Technical hurdles delay rollout of new standard for tax audit reports

“The pre-fill electronic form has already been released by the tax department. If CAs try to submit the tax audit reports in the already released e-forms taking into account the revised SA 700, it will not marry and several data entries may get lost. This is the reason why ICAI has delayed it for a year,” said Sanjay Agarwal, chairman of the indirect tax committee of ICAI.

Sources in the tax authorities said any changes in the pre-fill e-forms requires advance notice of at least one year. By next year, all the changes suggested by ICAI will be incorporated, a senior official said.

Experts said there should not be a delay in the applicability of SA 700 in the new e-filing of returns and audit reports. “I believe the ICAI will have to speak to the relevant department in the finance ministry and find a solution to incorporating the changes in the pre-fill e-filing forms. The applicability of SA 700 was delayed last year too,” N Venkatram, partner, Deloitte Haskins & Sells, told FE.

As is known, for professionals such as lawyers, doctors, film actors, singers, interior decorators, architects and company secretaries, among others, whose total gross receipts/turnover in a financial year exceeds R1 crore and/or whose professional annual fee income exceeds R25 lakh, it is compulsory to e-file the tax audit report from the current assessment year.

According to the latest directions from the income tax department, all such assessees will need to appoint a chartered accountant (CA) who will undertake the tax audit and e-file the same with his digital signature. Any violation will attract a penalty of 0.5% of the turnover/gross receipts of the assessee, subject to a maximum penalty of Rs.1,50,000. (Financial Express)