 1 crore, a tax audit is required. – If gross receipts or turnover exceed Rs. 1 crore but are less than Rs. 10 crores and cash transactions are less than 5%, a tax audit is not required. – If gross receipts or turnover exceed Rs. 10 crores, a tax audit is required. – Professionals: – If the gross receipts of a professional exceed Rs. 50 lakhs, a tax audit is required. – If a professional is eligible for the presumptive taxation scheme under Section 44ADA and claims a profit below the prescribed limit, a tax audit is required. |
| Penalty for Non-compliance with Tax Audit | – If a tax audit is applicable, and the assessee fails to get their accounts audited, a penalty of 0.5% of the total sales, turnover, or gross receipts, or Rs. 1,50,000, whichever is less, will be levied. |
| Income Tax Return Filing Deadlines for LLPs (FY 2022-23) | – LLPs that do not require a Tax Audit must file Income Tax Returns before July 31st. – LLPs requiring a Tax Audit must file Income Tax Returns before September 30th. – LLPs must file Nil Income Tax Returns even if they did not conduct any business during the financial year. |
Examples on LLP Audit requirements:
LLP Financial Audit Requirements: If XYZ LLP had annual revenues of Rs. 45 lakhs in the previous financial year, they are obliged to have their financial records audited as per the LLP Act and Income Tax Act.
Tax Audit Applicability for AY 2023-24:
- Businesses Example: If ABC Enterprises had a turnover of Rs. 1.2 crores in the assessment year 2023-24 and their cash transactions were less than 5% of the total, they would not require a tax audit. However, if their turnover exceeded Rs. 10 crores, they would need a tax audit regardless of the cash transaction percentage.
- Professionals Example: Dr. Smith, a medical practitioner, earned gross receipts of Rs. 60 lakhs during the assessment year. In this case, Dr. Smith would require a tax audit because their gross receipts as a professional exceeded Rs. 50 lakhs.
Penalty for Non-compliance with Tax Audit: Suppose a partnership firm named XYZ Traders was eligible for a tax audit but failed to get their accounts audited. If their total sales for the year were Rs. 2 crores, they would be liable for a penalty of 0.5% of Rs. 2 crores, which is Rs. 1,00,000, as this amount is less than the minimum penalty limit of Rs. 1,50,000.
Income Tax Return Filing Deadlines for LLPs (FY 2022-23):
- If DEF LLP did not require a tax audit for the financial year 2022-23, they must file their Income Tax Returns before July 31st.
- On the other hand, if GHI LLP had to undergo a tax audit for the same financial year, they would need to file their Income Tax Returns before September 30th.
- Even if JKL LLP did not conduct any business during the financial year, they are still required to file Nil Income Tax Returns.
Tags: LLP, Tax Audit
Kindly Refer to Privacy Policy & Complete Terms of Use and Disclaimer.
Author Bio
Name: CA Neha R Kashyap
Qualification: CA in Practice
Company: ANRA & Associates
Location: Delhi, Delhi, India
Member Since: 11 Apr 2019 | Total Posts: 17
ANRA have team of experienced professionals committed to work as your growth partnersI am a Partner with the ANRA & Associates practice and is based in New Delhi & Gurgaon. I have working experience in Accounts Management, Direct and Indirect taxation, registrations, Foreign Compliances View Full Profile
My Published Posts
Corporate Tax in UAE: Rates, Exemptions and Regulations
View More Published Posts
Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.
Join us on Whatsapp
GROUP LINKJoin us on Telegram
GROUP LINKDownload our App
More Under Income Tax
Sample Grounds for ITAT Appeal: Condonation of Delay under Sec. 249(3) Post CIT(A)’s Rejection
Extension of Due Date for Filing Form No. 26QE for F.Y. 2022-23 retrospectively
No TDS on Payments to Units of IFSC – CBDT Notifies
Liaison Office having active role treated as Permanent Establishment in terms of Article 5(2) of India-Germany DTAA
Mere listing of demand on e-filing portal not valid service of notice: ITAT Delhi
- « Previous Article
- Next Article »
