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“A STUDY OF TAXATION AND AUDITING SERVICES
PROVIDED BY NEXDIGM PRIVATE LIMITED”
A project Report
Submitted to Savitribai Phule University
In partial fulfilment of requirement for the award degree of
Master of Business Administration (MBA)
BY
DILSHAD AMIR PATHAN
Under the guidance of
Prof. DEVYANI INGALE
DEPARTMENT OF MANAGEMENT STUDIES
RMD SINHGAD INSTITUTE MANAGEMENT STUDIES
WARJE, PUNE 411058
Batch 2020-22.

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DECLARATION
I, the undersigned, hereby declare that the project report “A study of taxation and auditing
services provided by Nexdigm Private Limited” written and submitted by me to the
SAVITRIBAI PHULE PUNE UNIVERSITY, PUNE in partial fulfilment for the degree of
MASTER OF BUSINESS ADMINISTRATION under the guidance of, Prof. Devyani Ingale
is my original work and the conclusion darn therein are based on the material collected by
myself.
Date: Research student
Place: Pune Maharashtra (DILSHAD PATHAN)

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INDEX
SR.NO PARTICULARS PAGE NO.
1 CHAPTER NO 1
Introduction
1 Current Indian scenario
1.1 Global Scenario
1.2 Theoretical aspects
1.3 Key Components
1.4 Review of literature
1.5 Outline of problem
1.6 Scope of the study
1.7 Objectives
2 2.Profile of organization
2.1 Name, Address & Location of the Company
2.2 Company mission and vision
2.3 Historical background of the organization
2.4 Organization chart
2.5 Different product range profile of the organization
2.6 Any special awards to the organization
3 CHAPTER NO 3
RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research design
3.3 Sampling design
3.4 Data collection
3.5 Limitation of study
4 CHAPTER NO 4
Data Analysis
4.1 Introduction and importance
4.2 Data analysis and Data Interpretation
5 CHAPTER NO 5
Suggestions and Recommendations
5.1 Findings
5.2 Suggestions
5.3 Learning
5.4 Contribution to organization
5.5 Conclusion
6 CHAPTER NO 6
Reference
7 CHAPTER NO 7
Appendices

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ACKNOWLEDGMENT
I take this opportunity and privilege to express my deep sense of gratitude to Dr. Swati Vijay,
dean of RMDSSOMS and Prof. Devyani Ingale. Sip guide, for valuable suggestion regarding
the summer internship project and constant source of inspiration during this project work. I
would like to express my immense gratitude towards company guide Mr. Monika Patankar.
I wish to express a special thanks to all teaching and non-teaching staff member of RMD
Sinhgad school of management studies, Warje pune for their continues support.
Place: RMD Sinhgad School of management studies (Name of the student)
Date: DILSHAD AMIR PATHAN

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Executive Summary
The project that I worked upon is titled as “A STUDY ON TAXATION AND AUDITING
SERVICES PROVIDED BY NEXDIG PRIVATE LIMITED”. It was completed after a in-
depth analysis of the particular client’s Financial statements and thereby conducting the tax
audit and issuing the audit report to the respective clients. In this project, I have studied the
firm’s client’s financial statements, analyzing their growth, performance and any abnormal
losses occurrence, which I observed while assisting the auditor, during the audit of the
particular client’s business. The project also discusses about how chartered accountants firms
conducts tax audit of the client’s companies which is statutory in nature. The primary data
has been collected by obtaining the necessary set of book of accounts, financial statements,
vouchers, past audit reports etc. from the client’s accounts office. Also, I did a parallel study
about the effectiveness of the financial services rendered by the firm and why is it necessary
for the companies to get the audits done. For this report I have studied the past works of the
various authors about audit reports, which helped me in the preparation of the proper
reporting format of audits for the companies. In this project, I have also mentioned about the
various types of advanced auditing, brief description about the taxation and their usage and
necessity along with the analysis and interpretation of the data, gathered through the primary
and secondary sources. I also gathered information, views of the clients to examine the
effectiveness of the working behavior and the services provided by the firm and the extent of
client satisfaction by personally interviewing the staff.

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INTRODUCTION
Current Indian scenario
Taxes in India are levied by the Central Government and the state governments some minor
taxes are also levied by the local authorities such as the Municipality. The authority to levy a
tax is derived from the Constitution of India which allocates the power to levy various taxes
between the Centre and the State. An important restriction on this power is Article 265 of the
Constitution which states that "No tax shall be levied or collected except by the authority of
law". Therefore each tax levied or collected has to be backed by an accompanying law,
passed either by the Parliament or the State Legislature. In 2013-2014, the gross tax
collection of the Centre amounted to 13.64 trillion (US$210 billion). The authority to levy a
tax is derived from the Constitution of India which allocates the power to levy various taxes
between the Union Government and the State Governments. Tax structure in India is a three
tier federal structure. The central government, state governments, and local municipal bodies
make up this structure Article 256 of the constitution states that “No tax shall be levied or
collected except by the authority of law. Hence, each and every tax that is collected needs to
back by an accompanying law.
Auditing in India is a system of independently reviewing the records/activities and expressing
an opinion thereon Social audit is a process of reviewing official records and determining
whether state reported expenditures reflect the actual monies spent on the ground. In India,
every company whose shares are registered on the stock exchange must have an internal
auditing system in place. A company whose shares are not listed on the stock exchange, but
whose average turnover during the previous three years exceeds INR50 million, or whose
share capital and reserves at the beginning of the financial year exceeds INR5 million, must
also have an internal auditing system in place. The statutory auditor of the company must
additionally report on the company’s internal auditing system of the company in the final
report. Tax audits are required under Section 44AB of India’s Income Tax Act 1961. The tax
audit report is to be completed by September 30 after the end of the previous fiscal year.
Non-compliance with the tax audit provisions may attract a penalty of 0.5 percent of turnover
or INR100, 000, whichever is lower. There are no specific rules regarding the appointment or
removal of a tax auditor.

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1.1 Global Scenario
Taxation is, by and large, the most important source of government revenue in nearly all
countries. According to the most recent estimates from the International Centre for Tax and
Development, total tax revenues account for more than 80% of total government revenue in
about half of the countries in the world – and more than 50% in almost every country. We
begin this entry by providing an overview of historical changes in taxation patterns, and then
move on to an analysis of available data from the last couple of decades, discussing recent
trends and patterns in taxation around the world.Taxation patterns around the world today
reveal large cross-country differences, especially between developed and developing
countries. In particular, developed countries today collect a much larger share of their
national output in taxes than do developing countries; and they tend to rely more on income
taxation to do so. Developing countries, in contrast, rely more heavily on trade taxes, as well
as taxes on consumption.
Auditors play an essential role in assuring the investing public that financial statements are
both relevant and reliable. Fair value accounting for certain securities was adopted because it
was believed to more rationally reflect management's intent for the use of those assets and
thereby offer investors more relevant information.
In the United States and elsewhere, accounting standard setters are increasingly making the
move to fair value accounting. In light of the current market conditions, I will emphasize this
afternoon the challenges that determining fair value measurements can pose, and, talk briefly
about the obligations of preparers and auditors in this area.
Auditing companies are offering integrated and elaborate audit reports by adding new
performance indicators to conventional operating metrics related to production capacity,
production volumes, and operating expenses, among others. Integrated reporting envisages
combining financial and sustainability data with information about intangible wealth that is
mostly unreported so that stakeholders can gain more comprehensive insights into company’s
performance. Global audit services must fit the needs of internationally active groups under a
variety of assurance standards. Managing your company's regulatory compliance on a
worldwide level can be a difficult task. Enterslice provides well planned comprehensive audit
services to internationally active companies following a variety of auditing standards.

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1.2Theoretical aspects
What is Tax?
Taxes are termed as an obligatory contribution made by individuals or corporations falling
under the tax slab, to the Government of India. From local to national, taxes are applicable on
all levels in India and are considered to be one of the major sources of income for the
Government. The government levies taxes on the citizens of the country to produce income
for business projects, enhance the country’s economy, and lift the standard of living of the
nationals. The government’s authority to levy tax in our country is drawn from the
Constitution of India that deals out the supremacy to levy taxes to the State as well as Central
governments. All the taxes levied within the country require being backed by an escorting
law passed by the State Legislature or the Parliament.
Kinds of Taxes:
1. Direct Tax
As stated earlier, you pay these taxes directly. The government levies such taxes directly on
an individual or an entity and it cannot get transferred to any other person or entity. There is
only one such federation that winks at the direct taxes, i.e. the Central Board of Direct Taxes
(CBDT) governed by the Department of Revenue. The CBDT has, to assist it with its sense of
duties; the backup of several acts that preside over several aspects of the direct taxes.
Types of direct taxes
1.1 Income Tax
Income Tax is one of the most popular and least implicit taxes. It is such a tax, which is
imposed on your income in a fiscal year. There are a lot of facets to the income tax, like
taxable income, reduction of the taxable income, tax slabs, tax deducted at source (TDS), etc.
This tax is pertinent to both the companies and individuals. For individuals, the amount they
pay against the tax is based on the tax bracket they breeze in. This slab or tax decides the tax
that an individual has to pay depending upon their annual income and spreading from no tax
to 30 percent for the higher income groups. The government of India has fixed various tax
slabs for different groups of people, namely very senior citizens (people who have attained an
age above 80 years), senior citizens (people who have attained an age of 60 to 80 years), and
general taxpayers. The major tax enactment in India is the Income Tax Act, 1961 passed by
the Parliament, which imposes a tax on the income of persons.

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This Act imposes a tax on income under the following five heads.
a. Income from house property
b. Income from business and profession
c. Income from salaries
d. Income in the form of capital gains
e. Income from other sources
1.2 Capital gain tax
Capital gain is generally a gain on sale of capital assets—that is, those assets not held for sale
in the ordinary course of business. Capital assets include personal assets in many
jurisdictions. Some jurisdictions provide preferential rates of tax or only partial taxation for
capital gains. Some jurisdictions impose different rates or levels of capital gains taxation
based on the length of time the asset was held. There are generally two types of capital gain
long term capital gain and short term capital gain. Long-term capital gains from the
investment made for a period of more than 36 months and short-term capital gains from the
investments made for not more than 36 months. The tax that is applicable for each of these is
also different since short-term gains tax is computed basis the income bracket, which you fall
in and the long-term capital gain tax is 20 percent. The interesting thing about the capital gain
tax is that the profit does not always should be in the money form. It could also happen to be
barter in kind in this the worth of the exchange will be taken into consideration for taxation.
1.3 Corporate Tax
Corporate tax refers to income, capital, net worth, or other taxes imposed on corporations.
Rates of tax and the taxable base for corporations may differ from those for individuals or
other taxable persons. The income tax a company pays from its revenue earned by it is called
a corporate tax. The corporate tax also has a slab of its own, which decides the amount of tax
to be paid. The company’s income is treated separately from the shareholder’s dividend under
the corporate tax and is levied on domestic companies as well as foreign companies.
1.4 Wealth (net worth tax)
Some countries' governments will require declaration of the tax payers' balance sheet (assets
and liabilities), and from that exact a tax on net worth (assets minus liabilities), as a
percentage of the net worth, or a percentage of the net worth exceeding a certain level. The
tax may be levied on natural or legal persons.

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2. Indirect Tax
The taxes levied on goods and services are referred to as indirect taxes. They are different
from direct taxes as they are not imposed on an individual who shells out them directly to the
Indian government, they are, as an alternative, imposed on the products and an intermediary,
the individual selling the product, collects them. The most trivial examples of indirect taxes
are Sales Tax, Taxes levied on imported goods, Value Added Tax (VAT), etc. Such taxes are
imposed by summating them with the price of the product or service that is likely to push the
price of the product up.
2.1 Goods and Service Tax-GST:
The GST, i.e. Goods and Service Tax is the biggest reform in the structure of Indirect Tax in
India since the market began unlocking 25 years back. The goods and services tax is a
consumption-based tax because it is chargeable where the consumption is taking place. The
GST is imposed on the value-added services and goods at every stage of consumption in the
supply chain. The GST chargeable on the acquisition of the goods and services can be
redeemed against the GST chargeable on the supply of the goods and services, the vendor
will have to make payment of the GST on the applicable rate but he can claim it back via the
tax credit method. GST is known as the Goods and Services Tax. It is an indirect tax which
has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc.
Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and
Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is
levied on every value addition. GST is a single domestic indirect tax law for the entire
country
2.2 Sales Tax
The tax imposed on the sale of any product is called sales tax. This product can be anything
produced in India itself or imported and can also cover services provided. The sales tax is
levied on the product’s seller who then passes it to the individual who buys the said product
with this tax summated to the product’s price. The constraint with this tax is that such a tax is
imposed on a particular product that means if the product is re-sold; the seller cannot apply
sales tax on it. Fundamentally, all the states in India follow their individual Sales Tax Act,
and a percentage native to them is charged. Besides this, other additional charges such as
works transaction tax, turnover tax, purchase tax, and similar taxes are levied in a few states.
This is also one reason that sales tax was considered as one of the largest revenue producers

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for a number of state governments. In addition, the sales tax is imposed under both the State
and Central Legislation.
2.3 Value Added Tax:
Value Added Tax (VAT), popularly known as commercial tax is not chargeable on the
commodities, which are zero rated for food and necessary drugs or those falling under
exports. VAT is imposed at all the steps of the supply chain, from manufacturers to dealers to
distributors to the end user.
The VAT was a tax imposed on the prudence of the state government of the country. Not all
the states put it into practice when it was announced. The VAT is imposed on several goods
that were sold in the state and the state itself decided the amount of tax.
2.4 Customs Duty
While you buy anything that requires being imported from abroad, you are applied a charge
on it and that is known as the customs duty. It is applied to all the products, which come in
via air, sea or land. Although you can acquire products bought from different countries in
India, you will be charged a customs duty. The intention of the customs duty is to make sure
the goods that enter the country are taxed and are paid for. Like the customs duty makes sure
that the goods for different countries are levied taxes, Octroi is supposed to make sure that
the goods traversing the state borders inside India are appropriately taxed. The state
government levies this and functions in almost the same way as that of the customs duty.
2.5 Excise Duty
The excise duty is such a tax that is imposed on all the manufactured goods or the produced
goods in India. This tax varies from customs duty as it is chargeable only on the things that
are produced in India and is also called the Central Value Added Tax or CENVAT. The
government collects this tax from the manufacturer of goods, also from the entities, which
receive manufactured products and provide work for people to transport the products from
the manufacturer to them. The Central Excise Rule framed by the Central Government of
India suggests that every individual that manufactures or produces any ‘excisable goods or
products’, or who stockpile such products in a depot, will have to make payment of the duty
chargeable on these goods. Under this scheme, no excisable products, on which some duty is
payable will be permitted to move without making payment of duty from any point6, where
they are manufactured or produced

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What is Auditing?
Auditing refers to a systematic and independent examination of books, accounts, documents
and vouchers of an organization to ascertain how far the financial statements present a true
and fair view of the concern. It also attempts to ensure that the books of accounts are properly
maintained by the concern as required by law. Auditing has become such an ubiquitous
phenomenon in the corporate and the public sector that academics started identifying an
"Audit Society". The auditor perceives and recognizes the propositions before him/her for
examination, obtains evidence, evaluates the same and formulates an opinion on the basis of
his judgment which is communicated through his audit report. Any subject matter may be
audited. Audits provide third party assurance to various stakeholders that the subject matter is
free from material misstatement. The term is most frequently applied to audits of the financial
information relating to a legal person. Other areas which are commonly audited include:
internal controls, quality management, project management, water management, and energy
conservation. As a result of an audit, stakeholders may effectively evaluate and improve the
effectiveness of risk management, control, and the governance process over the subject
matter.
Kinds of Auditing
1. Statutory Audit
Statutory Audit is compulsory audit prescribed under statute i.e. law. Appointments of
auditors, removal, remuneration, rights, duties, liabilities are governed as per the Provisions
of the respective law applicable to the organization. Scope of the audit work and all others
terms are as laid down by the law. It can be conducted only by a qualified Chartered
Accountant. Statutory audit is conducted after preparation of final accounts. Statutory auditor
has to report whether the balance sheet and profit and loss A/c are drawn upon conformity
with law and whether they show true and fair view. Statutory auditor has to submit report to
the shareholder. His remuneration is fixed by shareholder. A statutory audit is an independent
assessment of the financial accounts of a company or institution. The auditor's role is to
report on whether the financial statements issued by an organisation are 'true and fair', and
meet all relevant guidelines or legal requirements. This in turn allows companies to guard
against risk and plan for the future. The auditing sector has been under scrutiny recently, with
the government calling for reform following the collapse of high-profile firms whose audits
have been called into question.

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2. Tax Audit
Statutory audits as well as the cost audit are taken up as result of specific provision contained
in the companies Act, 1956. However, a new concept of tax audit has been evolved lately
under the Income Tax Act, 1961. In India, the Indian Income Tax Act, 1961, provides for
compulsory audit of accounts of certain assesses whose turnover or receipts exceed the
specified limit. The Income Tax Act has provided for rules and regulations regarding tax
audit. The tax audit can be undertaken by the practicing member of the institute of Cost and
Works Accountants of India. The objective of such audit is to assist the tax authorities in
determination of correct tax liability. The tax auditor has to report about the transactions
which have an effect on fixation of tax liability. The tax audit was introduced by section 11 of
the Finance Act, 1984, which inserted a new section 44AB with effect from 1st April, 1985
[Assessment Year 1985-86]. This section makes it obligatory for a person carrying on
business to get his accounts audited by a chartered accountant and to furnish by the specified
date, the report in the prescribed form of such audit, if the total sales, turnover or gross
receipts in business in the relevant previous year exceed or exceeds the prescribed limit (Rs.1
Crorew.e.f. A.Y. 2013-14). For a professional, the provisions of tax audit become applicable,
if his gross receipt in profession exceeds the prescribed limit (Rs.25 Lakhs w.e.f. A.Y. 2013-
14) in the relevant previous year. The Tax Audit Reports u/s 44AB has been modified
substantially by a notification issued by Ministry of Finance .The revised audit reports
contain an extensive list of items on which an auditor has to give specific report on .The
revised Report places an onerous responsibility on the auditor to conduct extensive checking
of the books of accounts and other records based on which he shall give his audit report. Prior
to the introduction of this section in the Income Tax Act, the Act provided for the audit of
Public charitable trusts and non-corporate assesse establishing new industrial, undertakings.
Also, the Income Tax authorities where given the discretion to get the accounts audited under
certain specified circumstances under sec 142(2A), by a Chartered Accountant. The
introduction of sec 44 AB widened the scope of audit under the Income Tax Act
considerably. Tax audit refers to the verification of the books of accounts maintained by a
taxpayer. The purpose of a tax audit is to validate the income tax computation made by the
taxpayer in the income tax return and to ensure compliance with the laws of Income Tax.
Auditing of books of accounts must be carried out by a certified Chartered Accountant. In
this article, we discuss the concepts of tax audit limit, Section 44AB of the Income Tax Act
and the legal provisions governing the appointment of a tax auditor.

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1.3 Key concepts and definitions
Taxation
Taxation is imposition of compulsory levies on individuals or entities by governments. Taxes
are levied in almost every country of the world, primarily to raise revenue for government
expenditures, although they serve other purposes as well. This article is concerned with
taxation in general, its principles, its objectives, and its effects; specifically, the article
discusses the nature and purposes of taxation, whether taxes should be classified as direct or
indirect, the history of taxation, canons and criteria of taxation, and economic effects of
taxation, including shifting and incidence (identifying who bears the ultimate burden of taxes
when that burden is passed from the person or entity deemed legally responsible for it to
another). For further discussion of taxation’s role in fiscal policy, see government economic
policy. In addition, see international trade for information on tariffs.
Purposes of taxation
During the 19th century the prevalent idea was that taxes should serve mainly to finance
the government. In earlier times, and again today, governments have utilized taxation for
other than merely fiscal purposes. One useful way to view the purpose of taxation,
attributable to American economist Richard A. Musgrave, is to distinguish between
objectives of resource allocation, income redistribution, and economic stability. (Economic
growth or development and international competitiveness are sometimes listed as separate
goals, but they can generally be subsumed under the other three.) In the absence of a strong
reason for interference, such as the need to reduce pollution, the first objective, resource
allocation, is furthered if tax policy does not interfere with market-determined allocations.
The second objective, income redistribution, is meant to lessen inequalities in the distribution
of income and wealth. The objective of stabilization implemented through tax policy,
government expenditure policy, monetary policy, and debt management is that of maintaining
high employment and price stability. The purpose of taxes is to provide the government with
funds for spending without inflation. Taxes are used by the government for a variety of
purposes, some of which are: Funding of public infrastructure. It is through the taxes we pay
that the government can perform civil operations. In other words, without taxes, it would be
impossible for the government to run the country. Income tax is one of the biggest sources of
income for the Indian government.

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Advantages of Taxation
1. Funding Governments
One of the most basic advantages of taxes is that they allow the government to spend money
for basic operations. Article I, Section 8 of the U.S. Constitution lists reasons that the
government may tax its citizens. These include to raise an army, to pay foreign debt and to
operate a post office. By funding military and security forces, taxes keep Americans safe.
Government administration, which does everything from passing laws to promoting national
policies, wouldn't exist without the tax money needed to meet expenses.
2. Wealth Redistribution
Taxes also redistribute wealth between taxpayers and individuals who receive government
assistance. Taxes like the federal income tax are progressive taxes, which means that
wealthier taxpayers pay a higher proportional amount in taxes. For those who support
progressive taxation, this type of tax helps promote greater economic and social equality in
society. The benefit here is that the wealthiest taxpayers help pay for programs that support
lower-income and middle class citizens, while also contributing to the basic services that all
taxpayers have equal access to. These are the same programs and services that make it
possible to achieve wealth in the fist place.
3. Taxing Consumption
Some taxes only apply to certain products, which has the advantage of reducing or
discouraging consumption. For example, state taxes that apply to alcohol and cigarettes help
to moderate their use. Cigarette taxes also fund anti-smoking campaigns which benefit the
public health. State gasoline taxes help reduce the demand for gas and keep the international
demand for oil in check, while also protecting the environment from overconsumption.
4. Public Goods
Taxes are necessary for a government to run. Without taxes, a government would not be able
to hire employees or pay for any social programs. Money from taxes pay for infrastructure
such as roads, water systems, parks and public transportation. Social programs such as Social
Security, Medicaid and Medicare would not be possible without taxes.

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Importance Of Direct Taxation
 Direct taxation is one of the main sources of income for the government.
 It also affects inflation, demand and supply within the economy by regulating disposable
incomes across the board.
 Luxury goods and services are the most affected by this regulation and so, the tax rates have
to strike a balance between providing administrative funds, limiting inflation and leaving
enough disposable income to encourage consumption.
 Deductions on certain services such as insurance or some types of loans will attract
individuals and organizations to invest in the Indian economy and generate usable capital.
 This will allow for greater stability in the economy while also providing stakeholders with a
greater degree of financial security.
 More capital flowing into the country will increase revenue and in turn affect tax collection,
providing the government with a higher budget for expenditure on developing the nation’s
infrastructure, as well as its natural, man made and human resources.
Importance Of Indirect Taxation :
 Indirect taxes have been put in place to ensure that resources are used efficiently by
individuals and organizations as lower expenditure on raw materials will mean lower margins
lost on taxes.
 In turn, lowered costs of production will raise profits and foster healthy competition among
rival organizations thereby developing the economy.
 This also provides consumers with a wider variety of options catered to their needs,
facilitating improvements in standards of living.
 The burden of taxation falls on the consumers in the end, as most retailers, manufacturers and
service providers will attempt to recover taxes on initial expenses in the sales price itself.
 Hence the importance of taxes of this kind lies in how it incentivizes organizations to make
their operations as efficient as possible.

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Auditing
Auditing is the process of checking the financial statements along with other accounting
information of a business entity. It is a systematic procedure where the economic condition of
the entity is analyzed. The person taking up the responsibility of the process is called an
“Auditor”. In this process, it is checked if the business is running profitably or not. Auditing
is an important process for the company, the investors, the government, creditors,
shareholders, etc. They very much rely on audit reports to make important business decisions.
This is the concept of auditing in a nutshell.
Purpose of Auditing
 The auditor is the watchdog who its main objective is to protects its entity or owner’s
interest. This is why auditors exist. But, now the requirement of auditors scale up from
just to project the owner’s attention to significant stakeholders. If we talk about external
auditors like KPMG, EY, and PWC, the primary purpose of an audit to financial
statements is to let these firms provide an assurance or express their opinion on whether
the financial statements that prepare by the management of entity are true and fair or not.
Some entities are required by law or regulations to have their financial statements audited.
Some entities are requested by banks or creditors, while some entities are voluntary to
have the audit of their financial statements.
 For compliant auditors, the purpose of an audit is to let auditors assess whether policies,
laws, and regulations are fully and correctly implement by entities or not. For example,
the national bank or central bank required all financial institutions to operate in the
country to set up compliant auditors and regularly report to them whether those banks
fully and correctly implement the law and regulation they put or not.
 Internal auditors might have a different purpose. The main purpose of internal auditors is
to review the internal control of entity both operation and internal control over financial
reporting, the value of money audit, and compliant. Check here for detail of the Internal
Audit. As you can see above, the purposes are different based on the type of audit and
level of assurance they are providing.
 Auditors need to be independent of the operation and any kind of interest that might be
impaired to the quality of their works.

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Importance of auditing
 Audit satisfies the owner about the working of the business operations and the
functioning of its various departments.
 The audit helps in the detection and prevention of errors and frauds.
 The audit helps in maintaining the records and verification of books of the books of
accounts.
 The independent opinion of the auditor is extracted through auditing which is extremely
essential for the management of the company.
 The audit establishes a moral check on the staff of the business so that they became aware
of not committing any irregularity. This makes the staff more active and responsible.
 Audit protects the interests of the shareholders in the case of a joint-stock company by
assuring them that their accounts are being managed properly and their interests will not
suffer under any circumstances.
 Audit creates confidence among stakeholders such as creditors, debenture holders, and
banks, etc.
 Audited statements ensure compliance with legal requirements such as listing
requirements of stock exchange etc.
 Auditing reinforces and strengthens Internal control and provides suggestions necessary
in the internal control system.
 Audited financial statements enable easy access to loans because it provides a crystal
clear image to the banks.
Definitions
1. Audit is the examination or inspection of various books of accounts by an auditor
followed by physical checking of inventory to make sure that all departments are
following documented system of recording transactions. It is done to ascertain the
accuracy of financial statements provided by the organisation.
2. Taxation refers to the practice of government collecting money from its citizens to pay for
public services. Without taxation, there would be no public libraries or parks.

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1.4 Review of literature
The literature review is an abstract of the reference books and webliography that is used for
helping in the making of the project – “ A STUDY ON TAXATION, AUDITING
SERVICES PROVIDED BY NARENDER KUMAR GUPTA &CO.
1. PROF. PRAKASH PEGADWALA, SVKM’S NARSEE MONJEE COLLEGE OF
COMMERCE &ECONOMICS, 2017
“Audit of accounts in the corporate sector was always mandatory by virtue of the provisions
of The Companies Act, 1956. Realizing the importance of audit this requirement has been
extended to non-corporate assesses. Since by virtue of sec 44AB all assesses irrespective of
their nature, if they fulfill the criteria as laid out in the section have to get their accounts
audited. The intention of bringing in this piece of legislation as observed by the Finance
Minister while presenting the Union Budget for 1984-85 is the compulsory audit is intended
to ensure proper maintenance of books of accounts and other records, in order to reflect the
true income of the tax payer and to facilitate the administration of tax laws by a proper
presentation of the accounts before the tax authorities. This would also save the time of the
Assessing Officers considerably in carrying out the verification. The limits of turnover have
been in place for the past 16 years as a result the number of assesses under the ambit of sec
44AB has risen alarmingly. There is a need to revise the turnover limits upwards since only
then will it be able to help the Assessing Officers to pay special attention to such assesses
.The situation at present is that the Assessing Officers are inundated with a plethora of Tax
Audit Reports which has increased the burden on the taxman naturally affecting the quality of
assessments.”
2. Narayanan (1967) highlighted some important aspects of corporate taxation in India
focusing super profit tax, liberalization of investment allowance etc. Data from 1965 to 1971
are used for the study purpose. The author opined that liberal investment allowances under
corporate tax system along with high marginal tax rates got to subsidies non profitable
investment. The established companies shall get immediate benefit of investment allowance
where a new company shall have to wait for many years. The author added that investment
allowances coupled with high and progressive tax rates would promote excessive investment
and unwarranted mechanism. The paper suggested that tax holiday can avoid the
disadvantages of investment allowances.
3. Leuthold & N’Guessan (1986) have studied the buoyancies and elasticity of the major
taxes of Ivory Coast. The authors have used Ordinary Least Square (OLS) method for such
research work. GDP has been taken as regressand. Data from 1970 to 1979 is processed in
this literature. The researchers found that the overall elasticity of Ivorian taxes is .961 which
describes that one percentage increase of GDP responds .961 percentage increase of tax.
They concluded that “an elastic tax system is desirable in a developing economy because it
means that tax receipts will grow automatically with growing income without the need
for politically sensitive increases in tax rates”.
4. Sury (1993) made an historical analysis of the various aspects of income tax in India. The
author rivets on tax rate structure, exemptions, concessions and evasion. The author brought
in, changes the Income Tax Act 1886, Income Tax Act 1918, Income Tax Act 1922, Income
Tax Act 1939, and Income Tax Act 1961. The specifically analysed the post globalisation
effects on tax reform.

23
4. Mu’azu Saidu Badara department of accounting abubakar tatari ali polytechnic bauchi
(research journal of finance and accounting)
This paper assesses the effect of Tax audit on tax compliance in Nigeria a case of Bauchi
State Board of Internal Revenue. The methodology employed for data collection is only
primary source, which involved the use of questionnaires, in which 48 questionnaire were
administered to the staff of Bauchi State Board of Internal Revenue, some selected
individuals tax payers and corporate bodies within Bauchi State out of which only 42
questionnaires were completed and returned. The data generated for the study were
interpreted using simple percentage. The main finding of the study include among other; the
Relevant Tax Authority (RTA) employed tax audit towards achieving target revenue, that tax
audit reduce the problems of tax evasion, that tax payers do not usually cooperated with tax
audit personnel during the exercise. etc The paper recommends that; the RTA at all levels
should improve the standard of tax audit employed for effectiveness and efficiency, tax audit
should aim at reducing the level of tax evasion and RTA should provide a policy that would
allow the tax payers to cooperate during the period of tax audit.

24
1.5 Outline of problem
1. The complexity of business and system could sometime limited auditor from obtaining the
completed view on entity critical internal controls. Auditors may not be able to perform the
correct risk assessment. Management intention and override controls are sometimes could not
detect by auditors.
2. paying the amount on the tax notice and avoiding the confrontation with the taxing
authority. Most of the time, this option is not the best option for the taxpayer to resolve their
tax problem, as often the tax bill is inaccurate.
3. One of the biggest audit challenges that comes up is revenue recognition. auditing is a
methodical, complex job that requires incredibly close attention to detail. But clients often
don’t operate with the same rigor.
4. Delay of information and frauds made by clients is major problem faces by auditor.

25
Scope of study
1. The scope of a tax audit encompasses an examination or review of the books of accounts of
any business or profession maintained by taxpayers.
2. Helps to employer to know accurate profit and available funds.
3. It helps the investor who needs to judge whether the company is financially sound.
4. The project work helped to put the theoretical knowledge gained in financial accounting
and financial management help to widen the knowledge about taxation and auditing services.

26
1.7Objectives of the study
1. To study about analysis of financial statements at Nexdigm Private Limited.
2. To study tax computation of firm.

27
CHAPTER 2: PROFILE OF ORGANISATION

28
2.1 Name, Address and Location of the Company
Nexdigm (SKP) is an employee-owned, privately held, independent global business advisory
provider that helps organizations across geographies meet the needs of a dynamic business
environment. This organisation focus on problem-solving, supported by our multifunctional
expertise enables us to provide customized solutions for our clients. We provide integrated,
digitally driven solutions encompassing Business Consulting, Business Services, and
Professional Services that help businesses navigate challenges across all stages of their life-
cycle. Through our direct operations in the USA, India, and UAE, we serve a diverse range of
clients, spanning multinationals, listed companies, privately-owned companies, and family-
owned businesses from over 50 countries. Its multidisciplinary teams serve a wide range of
industries, with a specific focus on healthcare, food processing, and banking and financial
services. Over the last decade, we have built and leveraged capabilities across key global
markets to provide transnational support to numerous clients. From inception, our founders
have propagated a culture that values professional standards and personalized service. An
emphasis on collaboration and ethical conduct drives us to serve our clients with integrity
while delivering high quality, innovative results.
Nexdigm act as partners to our clients, and take a proactive stance in understanding
their needs and constraints, to provide integrated solutions. Quality at Nexdigm (SKP) is of
utmost importance, and are ISO/ISE 27001 certified for information security and ISO 9001
certified for quality management. Nexdigm represents our global readiness to serve our
clients and lead ourselves into the 'Next Paradigm' of business. The new identity brings fresh
energy to support organizations with specialized services across industries. Equipped with the
steady foundation of a deep-rooted existence, Nexdigm, shaped to ride waves of the future, is
bound to be touched by winds of change. Unlike most consultants, we don’t just assist in
helping clients set sails for the direction of their choice. We ensure that we handhold them
until they reach the shore, stress-free.

29
Company Name NEXDIGM PRIVATE LIMITED
Address 3RD FLOOR VEN BUSINESS CENTRE
GUT NO 135/1 BANER-PASHAN LINK
ROAD PUNE Pune Maharashtra 411021
PAN Number AAECG0462F
GSTIN Number 27AAECG0462F1ZW
Entity Type Private Limited Company
Registration Type Regular
Tax Payer Type Regular
2.2 Company mission and vision
Mission
To delivering the highest quality services to customers by applying best practices from team
of Industry experts ensuring not only our customers success but also employee
Vision
Vision is to be a leading consulting firm operating worldwide. Our success is measured by
the value we deliver to clients, the quality of the staff we employ, and our strength and spirit
as a firm

30
2.3 Historical background of the organization
As an organization, Nexdigm (SKP) has been consistently investing in content marketing. As
a specialized, B2B service provider, content marketing opens new doors for us and bolsters
our credibility. At the same time, every piece of content published has significant time,
human resource, and promotion costs associated with it. This document aims to guide the
organization as a whole, and every service in particular to optimize our content marketing
efforts. At the fore of all content marketing lies reader attention. Studies estimate the average
attention span of a reader to be between 8-12 seconds. Hence, it is important to have brief,
illustrated content, with info graphics highlighting the key takeaways.
Nexdigm logo with three intertwining lines represents the harnessing of our multifunctional
capabilities across Business Consulting, Business Services, and Professional Services,
coming together to create an integrated solution for our clients.The wave embodies the agility
and flexibility that we employ, alongside world-class professional and ethical standards. It
imbibes our approach of partnership and collaboration while signifying the rapid pace with
which we are innovating and digitizing. Nexdigm resonates our plunge into a new paradigm
of business; it is our commitment to ‘Think Next.’

31
2.4 Organization chart
Group Executive Chairperson
Guljit Singh
Chief Operating officer
Shrikant Venkatesham Jilla
Senior Executive Director
Darius Job Thomas
Executive Director
Alpana Shirgaonkar
Associate Director
Shraddha Mundhe
Manager Manager Manager
Monika Patankar Sandeep Renwa Hemant Joshi
2.5 Different product range profile of the organization

32
1-Business Services-Consulting, Operations & Implementation
BUSINESS PROCESS MANAGEMENT
 Finance & Accounting Management
 Commercial Operations
 Contract Management
 Process Improvement
 Shared Services
OPERATIONS & FINANCE TRANSFORMATION
 Finance
 Supply Chain
 Intelligent Automation & Accelerated Analytics
STRATEGIC INITIATIVES
 Mergers, Acquisitions, Divestitures & Restructuring
 Greenfield & Brownfield
 Program Management/Business Consulting
 Pre-Investment Advisory and Market Research
TECHNOLOGY ADVISORY
 Cyber Security & Data Privacy
 Technology Solutions
 Cloud Migration
2-Professional Services- Advisory, Compliance & Risk Management
ENTITY SET-UP & MANAGEMENT/CORPORATE SERVICES
 Business Establishment
 Finance & Accounting
 Payroll, Administration & HR Compliance
 Corporate & Tax Compliance
 CFO Support & Finance Controller Services
TAXATION

33
 Direct Tax & Indirect Tax
 Transfer Pricing & International Tax
 M&A Tax & Regulatory Services
ASSURANCE & RISK ADVISORY
 Accounting Advisory
 Internal Audit & Process Reviews
 Technology Risk
 Forensics
TRANSACTION ADVISORY
 Transaction Support
 Due Diligence & Valuations
 Economic Analysis

34
2.6 Any special awards to the organization
1. Winner Of Advisor Project Of The Year At The Accountant And International
Accounting Bulletin 2019
2. Winner Of Advisor Project Of The Year At The Accountant And International
Accounting Bulletin 2017
3. Winner Of Indian Tax Firm Of The Year At The Internationaltax Review’s Asia Tax
Award 2016
4. Winner Of Nexia International’s Firm Of The Yeraward 2015

35
CHAPTER NO 3-RESEARCH METHODOLOGY

36
3.1 Introduction
Research may be very broadly defined as systematic gathering of data and information and its
analysis for advancement of knowledge in any subject. Research attempts to find answer
intellectual and practical questions through application of systematic methods. Research is an
academic activity and as such the term should be used in a technical sense. According to
Clifford Woody research comprises defining and redefining problems, formulating
hypothesis or suggested solutions; collecting, organizing and evaluating data; making
deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.
3.2 Research design
The research design is of Descriptive type since it involved in studying the in-depth analysis
of the data of the clients and only after analyzing the task of performing the tax audit on the
financial statements provided by the clients would be performed. The data collected from the
offices was analyzed using accounting methods and techniques. For the diagrammatic
representation, Pie charts, Bar diagrams are used to reach at the conclusions. Findings are
made on the basis of analysis of the data gathered from the primary and secondary sources.
Recommendations are made on the basis of findings drawn from various data collected and
also based on the observations for the areas where corrections can be made.
3.3 SAMPALING DESIGN–
The non-probability sampling technique is used for this project. Non-probability
sampling involves non-random selection based on convenience or other criteria, allowing you
to easily collect data. The sampling design is of Descriptive type since it involved in studying
the in-depth analysis of the data of the clients and only after analyzing the task of performing
the tax audit on the financial statements provided by the clients would be performed.
3.3. a Population-
The population that was taken was the number of the clients for whom I had personally
assisted in organization while conducting the tax audit function.

37
3.3.b Sample Size –
Size of sample refers to the number of items to be selected from the universe to constitute a
sample. Selection of sample size is a headache to the researcher. The size should not be too
large or too small rather it should be optimum. An optimum sample is one which fulfills the
requirements of efficiency, representativeness, reliability and flexibility. The sample that was
taken was taken as per analysis of 3 years of data. Sample size - 3
3.4 Data Collection
Data collection is a process of collecting information from all the relevant sources to find
answers to the research problem, test the hypothesis and evaluate the outcomes. Data
collection methods can be divided into two categories: secondary methods of data collection
and primary methods of data collection.
Primary data
The primary data are those, which are collected afresh and for the first time, and thus happen
to be original in character .The primary data are to be originally collected. Primary data is
collected through personal observation of organization process. Some type of information
was gathered through oral conversation with Mrs. Monika Patankar (Accounts and Finance
Department Manager) and Mr. Amol Kondewar (Accounts and Finance Department Deputy
Manager). And some information is collected from internal discussion with colleges and
training videos provided by organization. The primary data is collected through observations
and internal conversation with senior.
Secondary Data
Sources of secondary data include books, personal sources, journals, newspapers, websitess,
government records etc. Secondary data are known to be readily available compared to that
of primary data .Sources: Collected from Balance Sheet, Books, Journals, Internet, and
Articles. Registrar of Companies, Income Tax Department, Sales tax.

38
3.5-Limitation of study
1. The study was limited to few departments in the organizations.
2. Unavailability of executives in their cabins as they were engaged in field work at that time.
3. It is difficult to collect data because privacy policy.

39
CHAPTER NO 4: DATA ANALYSIS

40
4.1 Introduction and Importance
Data has been the buzzword for ages now. Either the data being generated from large-scale
enterprises or the data generated from an individual, each and every aspect of data needs to
be analyzed to benefit yourself from it. But how do we do it? Well, that’s where the term
‘Data Analytics’ comes in. In this blog on ‘What is Data Analytics?’, you will get an insight
of this term with a hands-on. The data collected from the offices was analyzed using
accounting methods and techniques. For the diagrammatic representation, Pie charts, Bar
diagrams are used to reach at the conclusions. Findings are made on the basis of analysis of
the data gathered from the primary and secondary sources. Recommendations are made on
the basis of findings drawn from various data collected and also based on the observations for
the areas where corrections can be made.Data analysis is an internal organisational function
performed by Data Analysts that is more than merely presenting numbers and figures to
management. It requires a much more in-depth approach to recording, analysing and
dissecting data, and presenting the findings in an easily-digestible format. The importance of
data analytics in any sector is compounded, creating enormous quantities of knowledge that
can provide useful insights into the field. In the last ten years, this has led to a surge in the
data market. In order to gain decision-making insights, the compilation of data can be
supplemented by its analysis. Data analytics help organizations and businesses gain insight
into the enormous amount of knowledge they need for further production and growth.
Importance
Data analysis is important in research because it makes studying data a lot simpler and more
accurate. It helps the researchers straightforwardly interpret the data so that researchers don’t
leave anything out that could help them derive insights from it. Data analysis is a way to
study and analyze huge amounts of data. Research often includes going through heaps of
data, which is getting more and more for the researchers to handle with every passing
minute.Hence, data analysis knowledge is a huge edge for researchers in the current era,
making them very efficient and productive. Data analysis is an internal organisational
function performed by Data Analysts that is more than merely presenting numbers and
figures to management. It requires a much more in-depth approach to recording, analysing
and dissecting data, and presenting the findings in an easily-digestible format.

41
CLIENT NAME
M/s BANSAL STATIONERS WZ- A-252, Gali No. 7, uttam Nagar, New Delhi-110059
TRADING AND PROFIT AND LOSS ACCOUNT
FOR YEAR ENDED 2019
PARTICULARS AMOUNT PARTICULARS AMOUNT
To Opening Stock 4,50,000.00 By Sales 3,50,000.00
To Purchases 70,000.00 By Discount on
purchase
15,000.00
By Closing Stock
(BO)
3,50,000.00
To Gross Profit 1,95,000.00
5,20,000.00 5,20,000.00
To Audit &DSC
Fee
9,500.00 By Gross Profit 1,95,000.00
To Bank Charges 1,002.00 By Interest on
Security
12,000.00
To car Running &
maint
25,000.00 By Rebate &
Discount
2.00
To car insurance 7,000.00
To Conveyance
Exp.
5,000.00
To Depreciation 22,000.00
To Miscellaneous
Expenses
2,500.00
To Sales
Promotion
12,000.00
To Net Profit 1,23,000.00
2,07,002.00 2,07,002.00

42
BALANCE SHEET AS ON 31.03.2019
LIABILITIES AMOUNT AMOUNT ASSETS AMOUNT AMOUNT
Capital Acount FIXED ASSETS 1,05,000.00
Opening Balance 2,50,000.00
Add Addition 90,000.00
Add profit 1,23,000.00
4,63,000.00 CURRENT
ASSETS
Less Drawing 12,500.00 4,50,500.00 Sundry Debtors 50,000.00
Unsecured loans 1,60,000.00 Advance to
suppliers
26,821.00
Closing Stock 3,50,000.00
Current liabilities
Sundry creditors 57,000.00 CASH AND BANK
Payables and
provisions
4,500.00 Cash in Hand 28,179.00
Canara Bank A/c
1,12,000.00
6,72,000.00 6,72,000.00

43
FOR YEAR ENDED 2020
To Opening Stock 3,50,000.00 By Sales 3,60,000.00
purchase
25,000.00
By Closing Stock
(BO)
4,00,000.00
To Gross Profit 3,40,000.00
7,85,000.00 7,85,000.00
To Audit &DSC
Fee
13,000.00 By Gross Profit 3,40,000.00
To Bank Charges 1,728.00 By Interest on
Security
12,000.00
To car Running &
maint
27,000.00 By Rebate &
Discount
8.00
To Conveyance
Exp.
5,000.00
To Miscellaneous
Expenses
5,500.00
To Sales
Promotion
28,000.00
To Net Profit 2,40,000.00
3,52,008.00 3,52,008.00

44
Capital Acount FIXED ASSETS
1,67,500.00
Opening Balance 2,50,000.00
Add profit 2,40,000.00
5,80,000.00 CURRENT
ASSETS
Less Drawing 12,500.00
5,67,500.00
Sundry Debtors
50,000.00
Unsecured loans
1,60,000.00
Advance to
suppliers 31,500.00
Current liabilities Closing Stock
4,00,000.00
Sundry creditors 57,000.00
Payables and
provisions
4,500.00 CASH AND BANK
Cash in Hand
34,000.00
Canara Bank A/c
1,06,000.00
7,89,000.00
7,89,000.00

45
FOR YEAR ENDED 2021
To Opening Stock 400,000.00 By Sales 550,000.00
purchase
28,000.00
By Closing Stock
(BO)
3,90,000.00
To Gross Profit 486,000.00
482,000.00 482,000.00
To Audit &DSC
Fee
9,500.00 By Gross Profit 486,000.00
To Bank Charges 1520.00 By Interest on
Security
12,000.00
To car Running &
maint
25,000.00 By Rebate &
Discount
10.00
To Conveyance
Exp.
5000.00
To Miscellaneous
Expenses
5,500.00
To Sales
Promotion
15,000.00
To Net Profit 403,990.00
498,010.00 498,010.00

46
Capital Acount FIXED ASSETS 180000.00
Opening Balance 244,000.00
Add profit 403,990.00
732,990.00 CURRENT
ASSETS
Less Drawing 13,000.00 719,990.00 Sundry Debtors 60,000.00
Unsecured loans 160,000.00 Advance to
suppliers
31,500.00
Current liabilities 7,000.00 Closing Stock 390,000.00
Sundry creditors 54,500.00
Payables and
provisions
CASH AND BANK
Cash in Hand 20,990.00
Canara Bank A/c 259,000.00
941,490.00 941,490.00

47
STATEMENT OF ASSESSABLE INCOME
Source Of Income Amount(Rs)
Income From Business
Net Profit from
Business
403,990.00
Income From Other
Sources
Bank Interest 9,000.00
Gross Total Income 448,990.00
Less:Deduction Under
Chapter VIA
Deduction Under
Section 80C - LIC
premium
31,305.00
Deduction Under
Section 80TTA - Bank
Intt
9,000.00 40,305.00
Total Income 354,685.00
Rounded Off 354,685.00
TAX COMPUTATION
Tax On Above 17,735.00
Less: Rebate u/s 87A 2,000.00
15,735.00
Add:EducationCess 473.00
Total Tax Payable 16,208.00
Tax Paid 16,208.00

48
TAX COMPUTATION GRAPH
The tax chart shows the total taxes payable for the firm after successful deductions from the
gross total income. It shows that the total income to be taxable was at Rs. 354658 & after the
deduction of tax under the tax slabs, the tax payable amount is derived at Rs.16208 and it is
less in this case.
-
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
300,000.00
350,000.00
400,000.00
Total tax
payable
Tax on above Total Income
Series1

49
4.2 Data analysis and Data Interpretation
1. Net profit in 2021 is Rs 403,990 compare to year 2019 and 2020 net profit is high and sales
also increased in year 2021.
2. Gross profit is also higher in 2021 than 2019 and 2020. It is Rs 4,86,000 in 2021 and Rs
1,95,000 , Rs 3,40,000 of year 2019 and 2020 respectively.
3. Cash payments should not be more than Rs. 20,000.
4. Depreciation on the Assets are ascertained on the basis of their date of purchase
100% depreciation for 1-6 months old used assets
More than 6 months – 50% of rate of depreciation is charged
5. Liabilities should be paid on timely basis compare to year 2019 and 2020. Current
liabilities are increased in year 2021.
6. Current assets increased in year 2021 compare to year 2019 and 2020.
7. Sales is higher in year 2021. Sales in year 2021 is Rs 5,50,000 which means it is good for
profit of business.
8. There has been timely deposit of the quarterly Income tax returns as well as tax returns
which are tallied through the tax website.

50
CHAPTER 5: SUGGESTIONS & RECCOMENDATION

51
5.1Findings
1. Cash Payments are not more than 20,000/- and there is timely payment to the creditors
2. Unsecured Loans for more than 20,000/- are paid in Cash rather they are paid through
cheques and there is no bouncing of those cheques observed.
3. The proprietor has issued TDS certificates to their contractors, to the salaried workers and
professional heads etc. for the job rendered by them to the company and also, they have been
issued the TDS certificates from the financial institutions.
4. There has been timely deposit of the quarterly Income tax returns as well as of sales tax
returns which are tallied through the sales tax website.
5. Also, the Income tax returns are timely sent to the IT department.
6. Tax audit reduces the problems of tax evasion, tax avoidance and other tax irregularities .

52
5.2 Suggestions
1. The Relevant tax authority at all levels should improve the standard of tax audit employed
for effectiveness and efficiency.
2. Tax audit should aim at reducing more problems of tax evasion, tax avoidance and other
tax irregularities for standardization.
3. The scope of tax audit should be wider in such a way that will ensure proper submission of
accurate and current returns for proper computation.
4. The tax payers should have God fearing and submit the accurate returns of their operation.
5. RTA should also provide a policy that would allow the tax payers to co-operate during the
period of tax audit and at the same time the tax payers should do their best toward
cooperating with the tax audit personnel during the period of the exercise.

53
5.3 Learning
1. Learn about how to prepare financial statements and how to analyse the financial
statements.
2. Learn about tax calculation and different types of tax.
3. Preparing audit report and analysis of books of accounts.

54
5.4 Contribution to organization
1. Preparing trading and profit and loss accounts.
2. Going for Client visit on behalf of firm
3. Data entry in software (e.g sales, purchase and bank entries)
4. Closing of accounts and preparing account reports.

55
5.5 Conclusion
The primary goal of this project report was to identify the need and the requirement for a
company to conduct tax audits. It showed that unless and until the companies conducts of
their accounts how will the assessor be able to ensure that the figures and the data mentioned
in the financial statements by the companies are actual. Audit of accounts in the corporate
sector was always mandatory by virtue of the provisions of The Companies Act, 1956. Realizing
the importance of audit this requirement has been extended to non-corporate assesses. Since by
virtue of sec 44AB all assesses irrespective of their nature, if they fulfill the criteria as laid out in
the section have to get their accounts audited.
The project study conducted helped in examining the areas which are of upmost importance
to be considered while preparation of the audit report. The in-depth analysis of the particular
client’s financial statements helped in analyzing their growth, performance and any abnormal
losses occurrence. The project also discussed about how chartered accountants firms conducts
tax audit of the client’s companies’ accounts which is statutory in nature and what are the
various types of advanced auditing which companies can incorporate so that their growth
performance is increased.
Also, while gathering the information it was observed that the clients of the Nexdigm Private
Limited are loyal and there is high customer satisfaction meaning that these companies comes
to the Nexdigm Private Limited since they offer best services thereby maintaining the ethics
of the advisory. Hence this study could be concluded with the mentioning of there is a
liability for the assesse irrespective of their taxable income of Tax Audit.

57
Websites
1. www.charteredclub.com
2. www.icai.org
3. www.incometaxindia.gov.in
4. ICAI GUIDANCE NOTES
5. www.taxguru.in
6. www.yourfinancebook.com
9. http://www.investopedia.com/terms/c/ca.asp
BOOKS
1. Kothari, C.R. (1997). Research methodology, 3rd edition, 1997, Vikas Publishing House
Pvt. Ltd, New Delhi
2. Singhania, Dr. Vinod K. & Dr. Monica , Student’s guide to Income Tax, 48Th
edition,2014,Taxmann publications pvt. Ltd., New Delhi
3. Bansal, Surbhi, Advanced Auditing & Professional Ethics, 12th
edition, 2015, Taxmann’s
publications pvt. Ltd., New Delhi
4. Prasath, G.Sekar & Saravana, Easy guide to advanced auditing for CA, latest edition, 2015,
Padhuka publications pvt. ltd., New Delhi

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