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2 The information contained in this document is current as of the date of publication and subject to change. Because Tally must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Tally, and Tally cannot guarantee the accuracy of any information presented after the date of publication. The information provided herein is general, not according to individual circumstances, and is not intended to substitute for informed professional advice. This document is for informational purposes only. TALLY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT AND SHALL NOT BE LIABLE FOR LOSS OR DAMAGE OF WHATEVER NATURE, ARISING OUT OF, OR IN CONNECTION WITH THE USE OF OR INABILITY TO USE THE CONTENT OF THIS PUBLICATION, AND/OR ANY CONDUCT UNDERTAKEN BY PLACING RELIANCE ON THE CONTENTS OF THIS PUBLICATION. Complying with all applicable copyright and other intellectual property laws is the responsibility of the user. All rights including copyrights, rights of translation, etc., are vested exclusively with TALLY SOLUTIONS PRIVATE LIMITED. No part of this document may be reproduced, translated, revised, stored in, or introduced into a retrieval system, or transmitted in any form, by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose, without the express written permission of Tally Solutions Pvt. Ltd. Tally may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this document. Except as expressly provided in any written licence agreement from Tally, the furnishing of this document does not give you any licence to these patents, trademarks, copyrights, or other intellectual property Tally Solutions Pvt. Ltd. All rights reserved. Tally, Tally 9, Tally9, Tally.ERP, Tally.ERP 9, Shoper, Shoper 9, Shoper POS, Shoper HO, Shoper 9 POS, Shoper 9 HO, TallyDeveloper, Tally Developer, Tally.Developer 9, Tally.NET, Tally Development Environment, Tally Extender, Tally Integrator, Tally Integrated Network, Tally Service Partner, TallyAcademy & Power of Simplicity are either registered trademarks or trademarks of Tally Solutions Pvt. Ltd. in India and/or other countries. All other trademarks are properties of their respective owners. Version: Tax Audit-ILT/1.0/March 2011

3 Contents Tax Audit Introduction... 1 Scope and objective of Audit... 1 Tax Audit... 2 Tax Audit using Tally.ERP 9 Auditors Edition... 3 Features of Tally.ERP 9 Auditors Edition... 3 Features available under Tax Audit in Tally.ERP 9 Auditors Edition... 4 Button menus in Tax Audit screen... 8 Cl 16 - Bonus, PF, ESI Recoveries Lesson Objectives Provident Fund recoveries deposited in the Fund Audit of Monthly PF deductions Printing of Annexure to Clause Button menus in Bonus, PF, ESI Recoveries Cl 17(h) Amounts inadmissible u/s 40A(3) Lesson Objectives Inadmissible Cash Payments Cash payments that are allowed under Rule 6DD Printing of Annexure to Clause 17(h) Button menus in Cash Payments screen Cl18-Payments to Specified Persons Lesson Objectives Payments to Specified Persons Printing of Annexure to Clause Button Menus in Payment to Specified Persons screen Cl 21- Payments under Section 43B Lesson Objectives Value Added Tax Printing of Annexure to Clause Button Menus in VAT/CST Payable screen Cl 24 (a) - Loans / Deposits Accepted Lesson Objectives Loans / Deposits Accepted...80 Printing of Annexure to Clause 24(a) Button menus in Loans & Deposits Accepted screen Cl 24 (b) Loans / Deposits Repaid Lesson Objectives i

4 Loans / Deposits Repaid Printing of Annexure to Clause 24(b) Button menus in Loans & Deposits Repaid screen Cl 27 Tax Deducted at Source Lesson Objectives Tax Deducted at Source Printing of Annexure to Clause Button menus in Tax Deducted at Source Client Clarification Lesson Objectives Reports in Tax Audit Form 3CD Button menus in Form 3CD report Form 3CA Form 3CB Tax Audit Checklist ii

5 Introduction The term audit generally refers to auditing of financial statements. In an audit, the Auditor provides the expert opinion about the quality of and attests the truth of the statements. Audit also applies to non-financial matters as well, like audit of operations, efficiency, etc. Simply put, audit means a critical and intelligent examination of facts financial or otherwise, to provide a certificate or report an attestation, an expert opinion or advice. As per the Auditing and Assurance Standards on basic principles governing an audit, SA 200 (old AAS 1) published by the Institute of Chartered Accountants of India, an audit is an independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such examination is conducted with a view to express an opinion thereon. Scope and objective of Audit The Auditing and Assurance Standard: Objectives and Scope of Audit of Financial Statements, SA 200A (old AAS 2) of The Institute of Chartered Accountants of India, specifies that the main objective of an audit is to express an opinion about truth and fairness of the financial statements. The audit procedures performed to give the opinion about the financial statements include examination of the financial statements and satisfy about the truth and fairness of the financial position and operating results of the enterprise. An audit has other objectives which are detection and prevention of errors and frauds. The scope of audit refers to the identification or delineation of audit related aspects with regard to the objective of audit, procedures, areas to be covered etc. It also relates the auditor s concern in the underlying accounting records and source documents. The scope of audit is governed by the terms of engagement relevant statutory provisions relevant Institute pronouncement 1

6 Tax Audit Tax Audit was introduced under Sec 44AB of the IT Act, in the Finance Act, This section is known as the audit of accounts of certain persons carrying on business or profession. The section states that every person,- carrying on business shall, if the total sales, turnover or gross receipts as the case maybe, exceeds or exceeded Rs. Forty Lakhs in any previous year; or carrying on a profession, if the gross receipts exceeds or exceeded Rs. Ten Lakhs in any previous year; or Any person who claims an income less than the deemed income as computed under Sec 44AD,Sec AE Sec 44AF or Sec 44BB, Sec 44BBB, in any previous year, shall get the accounts of the previous year audited by an Accountant before the specified date and furnish a report in the prescribed form duly signed, to the Income Tax Dept. The word Accountant means a Chartered Accountant within the meaning of the Chartered Accountants Act, The specified date shall mean the 30th of September of the assessment year in relation to the accounts of the previous year. The audit report under this section (Sec 44AB) is to be furnished or filed in the following formats (Rule 6G of Income Tax Rules): a person who carries on a business or profession and is required to get the accounts audited under any other law, shall file the report in Form 3CA a person who carries on a business or profession but is not required to get the accounts audited under any other law, shall file the report in Form 3CB In addition, furnish all particulars required under the section in Form 3CD From 1st April 2011, the income limits for the purpose of audit under Sec 44AB, have been revised. Persons carrying on; Business- Rs.60 lakhs Profession- Rs.15 lakhs have to get their accounts audited under the section and furnish the required report. 2

7 Tax Audit using Tally.ERP 9 Auditors Edition The Auditors Edition of Tally.ERP 9 enables the Auditor to gather audit related information in comparatively lesser time with the accepted level of accuracy to form an audit opinion. From the data available, the audit tool extracts and presents information required to be reported. It helps in effectively narrowing down to the information to be reported which the Auditor may decide on whether it is to be reported or not. In this Book, we place emphasis on understanding the audit features and effectively use them to generate information to be reported under the Tax Audit under Section 44AB of the Income Tax Act, Features of Tally.ERP 9 Auditors Edition The Tally.ERP 9 Auditors Edition comes with these features to equip the Chartered Accountant to audit the accounts of an assessee efficiently and efficiently: IT Assisted Audit services Remote Access clients data/reports using Tally.ERP 9 Auditors Edition Post corrections and clarifications remotely Classification of records based on relevant clauses Facility to record & store Audit Note/Remark for every voucher Track alterations/modifications to vouchers post audit Facility to configure blocking of back dated entries Allow column sorting and multi-selection of vouchers during Audit Dashboard showing the statistics of Sampled, Audited, Clarifications sought, received and Unaudited vouchers/records Generate related reports & annexures Benefits of Tally.ERP 9 Auditors Edition The benefits an Auditor get using the Tally. ERP 9 Auditors Edition is: savings in audit time resulting in increased audit productivity and efficiency ability to audit transactions online availability of information to prepare audit working papers extract financial information required for Tax Audit (under Section 44AB) increase in additional avenues of billable services 3

8 Features available under Tax Audit in Tally.ERP 9 Auditors Edition The Auditors Edition of Tally.ERP 9 provides the following clauses for tax audit under Sec 44AB. Clause 16 Bonus, PF, ESI Recoveries Clause 17(h) - Amounts inadmissible u/s 40A (3) Clause 18 Payments to Specified Persons Clause 21 Payments under Section 43B Employer s Contribution Tax Collected at Source Service Tax Value Added Tax Clause 24(a) Loans/ Deposits Accepted Clause 24(b) Loans/ Deposits Repaid Clause 27 Tax Deducted at Source All these form annexures to the Form 3 CD report. In addition, you can generate: Form 3CA Form 3CB Form 3CD 4

9 The access to the Tax Audit features in the Tally.ERP 9 is through the Audit & Compliance Menu. To reach the menu, you have to select the following steps: 1. Gateway of Tally>Audit & Compliance The Gateway of Tally screen is displayed. Figure 1. Audit & Compliance Menu 2. Select Audit & Compliance and press Enter 5

10 The Audit & Compliance menu in the Gateway of Tally screen is displayed. Figure 2. Tax Audit features The audit features under Tax Audit are displayed in the Audit & Compliance menu. The features are: 44AB Audit Form 3CD Form 3CA Form 3CB 44AB Audit This is the main feature of the Tax Audit in the product. The feature provides audit features of clauses that are to be reported in the Form 3CD report. 3. Select 44AB Audit and press Enter to display the Tax Audit Dashboard 6

11 The Tax Audit screen is displayed with the required details. The details displayed in this screen are: Figure 3. Tax Audit Dash Board Screen Clause No The number assigned to the clause for reporting in the Form 3CD report. Audit Type - The description provided to the clause for audit under the section. Unaudited - The number of vouchers/transactions found in the accounts relating to the clause. Under Observation - the number of transactions which are under observation by the Auditor who wants to gather more information before making any decision. Need Clarification - the number of transactions for which the Auditor has communicated to the client requesting additional information Clarified (to be re-audited) the number of transactions for which the client has provided clarifications to the Auditor but have to be audited once again. Altered (to be re-audited) the number of transactions that have been altered by the client after the audit. Audit Complete? - The question whether the audit of the clause is completed. 7

12 4. Select the required clause by pressing the Spacebar The Tax Audit Dash Board screen is displayed. Figure 4. Save Audit Button The button menu Alt + F9: Save Audit is enabled in the right button panel. 5. Click Alt+F9: Save Audit. The Save Tax Audit window in the Tax Audit screen is displayed. Figure 5. Tax Audit Complete Screen 6. Select Yes/No under Save Tax Audit window in the Tax Audit screen The selected value appears under Audit Complete? in Tax Audit screen. Button menus in Tax Audit screen F2: Period- Click F2: Period button menu or the function key F2 to display the Assessment Year screen. Enter the required year value against Beginning under Financial Yearwindow. This is useful when the data of two years are maintained in a single folder and you want to load the data of the financial year under audit 8

13 The Financial Year window in the Assessment Year screen is displayed.. Figure 6. Period Entry for loading of audit data Alt+ C: Clarification List - Click Alt + C: Clarification List button menu or click Alt and C keys. The List of Clarifications screen is displayed. Figure 7. List of Clarifications Screen The screen provides the details of clarifications sought from the client by the Auditor. F11: Features-Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature). 9

14 The Tax Audit Rules in the Company Operations Alteration screen is displayed. Figure 8. Tax Audit Rules - F11:Features F12: Configure- Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed. The Configuration window in the Configuration screen is displayed. Figure 9. Configuration Screen for Tax Audit Dash Board - F12:Configure The details under Configuration : Show Last Audit Details - Select Yes/No as value. 10

15 Cl 16 - Bonus, PF, ESI Recoveries Lesson Objectives On completion of this lesson, you will be able to: Extract relevant information required under section 36(1)va Audit & Record Audit Comments for Clause 16 Print Annexure in prescribed form The audit of this clause is performed with respect to Sec 36(1) va of the Income Tax Act. This deduction is termed as Other deductions and is allowed in computing the income referred to in Sec 28 (Profits and gains of business or profession). The sub-clause (va) is regarding any sum received by the person (assessee) from the employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees State Insurance Act, 1948, or any other fund set up for the welfare of the employees. Such sum is credited by the assessee to the employee s account in the relevant fund(s) on or before the due date. The audit objective under this clause is to find whether the assessee as an employer is depositing sums collected from the employees in the funds on or before the due dates as per the respective Acts. The due date means the date by which the assessee (employer) is required to deposit the credit the employee s contribution to the employee s account in the relevant fund under any Act, rule, order or notification issued, or standing order, award, contract of service, etc. To use this feature your client has to: Activate the Payroll option under F11: Features in Accounting Features in default Tally.ERP 9 product. Configure Yes to Maintain Payroll under Cost/Profit Centres Management. The Client should account all payroll transactions in the payroll option. 11

16 Provident Fund recoveries deposited in the Fund Figure 9. Clause 16- Bnus, PF, ESI Recoveries 1. Select Bonus, PF, ESI Recoveries in Tax Audit screen and press Enter 12

17 The Employees Deduction screen is displayed. Figure 10. Employees Dedution Screen The summary details under Employees Deduction Details screen are: Particulars - The details of the funds to which the sums are credited by the assessee are displayed. For example, Provident Fund, etc. Under the Amount column the following details are displayed. Contributed/Deducted - The amount that is contributed by the employees or deducted from their salaries. Paid- The amount that is paid/deposited to the funds after the deductions/contributions. Difference- The amount that is not paid/deposited to the funds. Payment Status - The current status of the amount/contribution of employees on the payment/deposit to the respective funds. The values can be: On Time Due Partially Under the Audit Status column the following details are displayed (visible by scrolling) Audited - The number of audited transactions/vouchers Unaudited - The number of un audited transactions/vouchers Total - The total of audited and unaudited transactions/vouchers 13

18 Configuration of Bonus, PF, ESI Recoveries Screen You can configure the display of details in the main screen of the Clause 16 feature by clicking F12: Configure button menu or click the function key F12 in the Configuration of Bonus, PF, ESI Recoveries screen. The Configuration screen is displayed. The details under Configuration are: Figure 11. F12: Configure Screen with Configuration Details Show Provident Fund Details - Enter Yes/No as value. Show Employee State Insurance Details - Enter Yes/No as value. Show Professional Tax Details - Enter Yes/No as value. Show Bonus Details - Enter Yes/No as value. Show Voucher Audit Details - Enter Yes/No as value. Verification of Ledger Classification In order to know the details of group, pay head and statutory pay type, you can click F5: Masters button menu in the Employees Deduction screen. Click F5: Masters to display the List of Pay Heads screen. 14

19 The List of Pay Heads screen is displayed. Figure 12. List of Pay Heads Screen This report gives you the information on the payroll masters for a better understanding. Payment Summary If at any point of you want to view the payment summary for the selected deductions or any other deductions, you can click F6: Payment Summary button menu in the List of Pay Heads screen. On clicking the F6 key, the Payment Summary window in the Select Report screen is displayed. Figure 13. Select Report Screen Select the required statutory deduction under List of Reports for display. For Example, if you select Provident Fund and press Enter, the report on PF payments/ deductions is displayed. 15

20 The Details of Provident Fund Payments screen is displayed Figure 14. Details of Provident Fund Payments Screen You can select the required month and drill down to view the payments to the Provident Fund. Similarly you can select other payment, e.g., Bonus and generate the summary report. Audit of Monthly PF deductions Let us audit the payment of deductions/contributions to Provident Fund account month-wise. 2. Select Employees Statutory Deduction ledger under Provident Fund in the Employees Deduction screen and press Enter 16

21 The details of the Statutory Pay type under Payroll Monthly Summary screen is displayed. Figure 15. Payroll Monthly Summary Screen The details under Payroll Monthly Summary screen are: Statutory Pay Head - The name of the statutory deduction appears. In this case it is Provident Fund. Particulars - The months of the financial year are displayed, i.e. Apr- Mar. The columns under Amount are: Contributed/Deducted- The amount deducted under the above pay head type for the month is displayed. Paid -The actual payment into the fund for the statutory deduction is displayed. Difference - The difference in amount which can be due/excess paid for the statutory deductions (Contributed/Deducted minus Paid). Int & Other Payments - The interest amount paid on late payments and any charges paid are displayed. Payment Status - The status of deposit/payment into the statutory fund is displayed. 17

22 The values are: On Time Due Partially. The columns under Audit Status are: Audited - The number of audited transactions/vouchers Unaudited - The number of un audited transactions/vouchers Total - The total of audited and unaudited transactions/vouchers 3. Move the cursor to the Paid column under Amount in the Payroll Summary Screen and press Enter The Provident Fund Payment Vouchers screen is displayed. The details in this screen are: Figure 16. Payroll Montly Summary Screen Date - The date of the voucher prepared for the statutory deduction in the month under review is displayed. Vch No. The number of the voucher prepared for accounting the statutory deduction is displayed. Challan Date - The date which is mentioned on the Challan used for remitting the statutory deduction is displayed. 18

23 Due Date - The date by which the payment/contribution has to be paid into the Fund as prescribed under its Rules. Payment Status - The actual payment status whether paid on time or delayed is displayed. If paid within the due date, the status value is On Time else the value is Late. Amount - The deduction amount recorded in the voucher. Interest Payments - The amount paid as interest for late payments are displayed. The auditing of the statutory deduction is made by selecting the transactions in the Provident Fund Payment Vouchers screen. 4. Select a transaction in the Provident Fund Payment Vouchers screen and press Spacebar The F9: Audit button menu is displayed in the right side panel. Figure 17. Selection of Transaction for Audit You can select a transaction and press Enter to audit. If you want to select all transactions for audit, click Ctrl+Spacebar. 19

24 5. Click F9: Audit or click the function key F9 The Audit Details window in the Audit Details screen is displayed. Figure 18. Audit Details Screen Audit Status - The status selected by the Auditor on completion of the audit is displayed. There are six types of status values: Unknown -The Auditor is yet to complete the audit and status is unknown Disallowed - The transaction has not met the audit criteria and is therefore disallowed Late Paid - The amount of contribution/deduction is deposited into the Fund after the due date stipulated under the Rules of the Fund Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion Paid on Time - The amount of contribution/deduction is deposited into the Fund on or before the due date as stipulated under the Rules of the Fund Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information Audit Note - The remarks recorded/entered on the transaction by the Auditor on completing the audit. 20

25 6. Select the required status from Audit Status window 7. Type the required remarks under Audit Note 8. Accept the details by pressing Enter Figure 19. Audit Details Screen 9. Click Ctrl + A to accept the audit details in the Provident Fund Payment Vouchers screen The Provident Fund Payment Vouchers screen after the audit of the transaction is displayed. Figure 20. Provident Fund Payment Vouchers after Audit You can similarly audit other vouchers in the screen in a similar manner. To view the entries in the payroll transaction during the audit, select the transaction and press Ctrl + Enter in the Provident Fund Payment Vouchers screen. 21

26 The Accounting Voucher Alteration (Secondary) screen is displayed. Figure 21. PF Payment Voucher with Details You can now verify the entry for the statutory deduction with supports like payroll docs and payment challan. When you come to the Tax Audit Dash board screen, you will find there is a number mentioned under the Audited column. 22

27 The Tax Audit Dash Board screen after the audit is displayed. Printing of Annexure to Clause 16 Figure 22. Tax Audit Dash Board after the Audit After completion of the audit under Cl. 16, you can print its annexure. 10.Click Alt + P: Print in the Employees Deductions screen and press Enter 23

28 The Printing window in the Print Report screen is displayed. 11.Click Yes to Print? Figure 23. Print Report Screen The Annexure to Clause 16 & 21 report for Provident Fund payments is displayed. Figure 24. Annexure to Clause 16 - Provident Fund Payments 24

29 Button menus in Bonus, PF, ESI Recoveries F5: Masters - Click F5: Masters button menu or click F5 function key to display the List of Pay Heads screen (already discussed above). F6: Payment Summary - Click F6: Payment Summary button menu or click F6 function key to view other details of other statutory deductions (already discussed above). Alt + X: Exceptions/All - Click Alt + X: Exceptions button menu or click Alt and X keys together to display only the exceptions. The Employees Deductions screen is displayed. Figure 25. Employees Deduction Report- Exceptions To display the default details of the report, click Alt + X: All button menu in the above screen. F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature). 25

30 The Company Operations Alterations (F11: Features) screen with the details of the Tax Audit Rules is displayed. Figure 26. F11: Features- Tax Audit Rules The due dates for Provident Fund (PF), Employee State Insurance (ESI) and Professional Tax (PT) are displayed under Payroll in the above menu. F12: Configure - Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed (already discussed above). 26

31 Cl 17(h) Amounts inadmissible u/s 40A(3) Lesson Objectives On completion of this lesson, you will be able: To extract relevant information required under section 40A(3) Audit & Record Audit Comments for Clause 17(h) Print Annexure in prescribed form The audit of this clause is performed with respect to Sec 40A (3) of the Income Tax Act. Sec 40A deals with expenses or payments not deductible in certain circumstances. The subsection 3 states that if an assess incurs an expenditure in respect which a payment or aggregate of payments are made to a person in a day in a mode other than an account payee cheque or a crossed demand draft, exceeds rupees twenty thousand, no deduction is allowed in respect of such expenditure in arriving at the taxable income. If any allowance is made in the assessment for any year in respect of a liability and the assessee makes payments in respect of the liability by a mode other than an account payee cheque or crossed demand draft, such payment(s) so made will be deemed to be the profits and gains of the business or profession and accordingly will be charged to income tax. The audit objective under this clause is to find whether the assessee has made any payment(s) in respect of an expenditure/liability equal to or aggregating to twenty thousand and more in a day will be disallowed and charged to the taxable income. Configuring the cash limit/aggregate on payments Before the audit is commenced the limit on cash payments(aggregate) has to be defined. You can define the value for aggregate cash payments on a day in F11: Features under Tax Audit Rules by selecting the F5: Audit feature. 27

32 The Company Operations Alterations (F11: Features) screen is displayed. Figure 27. F11: Features- Values for Inadmissible Cash Payments The inadmissible value under Sec 40A (3) is configured under Inadmissible Cash Payments U/s 40A (3). Accept the value for the inadmissible cash payments in the Company Operations Alteration screen. 28

33 Inadmissible Cash Payments The Tax Audit screen is displayed. Figure 28. Amounts Inadmissible u/s 40A(3) 1. Select Amounts inadmissible u/s 40A (3) in Tax Audit screen and press Enter 29

34 The Cash Payments screen is displayed. The header details in the screen are: Figure 29. Cash Payments above Rs.20K Screen Group - The details of the accounting group is displayed. The Primary groups are displayed by default. Aggregate Cash Payments exceeding - The cash limit allowable for making a cash payments on a day. Minimum Voucher Amount - The minimum amount accounted in the voucher on a day. The columnar details in the screen are: Particulars - The ledger accounts which contain cash payment transactions. Cash Payments - The total of the cash payments for the ledgers displayed. The columns under Voucher Value are: Lowest -The lowest cash transaction amount recorded Highest - The highest cash transaction amount recorded Unaudited Vouchers - The number of vouchers which remain unaudited 30

35 Configuration of Cash Payments Screen You can configure the display of details in the Cash Payments screen of the Clause 16 feature by clicking F12: Configure button menu or clicking the function key F12. The Configuration screen is displayed. The details under Configuration are: Show Group Details - Enter Yes/No as value. Figure 30. F12:Configure - Cash Payments Screen Show Voucher High/Low Values - Enter Yes/No as value. Show Average Cash Payments Exceeding - Enter the required value above which the transactions are displayed in the report. Ignore Vouchers having Amount less than - Enter the required value below which the transactions are not displayed. Show Voucher Audit Details - Enter Yes/No as value to display audit details for transactions audited. Sorting Method - The methods available are: Alphabetical (Decreasing) Alphabetical (Increasing) Amount-wise (Decreasing) Amount-wise (Increasing) Default 2. Select any transaction (e.g. Shankar) in the Cash Payments screen and press Enter 31

36 The Cash Payments screen after selection of a ledger account is displayed. Figure 31. Selection of Ledger for Audit The Ledger Vouchers screen for the selected transaction is displayed. Figure 32. Ledger Voucher Screen 3. Select any payment transaction (e.g. Vch No. 396 for Rs.21000)by pressing the Spacebar 32

37 The Ledger Vouchers screen after selection of a voucher is displayed. Figure 33. Selection of Voucher for Audit The F9: Audit button menu is displayed in the right side panel. i. You can select a transaction and press Enter to audit. ii. If you want to select all transactions for audit, click Ctrl + Spacebar. 4. Click F9: Audit or click F9 function key The Audit Details screen is displayed. Figure 34. Audit Details Screen for Cash Payments Above Rs.20K 5. Select the required status from Audit Status window 33

38 The values for the Audit Status are: Unknown -The Auditor is yet to complete the audit and status is unknown Allowed - The transaction has met the audit criteria and is therefore valid and allowed Disallowed - The transaction has not met the audit criteria and is therefore disallowed Need Clarification -The Auditor has not decided on the status of the audit and needs additional information from the client before completion Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information The Audit Details screen with the details under Audit Status, Amount and Audit Note is displayed. Figure 35. Audit Details Screen with remarks 6. Select required status value under Audit Status 7. Type the transaction value under Amount 8. Type the required remarks under Audit Note 9. Accept the details by pressing Enter 34

39 The Ledger Vouchers screen after the audit is displayed. Figure 36. Ledger Voucher Screen after Audit You can similarly audit other transactions of the voucher in the screen in a similar manner. 10.Click Ctrl + A: Accept in the status bar to accept the audit remarks To view the entries in the voucher transaction during the audit, select the transaction and click Ctrl + Enter in the Ledger Vouchers screen. 35

40 The Accounting Voucher Alteration (Secondary) screen is displayed. Figure 37. Voucher Alteration Screen You can now verify the entry for the cash payment with supports like Vouchers and other documents. When you come to the Tax Audit Dash board screen, you will find there is a number mentioned under the Audited column. 36

41 The Tax Audit Dash Board screen after the audit is displayed. Figure 38. Tax Audit Dash Board Screen after audit of Cl.17h Cash payments that are allowed under Rule 6DD The Income Tax Act disallows cash payments totalling and aggregating to Rs /- unless they are made by Account Payee Cheque or Account Payee Demand Draft. It also allows cash payments in certain cases and circumstances under clauses (a) to (h) of Rule 6DD as deductions. Some examples exempted under Rule 6DD are salaries paid to employees, payments made on bank holidays or strike, payments made to Government against Statutory dues, Payments made to RBI, SBI or subsidiary bank, LIC, UTI etc. Tally.ERP AE provides the flexibility to exclude ledgers which fall under any clause under Rule 6DD. To exclude expenses which are allowed, follow the steps given below: Click Ctrl + F9: Master button menu Cash Payments screen or click the keys Ctrl and F9 together to configure the exclusion of the ledgers from the section 40 A (3). 37

42 The Select Ledger screen is displayed. Figure 39. Select Ledger Screen Select any ledger (i.e. Advance Tax) and press Enter. 38

43 The Ledger Alteration screen for the selected ledger account is displayed. Figure 40. Ledger Alteration Screen to exclude ledgers under Rule 6DD Make appropriate selections under Skip Audit for the selected ledger account under: Name of Audit Class Applicable From Applicable To Accept the selections. 39

44 The Cash Payments screen after the exclusion is displayed. Printing of Annexure to Clause 17(h) Figure 41. Cash Payments Screen after Configuration under Rule 6DD After completion of the audit under Cl. 17(h), you can print its annexure. 11.Click Alt + P: Print in the Cash Payments screen and press Enter The Annexure to Clause 17(h) report is printed. Figure 42. Annexure to Clause 17h 40

45 Button menus in Cash Payments screen F4: Group - Click F4: Group button menu or click F4 function key to display the ledgers for any selected group. The Select Item screen is displayed. Figure 43. Select Item Screen Select any group (e.g. Administrative Expenses) and press Enter. 41

46 The Cash Payments screen for the selected group is displayed. Figure 44. Cash Payment Screen for a Group F7: Show All Vch/F7 - Show Pending - Click F7: Show All Vch or click F7 function key to display the voucher details under Audit Status and vice versa. 42

47 The Cash Payments with the details under Audit Status is displayed. The columns displayed under Audit Status are: Figure 45. Display of Audited Vouchers (F7) Screen Audited - The number of audited transactions/vouchers. Unaudited - The number of unaudited transactions/vouchers. Total - The total of audited and unaudited transactions/vouchers. Click F7: Show Pending to display the default details. F8: Show Audit Amt/F8: Hide Audit Amt - This button menu is activated on clicking the clicking the F7: Show All Vch button menu. 43

48 The Cash Payments screen after clicking F8 is displayed. Figure 46. Display of Audit Amount in Cash Payments Screen (F8) The extra information displayed is the columns under Amount in addition to the usual details. The columns under Amount are: Unaudited - This is the value of the cash payments to be audited. Allowed - This is the value of the cash payments that are allowed as per the Income Tax Act & Rules. Disallowed -This is the value of the cash payments that are disallowed as per the Income Tax Act & Rules. This value is Unaudited minus Allowed amounts. Click F8: Hide Audit Amt to hide the audited amount details. F9: Show Skipped - Click F9: Show Skipped/F9: Hide Skipped to display the details of ledgers whose cash payments are allowable as per law, i.e. they are skipped. For example Advance Tax payment which can be paid by cash. 44

49 The Cash Payments screen with details of skipped ledgers is displayed. Figure 47. Details of Skipped Ledgers (F9) The details of ledgers skipped are displayed under Skipped Ledgers. Click F9: Hide Skipped to display the default details. F10: Range Wise - Click F10: Range Wise button menu or click F10 function key to display the cash payments for a configured range of amounts. The Cash Payments screen with range of amounts are displayed. Figure 48. Cash Payment - Voucher Amount Range - (F10) The payment values are displayed under Lowest and Highest for different payment ranges If you want to redefine the amount range for display when using F10: Range Wise button menu, click F6: Amount wise button menu. 45

50 The Cash Payment Range screen is displayed. Figure 49. Definition of Cash Payment Range You can redefine the range as required in this screen and save the new definitions. Alt + B: Bank Summary - Click Alt + B: Bank Summary button menuor click Alt and B keys together to display the payments made through the bank accounts. The Bank Payments screen is displayed. Figure 50. Bank Payments Screen Select the required bank ledger (e.g. Canara Bank) and press Enter. 46

51 The Ledger Payment Vouchers screen is displayed. Figure 51. Bank Payment Details You can now verify if any of the payments was made by a bearer cheque in consultation with the client. Select any payment by pressing the Spacebar. 47

52 Figure 52. Mark/Unmarking Payment as Bearer Cheque Click Ctrl + A : Mark/Unmark button menu to mark Yes/No under Is Bearer Cheque? You can click Ctrl + Space (Spacebar) to select all transactions for marking Yes/No. F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature- already discussed above). F12: Configure - Click F12: Configure button menu or click function key F12 to define the details of cash payments to be displayed (already discussed above). 48

53 Cl18-Payments to Specified Persons Lesson Objectives On completion of this lesson, you will be able: To extract information required under Payments to Specified Persons Audit & Record Audit Comments for Clause 18 Print Annexure as per Sec. 40(2) (b) The payments to specified persons are governed under Sec 40(2) (b) of the Income Tax Act. As per this sub-section, if an assessee incurs any expenditure for which payment has been made or is to be made to any person and the Assessing Office (ITO) is of the opinion that such expenditure is unreasonable or excessive having regard to the: fair market value of goods, services or any facilities received or legitimate needs of the assessee s business or benefit derived /accrued to the assessee In all such circumstances, the expenditure considered excessive or unreasonable shall not be allowed as a deduction while computing the taxable income of the assessee. The definitions of persons referred above are the following: Type of Assessee Individual Definition of Person Any relative of the assessee Company, Firm, AOP or HUF Any Director of the Company/Partner of the Firm/member of the AOP or HUF or any relative of the above persons The definition also includes: Any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual A Company/Firm/AOP/HUF having a substantial interest in the business or profession of the assessee or any director, partner, member of the company, firm or AOP/HUF, or any relative of the such director, partner or member 49

54 Any assessee being an individual carrying on a business or profession(including the relative of the assessee) having a substantial interest in the business or profession of that person Any assessee being a company, firm or AOP/HUF or any director of the company, partner of the firm, member of the AOP/HUF or any relative of such director, partner, member, has a substantial interest in the business or profession of that person The audit objective under this clause is to find whether the assessee has incurred any expenditure which is excessive and unreasonable in relation to the value of goods/services, legitimate needs or benefit to the assessee s business or profession. Configuration of ledger accounts as specified persons Before the audit of such payments is performed you have to configure the ledger accounts as specified persons. The configuration is done in consultation with the Client. For example, if you want to configure a ledger account (e.g. AVT Computers) as a specified party. The process of configuring the ledger account as a specified person is described here. The Tax Audit Dash Board screen is displayed here to describe the process. Figure 53. Payments to Specified Person Feature in Tax Audit Screen 1. Select Payments to Specified Persons in Tax Audit screen and press Enter 50

55 The Payments to Specified Persons screen is displayed. Figure 54. Payments to Specified Persons Screen 2. Click Ctrl + F9:Master in the Payments to Specified Persons screen 51

56 The Select Item screen is displayed. Figure 55. Select Item Screen to select Group for Configuration of Specified Person If there are ledger accounts configured as Specified Persons, they are displayed in the Payment to Specified Persons screen. In such circumstances, click Ctrl + F9: Master in the right side button menu panel in the Payments to Specified Persons screen for configuring additional ledgers as specified persons. 3. Select the required Group (e.g. Sundry Debtors) under which the ledger account is created. 52

57 The Related Party Configuration screen is displayed. Figure 56. Related Party Configuration Screen 4. Select any ledger account (e.g. AVT Computers) by pressing the Spacebar The F9: Update button menu is now enabled in the right side button panel. 5. Click F9: Update 53

58 The Audit Details screen is displayed. Figure 57. Audit Details Screen 6. Select Yes against Is Related Party 7. Type the appropriate value (e.g. Sister Concern) against Relation Type 8. Accept the selection and entry. The Related Party Configuration screen after the update is displayed. Figure 58. Related Party Configuration Screen after Configuration 54

59 Payments to Specified Persons Having configured the ledger accounts, the process of auditing the transactions with specified persons is described here. The Payments to Specified Persons screen after configuration is displayed. Figure 59. Payments to Specified Persons Screen after Configuration You will find the ledger account (AVT Computers) configured as Specified Person is displayed in the above screen. The details displayed in the above screen are: Group -The details of all ledgers under all groups are displayed in the report. By default it is All Items. Particulars -The ledgers which are configured as specified parties are displayed under the groups. Total Amount - The total value of the transactions accounted under the ledger accounts is displayed. Unaudited Vouchers -The total number of vouchers which are to be audited is displayed. Configuration of details in the Payments to Specified Persons Screen You can configure the display of details in the Payments to Specified Persons screen of the Clause 18 feature by clicking F12: Configure button menu or click function key F12. 55

60 The Configuration screen is displayed. Figure 60. F12:Configure- Configuration Screen for Payments to Specified Persons The details under Configuration are: Show Group Details - Enter Yes/No as value. Show Relation Type - Enter Yes/No as value. Show Voucher Audit Details - Enter Yes/No as value to display audit details for transactions audited. Sorting Method - The methods available are: Alphabetical (Decreasing) Alphabetical (Increasing) Amount-wise (Decreasing) Amount-wise (Increasing) Default 9. Select AVT Computers in the Payments to Specified Persons screen and press Enter 56

61 The Ledger Vouchers screen is displayed. Figure 61. Ledger Vouchers Screen 10.Select the payment transaction by pressing the Spacebar 11.Click Alt + F1: Detailed to display the details of the voucher The F9: Audit button menu is now enabled. 12.Click F9:Audit 57

62 The Audit Details screen is displayed. The values available under Audit Status are: Figure 62. Audit Details Screen with Audit Status details Unknown - The Auditor is yet to complete the audit and status is unknown Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion Not to be Reported - The transaction has met the audit criteria and is therefore valid and not be reported as payment to specified party To be Reported - The transaction has not met the audit criteria and has to be reported in the audit report as payment to specified party Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information Figure 63. Audit Details Screen with details 13.Select required status value under Audit Status The value of the transaction is automatically displayed under Amount 14.Type the required details under Nature of Payment 58

63 15.Type the required remarks under Audit Note 16.Accept all details by pressing Enter 17.Return to the Ledger Vouchers screen 18.Click Ctrl + A: Accept to accept the audit remarks 19.Return to the Payments to Specified Persons screen 20.Click F7: Show All Vch in the Payments to Specified Persons screen The Payments to Specified Persons screen is displayed with details under Audit Status (refer value under Audited column). Figure 64. Payments to Specified Persons with Audited Details The Tax Audit screen after the audit is displayed. Figure 65. Tax Audit Dash Board Screen with Details 59

64 Printing of Annexure to Clause 18 After completion of the audit under Cl. 18, you can print its annexure. 21.Click Alt + P: Print in the Payments to Specified Persons screen and press Enter The Annexure to Clause 18 report is printed. Figure 66. Annexure to Clause 18 Button Menus in Payment to Specified Persons screen F4: Group - Click F4 - Group button menu or click F4 function key to display the ledgers for any selected group (already discussed above). F7: Show All Vch/F7 - Show Pending -Click F7: Show All Vch or click F7 function key to display the voucher details under Audit Status and vice versa(already discussed above). Ctrl + F9: Master - Click Ctrl + F9: Master button menu or click Ctrl and F9 together to configure the ledgers as specified parties (already discussed above). F11: Features -Click F11: Features button menu or click function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature). F12: Configure - Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed (already discussed above). 60

65 Cl 21- Payments under Section 43B Lesson Objectives On completion of this lesson, you will be able to: Extract information in respect of Payments made under Sec. 43B Audit & Record Audit Comments for Clause 21 Print Annexures in Prescribed form The section deals with the taxes, cesses, duties or fees collected or employer s share of statutory deductions (PF or Superannuation Fund), etc. The subsection mentions that deductions on account of the above sums are allowed only in computing the income referred to in Sec 28 of that previous year in which they are actually paid by the assessee. The deductions are allowable provided the assessee payments are remitted to the concerned Funds/Depts before the date of filing the tax return. The details of deductions under the above section are: Any sum payable by the assessee as tax, duty, cess or fee, by whatever name called, under any law for time being in force or any sum payable by the assessee as an employer by way of contributions to any Provident Fund/Superannuation Fund/Gratuity Fund or any other employee welfare fund any sum paid by the assessee to an employee as Bonus or commission for services rendered, where such sum would have not been payable as profits/dividends (Sec 36(1) (ii)) any sum payable as interest on any loan/borrowing from a public financial institution or a State Financial Corporation/State Industrial Investment Corporation in accordance with the terms and conditions of loan agreement any sum payable as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the loan agreement any sum payable by the assessee as an employee in place (in lieu) of any leave at the credit of the employee The audit objective under this clause is to find whether the assessee has paid the sums described above before the date of filing of the tax return. 61

66 To audit the transactions under Payments Under Section 43B, you have to activate the following in the default Tally.ERP 9 product and account the required transactions: Enable Tax Collected at Source (TCS) option by setting it to Yes in Statutory & Taxation (F3: Statutory) under F11: Features Enable Service Tax option by setting it to Yes in Statutory & Taxation (F3: Statutory) under F11: Features Enable Value Added Tax (VAT) option by setting it to Yes in Statutory & Taxation (F3: Statutory) under F11: Features Enable Payroll Statutory option by setting it to Yes in Statutory & Taxation (F3: Statutory) under F11: Features Maintain Payroll option by setting it to Yes in Accounting Features (F1: Accounts) under F11: Features The Statutory & Taxation screen under F11: Features is displayed. Figure 67. Stautory & Taxation Features in F11: Features 62

67 The Company Operations Alteration screen with the Accounting Features features (F11: Features) is displayed. Value Added Tax Figure 68. Accounting Features under F11: Features The process of auditing the transactions under Value Added Tax (VAT) is described. The Tax Audit Dash Board screen is displayed. Figure 69. Tax Audit Dash Board Screen with Value Added Tax Feature 63

68 1. Select the required feature (e.g. Value Added Tax) in the Tax Audit screen and press Enter The VAT/CST Payable Summary screen is displayed. The details in the screen are: Particulars -The details are: Figure 70. VAT/CST Payable Summary Screen Output Tax (A)- The tax collected on sales of items Available Input Tax Credit (B) The tax credit/paid on purchase of items Tax Payable after adjusting the available (A-B)-The balance tax payable after deducting the input credit against output tax payable Paid - The situation when the input tax credit is more than the output tax Tax Amount - The tax amounts on both sales and purchases are displayed. The columns under Audit Status are: Audited - The number of audited transactions/vouchers. Unaudited - The number of un audited transactions/vouchers. Total - The total of audited and unaudited transactions/vouchers. 64

69 VAT/CST Payments Output Summary The VAT/CST Payments Output Summary report displays the various rates of Output VAT available on the sale of goods and the assessable value on which the tax was collected. 2. Select any of the tax components in VAT/CST Payable Summary for audit (e.g. Output Tax (A) and press Enter The VAT / CST Payments Output Summary screen is displayed. Figure 71. VAT/CST Output Payments Summary Screen 3. Select any component of Output VAT (e.g. Output 12.5%) in the VAT / CST Payments Output Summary screen and press Enter 65

70 The Ledger Vouchers screen is displayed. The above report displays details of: Figure 72. Ledger Vouchers Screen - Output 12.5% Voucher Type Voucher No Assessable Value Tax Amount The other details to be entered during audit are: Audit Status Audit Remarks Audit Note 66

71 Configuration of display of details in Ledger Vouchers screen You can configure the display of details in the Ledger Vouchers screen of the Clause 21 feature by clicking F12: Configure button menu or click function key F12. The Configuration screen is displayed. Figure 73. Configuration Screen- F12: Configure The details under Configuration are: Show Narrations also - Enter Yes/No as value. Show Audit Status - Enter Yes/No as value. Show Audit Note - Enter Yes/No as value. Show Client s Clarifications - Enter Yes/No as value. Show Vouchers of Audit Status - Enter any of these values. Any Unknown Altered Audited Clarified Need Clarification Unaudited Under Observation Sorting Method - The methods available are: Alphabetical (Decreasing) 67

72 Alphabetical (Increasing) Amount-wise (Decreasing) Amount-wise (Increasing) Default 4. Select any ledger account (e.g. Janata Timbers) in the Ledger Vouchers screen and press Enter (or by press the Spacebar and click F9: Audit) The Audit Details screen is displayed. The values available under Audit Status are: Figure 74. Audit Details Screen Unknown - The Auditor is yet to complete the audit and status is unknown Audited - The Auditor has completed the audit of the transaction Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information Figure 75. Audit Details Screen with remarks 5. Select the required status value under Audit Status 68

73 6. Type the required remarks under Audit Note 7. Accept the details by pressing Enter The Ledger Vouchers screen after the audit is displayed. Figure 76. Ledger Vouchers Screen after Audit 8. Click Ctrl + Enter to view the details of the sales entry 69

74 The Accounting Voucher Alteration (Secondary) screen is displayed. Figure 77. Voucher Alteration Screen You can now verify the sales entry with supports like party invoice, sales order and other docs. In similar manner you can audit other sales transactions relating to Output Tax and Output Tax Credit. When you come to the Tax Audit Dash board screen, you will find there is a number mentioned under the Under Observation column. 70

75 The Tax Audit Dash Board screen is displayed. Available Tax Input Credit Figure 78. Tax Audit Dash Board Screen after Audit 9. Click Value Added Tax feature under Cl.21- Payments Under Section 43B and press Enter The VAT/ CST Payable Summary screen is displayed. Figure 79. VAT/CST Payable Summary Screen 10.Click Available Input Tax Credit (B) in the VAT/CST Payable Summary screen and press Enter 71

76 The VAT/ CST Payments Input Summary screen is displayed. Figure 80. VAT / CST Payments Input Summary Screen The VAT/ CST Payments Input Summary report displays the Input Tax Credit available and the assessable value on which tax was paid for purchase of goods at different tax rates. It also displays the excess input credit which is brought forward from the previous year. 11.Select any component of Input VAT (e.g. Input 12.5%) in the VAT / CST Payments Output Summary screen and press Enter The Ledger Vouchers screen is displayed. The above report displays details of: Figure 81. Ledger Vouchers Screen Voucher Type 72

77 Voucher No Assessable Value Tax Amount The other details to be entered during audit are: Audit Status Audit Remarks Audit Note Configuration of display of details in Ledger Vouchers screen You can configure the display of details in the Ledger Vouchers screen of the Clause 21 feature by clicking F12: Configure button menu or click function key F12. The Configuration screen is displayed. Figure 82. Configuration for Ledger Vouchers Screen- F12: Configure The details under Configuration are: Show Narrations also - Enter Yes/No as value. Show Audit Status - Enter Yes/No as value. Show Audit Note - Enter Yes/No as value. Show Client s Clarifications - Enter Yes/No as value. Show Vouchers of Audit Status - Enter any of these values. Any Unknown Altered 73

78 Audited Clarified Need Clarification Unaudited Under Observation Sorting Method - The methods available are: Alphabetical (Decreasing) Alphabetical (Increasing) Amount-wise (Decreasing) Amount-wise (Increasing) Default 12.Select any ledger account (e.g. HP India Ltd) in the Ledger Vouchers screen and press Enter (or by pressing the Spacebar) The Audit Details screen is displayed. The values available under Audit Status are: Figure 83. Audit Details Screen Unknown - The Auditor is yet to complete the audit and status is unknown Audited - The Auditor has completed the audit of the transaction Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion 74

79 Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information Figure 84. Audit Detail Screen with Remarks 13.Select the required status value under Audit Status 14.Type the required remarks under Audit Note 15.Accept the details by pressing Enter The Ledger Vouchers screen after the audit is displayed. Figure 85. Ledger Vouchers Screen after Audit 16.Click Ctrl + Enter to view the details of the sales entry 75

80 The Accounting Voucher Alteration (Secondary) screen is displayed. Figure 86. Accounting Voucher Alteration Screen You can now verify the purchase entry with supports like party invoice, purchase order and other docs. In similar manner you can audit other purchase transactions relating to Input Tax and Input Tax Credit. 17.Click Ctrl + A and return to the VAT / CST Payments Output Summary screen When you come to the Tax Audit Dash board screen, you will find there is a number mentioned under the Need Clarification column. 76

81 The Tax Audit Dash Board screen after the audit is displayed. Printing of Annexure to Clause 21 Figure 87. Tax Audit Dash Board Screen after Audit After completion of the audit under Cl. 21, you can print its annexure. 18.Click Alt + P: Print in the VAT/CST Payable screen and press Enter The Annexure to Clause 21 report is printed. Figure 88. Annexure to Clause 21 77

82 Button Menus in VAT/CST Payable screen F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature). The Company Operation Alteration screen displays the Tax Audit Rules. Figure 89. Tax Audit Rules - F11: Features The due dates for remitting tax dues are mentioned here: VAT & CAT: Under Value Added & Central Sales Tax Service Tax: Under Service Tax F12: Configure - Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed. The Configuration screen is displayed. Figure 90. Configuration for VAT/ CST Payable Summary Screen- F12: Configure The details under Configuration are: Show Voucher Audit Details - Enter Yes/No as value. 78

83 Cl 24 (a) - Loans / Deposits Accepted Lesson Objectives On completion of this lesson, you will be able to: Extract information required under Loans / Deposits Accepted Audit & Record Audit Comments for Clause 24(a) Print Annexure as per Sec. 269 SS Under Sec 269 SS of the Income Tax Act, the mode of taking or accepting certain loans and deposits are defined. This section states that no person after 30th June 1984 shall take or accept from any other person (person giving the sum is referred as the Depositor) any loan or deposit otherwise than by an account payee cheque or account payee demand draft if,- a. the amount of the loan/deposit or the aggregate of the loan and deposit or b. on the date of accepting/taking the loan/deposit if there is any loan or deposit taken or accepted earlier by the person from the depositor remaining unpaid ( whether due or not), the aggregate of such unpaid loan/deposit or c. the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more. However there are exceptions to this section. The provisions of this section shall not apply to any loan or deposit taken or accepted from, or a loan or deposit taken by: Government Banking Company, Post Office Savings Bank or Co-operative Bank A Corporation established by a Central, State or Provincial Act Any Government Company as defined u/s 617 of the Companies Act, 1956 Institutions, Associations, Bodies or Class of Institutions, Associations or Bodies which the Central Government may, with reasons in writing, notify in the Official Gazette The provisions of the section shall not apply to any loan or deposit transaction is between the persons who have agricultural income and neither have any income chargeable to Income Tax. 79

84 The audit objective of this clause is to find those payments of loan or deposit accepted by mode other than crossed account payee cheque or demand draft and its value is and aggregates to twenty thousand rupees or more. Consideration of ledger accounts for loans/deposits accepted You can configure ledgers under a sub group (e.g. South Debtors under Sundry Debtors) to be considered for Loans & Deposits Accepted feature by using the Ctrl + F9: Master button menu. By default, this feature displays all ledgers created under Unsecured/ Secured Loan Groups. However, the button menu, Ctrl + F9: Master is provided in the screen to configure any ledger that comes under the Sundry Creditors/Debtors groups. This button menu will enable you as an Auditor to check for transaction(s) that has/have been recorded wrongly/intentionally under sundry debtor/creditor ledger accounts. Loans / Deposits Accepted The Tax Audit Dash Board screen is displayed. Figure 91. Tax Audit Dash Board Screen 1. Click Loans/ Deposits Accepted in the Tax Audit screen and press Enter 80

85 The Loans & Deposits Accepted screen is displayed. Figure 92. Loans & Deposits Accepted Screen The details in the Loans & Deposits Accepted screen are: Group - The ledger details under the groups displayed in the report. By default it is All Items. Particulars - The ledgers which are configured to be considered under loans & deposits accepted are displayed. Total Amount - The total value of the transactions accounted under the ledger accounts is displayed. Unaudited Vouchers - The total number of vouchers which are to be audited is displayed. 81

86 Configuration of details in Loans & Deposits Accepted screen You can configure the display of details in the Loans & Deposits Accepted screen of the Clause 21 feature by clicking F12: Configure button menu or by clicking the function key F12. The Configuration screen is displayed. Figure 93. Configuration of details in Loans/Deposits Accepted Screen- F12: Configure The details under Configuration are: Show Group Details - Enter Yes/No as value. Eliminate all cross Sales transactions - Enter Yes/No as value. Show Voucher Audit Details - Enter Yes/No as value. Sorting Method - The methods available are: Alphabetical (Decreasing) Alphabetical (Increasing) Amount-wise (Decreasing) Amount-wise (Increasing) Default 82

87 Audit of transaction of Loans & Deposits Accepted Figure 94. Loans & Deposits Accepted Screen- Ledger Selection 2. Select any ledger account (e.g. Maruthu Finance Ltd) in the Loans & Deposits Accepted screen and press Enter 83

88 The Ledger Vouchers screen is displayed. Figure 95. Voucher Selection for Audit 3. Select the cash transaction (Receipt) by pressing the Spacebar for audit The button menu, F9: Audit is now enabled in the right side panel menu bar. You can also press the Enter key to perform the audit of the transaction. 4. Click F9: Audit or click F9 function key 84

89 The Audit Details screen is displayed. The values available under Audit Status are: Figure 96. Audit Details Screen Unknown - The Auditor is yet to complete the audit and status is unknown Accepted by Cash - The loan or deposit has been accepted by cash and the value is Rs or more Accepted by Cheque / DD - The loan or deposit has been accepted by a crossed cheque /DD Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion Not a Loan - The transaction recorded is not a loan or deposit Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information 5. Select the required status value under Audit Status 6. Type the transaction value under Amount 7. Type the required remarks under Audit Note 85

90 The Audit Details screen with the details is displayed. 8. Accept the details by pressing Enter Figure 97. Audit Details Screen with Remarks The Ledger Vouchers screen after the audit is displayed. Figure 98. Ledger Vouchers Screen after Audit 9. Press Ctrl + A to return to the Loans & Deposits Accepted screen 10.Click F7: Show All Vch to display the Audit Status in the Loans & Deposits Accepted screen 86

91 The Loans & Deposits Accepted screen after the audit is displayed. Figure 99. Loans & Deposits Accepted Screen after Audit The Tax Audit Dash Board screen after the audit is displayed. Figure 100. Tax Audit Dash Board Screen after the Audit 87

92 Printing of Annexure to Clause 24(a) After completion of the audit under Cl. 24 (a), you can print its annexure. 11.Click Alt + P: Print in the Loans & Deposits Accepted screen and press Enter The Annexure to Clause 24(a) report is printed. Figure 101. Annexure to Clause 24(a) 88

93 Button menus in Loans & Deposits Accepted screen F4: Group - Click F4: Group button menu or click F4 function key to display the ledgers for any selected group. The Select Item screen is displayed. Figure 102. Selection of Group through F4: Group Select Unsecured Loans under List of Groupings and press Enter. 89

94 The Loans & Deposits Accepted screen containing the ledger details under Unsecured Loans is displayed. Figure 103. Ledgers under Selected Group- Unsecured Loans You can audit the ledger transactions of the selected group. F7: Show All Vch/F7: Show Pending - Click F7: Show All Vch or click F7 function key to display the voucher details under Audit Status and vice versa (already discussed above). Ctrl + F9: Master - Click Ctrl + F9: Master button menu or Ctrl and F9 keys together to configure the ledgers to be considered for loans and deposits received feature (already discussed above). F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature- already discussed above). F12: Configure - Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed (already discussed above). 90

95 Cl 24 (b) Loans / Deposits Repaid Lesson Objectives On completion of this lesson, you will be able to: Extract information required under Loans / Deposits Repaid Audit & Record Audit Comments for Clause 24(b) Print Annexure as per Sec. 269T This section is called as Mode of repayment of certain loans or deposits and is covered by the provisions of Sec 269 T of the Income Tax Act. The section requires that a branch of a banking company or a co-operative bank or a company or co-operative society or firm or any person shall repay a loan or deposit made with it by the mode of an account payee cheque or account payee bank draft in the name of the person who has made the loan or deposit. This mode has to be made only if: the amount of loan or deposit together with the interest, if any payable or the aggregate amount of the loans or deposits held by a person with a bank branch or a co-operative bank or a company or co-operative society or a firm or a with a person either singly or jointly on the date of repayment along with the interest, if any, payable is twenty thousand rupees or more. In the case of a bank branch or a co-operative bank, the repayment may be in the form of crediting the proceeds to the savings/current account maintained with bank branch/cooperative bank of the person who has made the loan or deposit. The section however does not apply to repayment of loans or deposits by persons to: Government Any bank company, post office savings bank or co-operative bank A Corporation established under a Central, State or Provincial Act A Government Company as defined under Sec 617 of the Companies Act, 1956 Institutions, association or body or class of institutions, associations or bodies which the Central Government may, for reasons recorded in writing, notify in this behalf in the Official Gazette The banking company means a company to which the Banking Regulation Act, 1949 applies and includes a bank or banking institution as defined under section 51 of the Act. The co-operative bank means a bank defined under Part V of the Banking Regulation Act,

96 The loan or deposit means any loan or deposit of money repayable after notice or repayable after a period. In the case of a person other than a company it includes loan or deposit of any nature. Consideration of ledger accounts for loans/deposits repaid You can configure ledgers under a sub group (e.g. South Debtors under Sundry Debtors) to be considered for Loans & Deposits Repaid feature by using the Ctrl + F9: Master button menu. By default, this feature displays all ledgers created under Unsecured/ Secured Loan Groups. However, the button menu, Ctrl + F9: Master is provided in the screen to configure any ledger that comes under the Sundry Creditors/Debtors groups. This button menu will enable you as an Auditor to check for transaction(s) that has/have been recorded wrongly/intentionally under sundry debtor/creditor ledger accounts. Loans / Deposits Repaid The Tax Audit Dash Board screen is displayed. Figure 104. Tax Audit Dash Board Screen- Loans & Deposits Repaid 1. Select Loans / Deposits Repaid in the Tax Audit screen and press Enter 92

97 The Loans & Deposits Repaid screen is displayed. Figure 105. Loans & Deposits Repaid Screen The details in the Loans & Deposits Repaid screen are: Group - The ledger details under the groups displayed in the report. By default it is All Items. Particulars - The ledgers which are configured to be considered under Loans & Deposits Repaid are displayed. Total Amount - The total value of the transactions accounted under the ledger accounts is displayed. Unaudited Vouchers - The total number of vouchers which are to be audited is displayed. 93

98 Configuration of details in Loans & Deposits Repaid screen You can configure the display of details in the Loans & Deposits Repaid screen of the Clause 21 feature by clicking F12: Configure button menu or by clicking the function key F12. The Configuration screen is displayed. Figure 106. Configuration for Loans & Deposits Repaid Screen- F12: Configure The details under Configuration are: Show Group Details - Enter Yes/No as value. Eliminate all cross Purchase transactions - Enter Yes/No as value. Show Voucher Audit Details - Enter Yes/No as value. Sorting Method - The methods available are: Alphabetical (Decreasing) Alphabetical (Increasing) Amount-wise (Decreasing) Amount-wise (Increasing) Default 94

99 Audit of transaction of Loans & Deposits Repaid. Figure 107. Loans & Deposits Screeen- Selection of Ledger Account 2. Select any ledger account (e.g. B Ramesh - Loan) in Loans & Deposits Repaid screen and press Enter The Ledger Vouchers screen is displayed. Figure 108. Ledger Vouchers Screen 3. Select any transaction (e.g. Payment) by pressing the Spacebar for audit The button menu, F9: Audit is now enabled in the right side panel menu bar. You can also press the Enter key to perform the audit of the transaction. 4. Click F9: Audit or click F9 function key 95

100 The Audit Details screen is displayed. The values available under Audit Status are: Figure 109. Audit Details Screen Unknown - The Auditor is yet to complete the audit and status is unknown Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion Not a Loan - The transaction recorded is not a loan or deposit Repaid by Cash - The loan or deposit has been repaid by cash and the value is Rs or more Repaid by Cheque / DD - The loan or deposit has been repaid by a crossed cheque / DD Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information 5. Select the required status value under Audit Status 6. Type the transaction value under Amount 7. Type the required remarks under Audit Note 96

101 The Audit Details screen with the details is displayed. 8. Accept the details by pressing Enter Figure 110. Audit Details Screen with Remarks The Ledger Vouchers screen after the audit is displayed. Figure 111. Ledger Vouchers Screen after Audit 9. Click Ctrl + A to accept the entries/selection under Audit Details 10.Click F7: Show All Vch to display the details under Audit Status 97

102 The Loans and Deposits Repaid screen is displayed with details under Audit Status (refer value under Audited column). Figure 112. Loans & Deposits Repaid Screen after Audit 98

103 The Tax Audit screen after the audit is displayed. Printing of Annexure to Clause 24(b) Figure 113. Tax Audit Dash Board after Audit After completion of the audit under Cl. 24 (b), you can print its annexure. 11.Click Alt + P: Print in the Loans & Deposits Repaid screen and press Enter The Annexure to Clause 24(b) report is enclosed. Figure 114. Annexure to Clause 24(b) 99

104 Button menus in Loans & Deposits Repaid screen F4: Group - Click F4: Group button menu or click F4 function key to display the ledgers for any selected group (Similar to what was discussed under Loans & Deposits Accepted feature). F7: Show All Vch/F7: Show Pending - Click F7: Show All Vch or click F7 function key to display the voucher details under Audit Status and vice versa (already discussed above). Ctrl + F9: Master - Click Ctrl + F9: Master button menu or Ctrl and F9 together to configure the ledgers to be considered for loans and deposits paid feature (already discussed above). F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature-already discussed above). F12: Configure - Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed (already discussed above). 100

105 Cl 27 Tax Deducted at Source Lesson Objectives On completion of this lesson, you will be able to: Audit TDS transactions as required under Tax Audit Generate Annexure to Cl 27 The requirement under this clause refers to the compliance made by the assessee with Chapter XVII-B regarding tax deducted at source and its payment to the credit of the Central Government. If the assessee has not complied with the provisions, the Tax Auditor has to provide details with respect to: Tax deductible but not deducted Shortfall on lesser deduction of tax than required Tax which was deducted late Tax deducted but not remitted to the Central Government In this connection reference is made to Sec 200 of the Income Tax Act. This section deals with the duty of the person responsible for deducting the tax at source. The section mentions: 1. Any person deducting tax in accordance with the provisions of this Chapter shall pay within the prescribed time, the tax deducted to the credit of the Central Government or as the Board directs. 2. Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. 3. Any person deducting any tax on or after the 1st day of April, 2005 in accordance with the provisions of this Chapter or any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the Central Government within the prescribed time, prepare such statements for such period as may be prescribed. The statements have to be delivered to the prescribed income-tax authority or the authorised person. The statement should in a prescribed form and verified providing required particulars and within such time as may be. To audit the TDS deduction and payment details, you have to activate the Enable Tax Deducted at Source (TDS) option in the default Tally.ERP 9 product by setting it to Yes in Statutory & Taxation (F3:Statutory) under F11: Features and account the TDS related transactions. 101

106 The F11: Features screen with the details of Tax Audit Rules is displayed. Figure 114. Tax Audit Rules for TDS- F11: Features The due dates in respect of Tax Deducted at Source & Tax Collected at Source are configured in this menu. Tax Deducted at Source The Tax Audit Dash Board screen is displayed. Figure 115. Tax Audit Dash Board Screen- Tax Deducted at Source 1. Select Tax Deducted at Source in the Tax Audit screen and press Enter 102

107 The TDS Summary screen is displayed. Figure 116. TDS Summary Screen The details in the TDS Summary screen are: Particulars - The report is made of two headings: Deduction Details - The elements under this sub heading are: Deducted on Time Deductible Deducted Late Deducted at Zero Rate (Section 197A) Deducted at Lower Rate (Section 197) Under Exemption Limit Marked as Not Applicable Payment Details - The elements under this sub heading are: Paid on Time Paid Late Deducted but not Paid 103

108 Assessable Value - The total value of the income assessable for tax is displayed. Tax Amount - The amount of tax payable on the assessed income as per the rules of Income Tax. The columns under Audit Status are: Audited - The number of audited transactions/vouchers. Unaudited - The number of un audited transactions/vouchers. Total - The total of audited and unaudited transactions/vouchers. Note: The report also displays the estimated amount of tax that is payable to the Central Government against Deductible under Deduction Details. Deduction Details 2. Select any deduction type (e.g. Deduction On Time) under Deduction Details in the TDS Summary screen and press Enter The TDS Summary screen is displayed. Figure 117. TDS Summary Screen 3. Select any ledger account (e.g. Advertising Expenses) in the TDS Summary screen and press Enter 104

109 The TDS Bills screen is displayed. Configuration of details in TDS Bills screen Figure 118. TDS Bills Screen for selected Ledger You can configure the display of details in the TDS Bills screen of the Clause 27 feature by clicking F12: Configure button menu or by clicking the function key F12. The Configuration screen is displayed. Figure 119. Configuration of TDS Bills Screen - F12: Configure The details under Configuration are: Show Audit Status - Enter Yes/No as value. Show Audit Note - Enter Yes/No as value. Show Client s Clarifications - Enter Yes/No as value. Show Payment Details - Enter Yes/No as value. 105

110 Show Tax Break-Up - Enter Yes/No as value. Show Narration - Enter Yes/No as value. Show Vouchers of Audit Status - The status values available are: Any Unknown Altered Audited Clarified Disallowed Needs Clarification Not to be Reported Unaudited Under Observation 4. Click Alt + F1: Detailed in the TDS Bills screen to display details for the payments The TDS Bills screen is displayed with the details. Figure 120. TDS Bills Screen with Expanded Details 5. Select any party ledger (e.g. Phoneix Agencies) and press the Spacebar The F9: Audit button menu is activated on the right side panel bar. 6. Click F9: Audit or click F9 function key 106

111 The Audit Details screen is displayed. The values available under Audit Status are: Figure 121. Audit Details Screen Unknown - The Auditor is yet to complete the audit and status is unknown Audited - The Auditor has completed the audit of the transaction Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information Figure 122. Audit Details Screen with Remarks 7. Select the required status from Audit Status window 8. Type the required remarks under Audit Note 107

112 9. Accept the details by pressing Enter During the audit if you want to verify the TDS payment entry, click Ctrl + Enter to display the payment entry voucher. You can now verify the payment entry with supporting documents. The TDS Bills screen after the audit of the transaction is displayed. Figure 123. TDS Bills Screen after Audit 10.Select the audited transaction (e.g. Phoneix Agencies) and press Ctrl + Enter 11.Click Ctrl + A to accept the audit details The TDS Summary screen after the audit is displayed. Figure 124. TDS Summary Screen after Audit 108

113 The Tax Audit screen after the audit is displayed. Payment Details Figure 125. Tax Audit Dash Board Screen after Audit The TDS Summary screen with Payment Details is displayed. Figure 126. TDS SUmmary Screen - Payment Details 12.Select any deduction type (e.g. Paid On Time) under Payment Details in the TDS Summary screen and press Enter 109

114 The TDS Summary Screen is displayed. Figure 127. TDS Summary Screen 13.Select the ledger account (e.g. Advertisement Expenses) in TDS Summary and press Enter The TDS Bills screen is displayed for the selected ledger. Configuration of details in TDS Bills screen Figure 128. TDS Bill Screen You can configure the display of details in the TDS Bills screen of the Clause 27 feature by clicking F12: Configure button menu or clicking the function key F

115 The Configuration screen is displayed. Figure 129. Configuration of TDS Bills Screen- F12: Configure The details under Configuration are: Show Challan Details - Enter Yes/No as value. Show Audit Status - Enter Yes/No as value. Show Audit Note - Enter Yes/No as value. Show Client s Clarifications - Enter Yes/No as value. Show Deduction Details - Enter Yes/No as value. Show Payment Details - Enter Yes/No as value. Show Narration - Enter Yes/No as value. Show Vouchers of Audit Status - The status values available are: Any Unknown Altered Audited Clarified Disallowed Needs Clarification Not to be Reported 111

116 Unaudited Under Observation 14.Click Alt + F1: Detailed to display the details of TDS Bills 15.Select the entry (Purc/1-1 ABC & Co) by pressing the Spacebar in the TDS Bills screen The F9: Audit button menu is activated in the right side button bar. 16.Click F9: Audit or click F9 function key The Audit Details screen is displayed. Figure 130. TDS Bills Screen with Details for Audit The values available under Audit Status are: Figure 131. Audit Details Screen Unknown - The Auditor is yet to complete the audit and status is unknown Audited - The Auditor has completed the audit of the transaction Disallowed - The transaction has not met the audit criteria and is therefore disallowed Need Clarification - The Auditor has not decided on the status of the audit and needs additional information from the client before completion 112

117 Under Observation - The audit of the transaction is not complete as the auditor needs to consult/check additional evidence/information Figure 132. Audit Details with Remarks 17.Select the required status from Audit Status window 18.Type the required remarks under Audit Note 19.Accept the details by pressing Enter During the audit if you want to verify the details of the TDS payment, click Ctrl + Enter to display the payment voucher. You can now verify the payment entry details with supporting documents. The TDS Bills screen after the audit of the transaction is displayed. Figure 133. TDS Bills Screen after Audit 113

118 20.Click Ctrl + A to accept the audit details The TDS Summary screen after the audit is displayed. Figure 134. TDS Summary Screen after Audit You can also generate the deduction details as per party in the above TDS Summary screen. 21.Click Alt + F4: Party button menu in the TDS Summary screen or click the Alt and F4 keys together The TDS Summary- Deducted on Time - Party Summary screen is displayed. Figure 135. Deduction Deduction Party Wise Screen Similarly, you can generate the deduction details as per as per nature of expenses(nop) 22.Click Alt + F5: NOP button menu in the TDS Summary screen or click the Alt and F5 keys together 114

119 The TDS Summary- Deducted on Time - Nature of Payment screen is displayed. Figure 136. Deduction Details Nature of Payment Screen To revert to the Expenses Summary screen from the Party Summary and Nature of Payment Summary screens, click Alt + F6: Expenses button menu. The Tax Audit screen after the audit is displayed. Figure 137. Tax Audit Dash Board Screen after Audit 115

120 Printing of Annexure to Clause 27 After completion of the audit under Cl. 27, you can print its annexure. 23.Click Alt + P: Print in the TDS Deduction & Payment Summary screen and press Enter The Annexure to Clause 27 (b) (i) report is printed. Figure 138. Annexure to Cl. 27 In the above report the delayed TDS payments in respect to the payments for advertisement services are displayed. Button menus in Tax Deducted at Source F5: Expense Analysis - Click F5: Expense Analysis button menu or click F5 function key to display the Expense Analysis screen. 116

121 The Expenses Analysis screen is displayed. Figure 139. Expense Analysis Report- TDS vs Non-TDS Expenses This report shows the comparison between the TDS and the non-tds expenses. Click Alt + F1: Detailed/Condensed to display the expanded report and the default report respectively. 117

122 The Expenses Summary report with details is displayed. Figure 140. Expense Analysis Report - Detailed F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature- already discussed above). F12: Configure - Click F12: Configure button menu or click function key F12 to define the configuration of details to be displayed in the TDS Summary screen. The Configuration screen is displayed. Figure 141. Configuration Screen for TDS Summary Screen- F12: Configure Select Yes/No against Show Last Audit Details under Configuration. 118

123 Client Clarification Lesson Objectives On completion of this lesson, you will be able to: Know how the client clarifies to the Auditor Audit transcations modified by the Client As the Auditor you would have requesterd the client for clarifications on the observations found during the audit. This Chapter focuses how the client clarifies your audit query and modification of the audited transactions. The client executes the following steps in the default Tally.ERP 9 product. 1. Open Tally.ERP 9 The Gateway of Tally screen is displayed. Figure 152. Gateway of Tally Screen 2. Select Display in Gateway of Tally screen and press Enter 119

124 The Display Menu consisting of various options is displayed. Figure 153. Display Menu Screen 3. Select Statements of Accounts and press Enter The Statements of Accounts menu is displayed. 120

125 Figure 154. Statement of Accounts Menu 4. Select TaXAudit Info in the Statement of Accounts screen and press Enter The Tax Audit Information screen is displayed. Figure 155. Tax Audit Information Screen The columns in the Tax Audit Information screen are: Clause No.:The number of the clause in the Tax Audit Dash Board screen Audit Type:The description of the tax audit clause Need Clarification:The number of the clarifications sought by the Auditor 5. Select Value Added Tax under Payments under Sec43B and press Enter The Audit Vouchers screen is displayed. Figure 156. Audit Vouchers Screen 121

126 Figure 157. Selection of Tax Audit Transaction 6. Select the Input 12.5% by pressing the Spacebar The F9: Clarify button menu is enabled on the right side button panel. Click F9:Clarify The Audit Clarification screen is displayed. Figure 158. Audit Clarification Screen 7. Type the required remarks under Audit Clarification 8. Accept the remarks 122

127 The Audit Vouchers screen after the audit is displayed. Figure 159. Audit Vouchers Screen after Audit 9. Click Ctrl + A in the Audit Vouchers screen and return to the Tax Audit Information screen The Tax Audit Information screen after audit is displayed. Figure 160. Tax Audit Information Screen after Audit At the Auditor s end the clarification provided by the Client is shown in the Tax Audit Dash Board screen. 123

128 The Tax Audit Dash Board screen is displayed. Figure 161. Tax Audit Dash Board Screen 10.Place the cursor on the voucher under Clarified (To be re-audited) and press Enter The Ledger Vouchers screen for the transaction is displayed. Figure 162. Ledger Vouchers Screen after Client Clarification You can now audit the clarified voucher and mention the appropriate audit remark. Altered- To be re-audited If your Client makes any alteration in any audited voucher, the details are displayed under the Altered- To be re-audited column. 124

129 Reports in Tax Audit The Tally.ERP 9 Auditors Edition offers the following reports: Form 3CD Form 3CA Form 3CB Form 3CD The assessees whose books of accounts are audited under Sec44AB have to furnish a statement of particulars in Form 3CD to the Income Tax Department. Currently some details of clauses (e.g. 1-6) are automatically populated by the master data in the product. Other details have to be entered manually for generating the report. However the annexures to the clauses discussed above are generated as mentioned above. The Form has user-friendly options to copy the content of the report from one financial year to another thus saving time and energy. They can also be copied from one company to another. Apart from these advantages, you can select standard texts for quick entry of details in the report. 1. Select Form 3CD in the Gateway of Tally screen under Audit & Compliance and press Enter 125

130 The Form 3CD screen is displayed. Figure 140. Form 3CD Report 2. Select any clause (e.g. 7 (a & b) - Particulars of Members / Partners in the Form 3CD screen and press Enter 126

131 The Particulars of Members / Partners screen is displayed. Figure 141. Particulars of Members / Partners Screen You can use standard texts available to enter against the clauses or enter your own text. 3. Click Alt + T: Select Text in the status bar below The Select Item screen is displayed. Figure 142. Select Item with Select Text WIndow 4. Select the required text under Select Text window and press Enter 127

132 The selected value is displayed against the clauses. 5. Accept the selection Figure 143. Particular of Members Screen with Selected Details You can similarly fill the details for other clauses if required. You want to copy the common data from one financial year to another. 6. Click Ctrl + O :Copy From button menu or click Ctrl and O keys together in the Form 3CD screen The Data Configuration screen is displayed. Figure 144. Data Configuration Screeen 7. Select the required financial year from the Financial Year window against Copy From Financial Year and press Enter 128

133 Figure 145. Selection of Year for Copying 8. Accept the selection In the similar manner you can copy the details to another company. 9. Click Alt + P: Print to print the Form 3CD report 129

134 The Form NO. 3CD report is displayed. Figure 146. Form 3CD Report 130

135 Button menus in Form 3CD report Alt + F1: Detailed - Click Alt + F1: Detailed button menu or click Alt and F1 keys together to display a detailed report of the form. Click Alt + F1: Condensed to display the default report. The Form 3CD report in a detailed form is displayed. The Form 3CD report in a detailed form is displayed. Figure 147. Detailed Form 3CD Report F2: Period - Click F2: Period button menu or click F2 key to display the Form 3CD report for the required year. F11: Features - Click F11: Features button menu or function key F11 to configure details relating to Accts, Inv, Stat, Tally.Net and Audit (default Tally.ERP9 feature). 131

136 Form 3CA This is an report that has to be furnished by an Auditor who performs the statutory audit of the assessee s business or profession as required under any other law (other than the audit under Sec44AB). The Auditor has to file the audited copies of final statements of profit & loss account, the balance sheet and annexures, to the IT Department in addition to the report under Form 3CD report. 1. Select Form 3CA in the Gateway of Tally screen under Audit & Compliance and press Enter The Print Report screen is displayed. 2. Click Yes under Print Figure 148. Form 3CA Print Screen 132

137 The Form NO. 3CA audit report is displayed. Figure 149. Form 3CA Report The report can be printed with the signature of the Auditor. 133

138 Form 3CB This is another audit report under Sec 44AB which applies to a person who carries on business or profession, but not being a person referred to in clause 1 (a) of Rule 6G. Note: Clause1 (a) of Rule 6G states: (1) The report of audit of the accounts of a person required to be furnished under section 44AB shall, a. in the case of a person who carries on business or profession and who is required by or under any other law to get his accounts audited, be in Form No. 3CA; The Auditor provides this information in the report: Certification of profit & loss a/c and the balance sheet Statement of particulars under Sec 44AB are furnished in Form 3CD Certifies the particulars provided in Form 3CD and the annexures as true and correct Further certifies the necessary information and explanations provided by the assessee Maintenance of proper books of accounts in the head office and the branches of the assessee Certifies that the profit & loss a/c and balance sheet along with accounting notes give a true and fair view of the accounting information 1. Select Form 3CB in the Gateway of Tally screen under Audit & Compliance and press Enter The Print Report screen is displayed. 2. Click Yes under Print Figure 150. Form 3CA - Print Report Screen 134