Para 2.3.5 — MSO (Audit)
Original Rule Text
2.3.5 Any obvious errors in assessment, computation, etc. can be pointed out in audit leaving it to the administrative authorities to set right the errors by adopting such action as they may consider appropriate.
2.3.5
(i) The audit department is empowered to audit the collection of taxes as extensively as possible and, in doing, so, to examine individual tax files.
2.3.5
(ii) Tax audits are primarily legality and regularity audit; however, when auditing the application of tax laws, Audit should also examine the system and efficiency of tax collection, the achievement of revenue targets, and if appropriate, propose improvements to the legislative body.
- Audit Approach
What This Means
Audit can point out obvious errors in tax assessments and computations, leaving it to the tax department to correct them as they see fit. The audit department has the power to audit tax collection as extensively as possible and may examine individual tax files. While tax audit is primarily about checking legality and regularity, auditors should also examine the efficiency of the tax collection system, compare revenue against targets, and propose improvements to the legislature if appropriate.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Audit can flag obvious assessment and computation errors
- 2The department decides how to correct flagged errors
- 3Audit can examine individual tax files
- 4Tax audits are primarily legality and regularity checks
- 5Audit should also examine system efficiency and revenue target achievement
- 6Improvements may be proposed to the legislative body
Practical Example
During audit of a sales tax office, auditors find that in 15 out of 100 test-checked assessments, the wrong tax rate was applied, resulting in short-levy of Rs 3.2 crore. Audit points out these computation errors. Additionally, the audit report notes that the office achieved only 65% of its revenue target and recommends that the legislature consider strengthening the department's enforcement wing.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why does audit leave correction to the administrative authority?▼
How can audit propose improvements to the legislative body?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.