Difference between Statutory Audit and Tax Audit
Basis |
Statutory Audit |
Tax Audit |
---|---|---|
Meaning |
Statutory audit is made compulsory by the law. |
Tax audit is conducted in case of turnover of assessee reaches a specific limit. |
Governing Act |
Companies Act 2013 or any other statute governing the corporation. |
Income Tax Act, 1961. |
Purpose |
To ensure that the companies financial statements are authentic and transparent. |
To ensure proper maintanence of books of accounts and they reflect the true taxable income of the assessee. |
Audit of |
It is the audit of full accounting records of the company. |
The audit is performed only on tax related matters. |
Time period |
A company has to perform statutory audit within six months of the end of an accounting year. |
A company or a professional must conduct the tax audit and file the report with the Income Tax Department by September 30 of each fiscal year. |
Auditor |
It is conducted by external auditors. |
This is performed by practising Chartered Accountant. |
Applicable |
All companies |
All companies |
Report Submission |
Shareholders |
Income Tax Department |
Documentation |
Companies has to provide documents supporting financial statements and disclosure at the time of audit. |
Assessee must provide relevant documentation and evidence to support the information reported on their tax returns during audit. |
Difference between Statutory Audit and Tax Audit
“Statutory Audit” and “Tax Audit” are two essential types of audits that any company must go through. While both audits involve the examination of financial records, their objectives, scopes, and the entities involved differ significantly. Statutory audits focus on financial statement accuracy and compliance with accounting standards, while tax audits focus on tax compliance and the correct calculation of taxes owed by the taxpayer.