Project File based on Training

(By = CA Mayank Bansal)

Desh Bhagat College, Bardwal-Dhuri

Topics covered are :

● GST RETURNS
● BANK DEALINGS
● INCOME TAX RETURNS
● VOUCHING AND VERIFICATION

SUBMITTED BY = NAME Himanshi

CLASS B.COM (Honours)
ROLL NO

SUBMITTED TO = The Department of Desh

Bhagat College,Bardwal-Dhuri

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Introduction to Taxes
Taxes are levied by governments on their citizens to generate
income for undertaking projects to boost the economy of the
country and raise the standard of living of its citizens. In every
country, the taxation process is laid out by its government. The
authority of the government to levy tax in India is derived from
the constitution of India, which allocates the power to levy taxes
to the Central and State government. All taxes levied within
India need to be backed by an accompanying law passed by
the Parliament or the State legislature.
There are two types of taxes which are levied by the Indian
government to its citizens: first is Direct tax and second is
Indirect tax.

Direct Taxes = These taxes are directly levied on the taxable

income generated by individuals and corporations. The
importance of these taxes are that they are paid directly to the
government and make up a significant portion of India's tax
generated revenue. Example: income tax, corporate tax etc.

Indirect Taxes = These taxes are not levied directly on the

taxpayers income. Example: GST (goods and services tax).

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Goods and services tax is an indirect tax that is applied to the
cost of certain goods and services. It was implemented on July
1,2017 to the whole of India. Under the Indian GST, goods and
services are categorised into different tax slabs including:
5% ,12% ,18% and 28%. GST is a destination based tax. It is
levied where goods and services are consumed.
The GST number has fifteen digits. The first 2 digits can range
between 01-35 because it indicates the state code for GST
registration. The next 10 digits are the PAN number of the GST
registered entity. The fourth digit of the PAN number identifies
the status of the person (P) stands for individual and © stands
for company. Last three digits of the GST number, first
represents entity code, second digit represents "Z" by default
and last digit represents check code.

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There are four types of GST:

1. CGST (Central Goods and Services Tax) =CGST that is

collected by the central government within a single state.
2. SGST (State Goods and Services Tax) = SGST that is
collected by the state government within a single state.
3. IGST (Integrated Goods and Services Tax) = IGST that is
collected by the central government.

4. UTGST (Union Territory Goods and Services Tax) =

UTGST that is collected by the union territory government
within a single union territory.
France was the first country to implement GST to reduce tax
evasion. Under the old taxation system, the central taxes
applicable in India were:
1. Custom Duty /Central Excise Duty
2. Central sales tax on commodity and services
3. VAT (value added tax)
4. Excise Duty
5. Import Tax
6. Service Tax

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 ● Reverse Charge : Reverse charge means the liability to
pay tax is on the recipient of supply of goods or services
instead of the supplier of such goods or services in
respect of notified categories of supply.

● Forward Charge : The forward Charge mechanism is a

mechanism where suppliers of goods and services are
responsible for collecting tax from the recipient and
remitting it to the government.

Who can File GST RETURNS?

All business owners and dealers who have registered under the
GST system must file GST returns according to the nature of
their business or transactions.

TYPES of Taxpayers
● Composition Taxpayer : Composition Scheme is a
simple and easy scheme under GST for taxpayers. Small
taxpayers can get rid of tedious GST formalities and pay
GST at a fixed rate of turnover. This scheme can be opted
by any taxpayer whose turnover is less than Rs. 1.5 crore.
There is a separate form called CMP08 available for filing
returns for small taxpayers.

● Regular Taxpayer : Taxpayers/businesses with an

annual turnover exceeding Rs. 1.5 crores (75 lakhs for
North Eastern states and Himachal Pradesh) are
considered as regular taxpayers and are required to file
monthly returns as applicable on the nature of their
business.

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GST RETURNS
GST Returns is a document that will contain all the details of
sales, purchase, tax collected on sales (output tax) and tax paid
on purchases (input tax). Once you file GST returns, you will
need to pay the resulting tax liability.
There are various types of GST returns. Let's discuss some of
the returns as follows:
● GSTR 1
● GSTR 2A
● GSTR 2B
● GSTR 3B
● CMP08

1. GSTR-1: GSTR 1 form is a monthly / quarterly statement

of outward supply of goods and services by all normal and
casual registered taxpayers. In India, businesses with an
annual turnover of more than Rs 40 lakhs (Rs 20 lakhs for
business in some special category states) are required to
register for GST. The due date is the 11th of the
subsequent month.
2. GSTR-2A : GSTR 2A means a purchase related live tax
that the GST portal provides to each business registered
with it. The GSTR 2A is generated automatically when a
business's seller uploads the GSTR 1 and 5 forms. It
deals with the purchases a company makes in a particular
month, thereby noting all invoice details. However, it is a
read only document, serving only to inform a business of
its seller's invoice details. The concerned enterprise
should verify this GST form 2A and rectify any discrepancy

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 in it before filing their returns on the GST portal as GSTR
2.
3. GSTR-2B : GSTR-2B is an auto-generated document that
contains details of all the inward supplies received from
registered vendors. It includes invoice numbers, GSTINs,
Tax rates, Total value etc. This form summarises the
details furnished by vendors in their returns and is used to
help companies reconcile their purchase ledger and
ensure that their GST returns are accurate. Moreover, it
helps track the GST liability, input tax credits, and
compare it with purchase details.
4. GSTR-3B : GSTR-3B is a monthly self-declaration to be
filed by a registered GST dealer along with GSTR-1 and
GSTR-2 returns forms. It is a simplified return to declaree
summary GST liabilities for a tax period.
5. CMP08 : A composition dealer will use the Form CMP-08,
which is a special statement -cum-challan to declare the
details or summary of his/her self-assessed tax payable
for a given quarter. It acts as a challan for making
payment of tax. A composition dealer is a dealer who has
been registered under the composition scheme laid down
for both supply of goods and services. In addition to Form
CMP-08, a composition dealer will also need to file his/her
annual return via the revised format of Form GSTR-4 by
30 April.

Where all these GST Returns are filed?

We can file all these GST returns on the gst portal which is
www.gst.gov.in under the guidance of an experienced person.

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QRMP SCHEME : Quarterly Returns with Monthly Payment
(QRMP) Scheme is for eligible taxpayers to file their Form
GSTR-1 and Form GSTR-3B returns on quarterly basis, while
paying their tax dues on monthly basis through a challan.

IFF SCHEME: Invoice Furnishing Facility is an optional facility

provided to quarterly taxpayers only. If IFF is in submitted
status, then filing of IFF is mandatory. Incase, submitted IFF is
not filed then Taxpayers cannot file their Form GSTR-1 for the
quarter.

INPUT TAX CREDIT AND OUTPUT TAX CREDIT UNDER

GST

1. Input Tax Credit : Input tax credit is the tax paid by the
buyer on purchase of goods or services.Such tax which is
paid at the purchase when reduced from liability payable
on outward supplies is known as input tax credit.In other
words, input tax credit is tax reduced from output tax
payable on account of sales.
2. Output Tax Credit : It is the tax that a VAT registered
business is required to charge on its taxable supplies at
the standard and reduced rates of VAT.

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Bank dealings are the transactions or dealings between bank
and customer like depositing or withdrawing money, taking
loans etc.
Documents needed for opening bank account:
● PAN Card
● Aadhar Card
● Mobile Number
● Passport size photos
● Signature of candidate

How to open a Bank Account ?

STEP 1 : Choose the right banking partner : The first and
foremost step in opening a bank account is to find the best
banking partner for your needs and preferences. . If you're
going to open a savings account, you will want to maximise the
interest earned on your account balance. Keep an eye out for
banks with higher interest rates that will allow you to profit
more. Some bank accounts may have a minimum balance
requirement, whereas others may have a zero balance
requirement
STEP 2 : Visit the Bank or go to their Website/ App : Once
you've decided on a banking partner, go to their branch or
website. If you are visiting in person, proceed to the counter
and request the form and process for opening a new account. If

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you're doing it online, navigate to the appropriate section and
select the option to open an account.
STEP 3 : Fill out the Application Form‍ : Here you will enter
your basic information, such as your name, date of birth, email
address, phone number, and so on. Fill out the form
completely, then submit it.
Step 4: Submit the Necessary Paperwork ‍: After completing
the application form, you must attach copies of the required
documents. This list may differ slightly from one bank to the
next. According to the requirements of certain banks, you may
be required to self-attest the copies of your documents before
submitting them. Some of the mandatory documents that must
be included in the necessary paperwork are as follows:
● Aadhaar card
● Proof of identity and address PAN card, driver's
licence and passport
● Form 16 (required only if the individual does not have
a PAN card)
● Most recent passport-size photographs
● Some banks may require you to self-attest your
documents before submitting them online.
Step 5: Complete KYC Process ‍ : If the account was opened
online, Know Your Customer (KYC) must be completed online
via a video call. To proceed, one must confirm their identity and
ensure that they are who they claim to be.
Step 6: Make an initial deposit : Once the account is opened,
the customer must physically visit the bank and make an initial
deposit in accordance with the bank's regulations. Following
the verification process, a passbook and cheque book will be
issued.

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 STRUCTURE OF BANKING INSTITUTIONS

FUNCTIONS OF COMMERCIAL BANKS

1. PRIMARY FUNCTIONS
A. Accepting Deposits: Deposits constitute the major
source of funds or banks. Hence,the main function of a
commercial bank is acceptance of deposits from the
public. This function is important because banks mainly
depend on the funds deposited with them by the public.
Banks accept deposits by mobilising the savings of the
public.
Deposits are of 4 types:
(i) Fixed Deposit Account: Cash is deposited in this account
for a fixed period. The depositors can withdraw money only on
the expiry of the period for which the deposit has been made.
(ii) Current Deposit Account: In this account a depositer can
deposit and withdraw his funds any number of times he likes.

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Businessmen deposit their funds in this account. Generally, no
interest is paid by the bank on the Current Deposit Account.
Banks also provide certain useful services such as free
collection of outstation cheques to account holders.
(iii) Saving Deposit Account: This account is meant for small
savings. There is a limit on total weekly withdrawals. Banks pay
interest on this account. But the rate of interest is less than the
rate of interest paid on a fixed deposit account. Cheques may
be drawn on a savings account.
(iv) Recurring Deposit Account: Under this account a
specified amount is deposited every month for a specified
period eh for 12,24,36 or 60 months. The amount cannot be
withdrawn before the expiry of the given period except under
exceptional circumstances.

B. Advancing Loans: Another primary function of the

commercial banks is to advance loans. A certain part of
the cash received by the banks as deposits is kept in the
reserve and the remaining is given as loan. Banks
advance loans mostly for productive purposes against
approved security. The amount of loan is generally less
than the value of security.
Advancing loans is essential because banks undertake to
pay interest on deposits they receive from the public. They
charge more on the loans than they pay on deposits and
the difference constitutes their profits.

Banks advance following types of loans:

1.Money at call 2.Overdraft
3.Cash Credit 4.Discounting of bills
5.Credit to government

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 C. Creation of Credit: One of the most important functions,
which the banking system plays in the modern capitalist
economy is to create demand deposits and help in
circulating it as a medium of exchange. This is also called
credit creation.
D. Cheque System of Payment of Funds: A cheque as a
negotiable instrument is the most popular credit
instrument used by the customer to make payments. The
cheque System was evolved in very early stages of
banking and now it has become the main credit instrument
in the banking world.

2. SECONDARY FUNCTIONS
A. Agency Functions: Banks render a number of useful
services to the customers apart from performing the
primary functions.
Commercial banks act as an agents of their customers in
the following ways:
(i) Collection and Payment of Credit
(ii) Purchase and Sales of Securities
(iii) Trustee and Executor
(iv) Remittance of Money
(v) Representation and correspondence
(vi) Bullion Trading

B. General Utility Services: Banks provide many more

utility services in addition to agency services:
(i) Locker Facilities
(ii) Acting as a Referee
(iii) Issuing Letter of Credit
(iv) Acting as Information Banks
(v) Acting as Underwriter
(vi) Issuing of Traveller's cheques

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(vii) Issuing of gift cheque
(viii) Dealing in foreign exchange
( ix) Merchant Banking Services

3. DEVELOPMENTAL FUNCTIONS
A. Mobilisation of Savings: Banks collect idle savings of
the people and invest the same in productive activities.
Banks help in accelerating the rate of capital formation in
the country by mobilising the savings. The most important
role in mobilising the savings of the society is played by
the commercial bank.
B. Extension of Banking Services in Rural areas:
Commercial banks have opened their branches in rural
areas and small towns to provide banking facilities to the
people living therein. Banks also give loans at low rates of
interest to finance programmes meant for rural
development and removal of unemployment.
C. Providing Loans to Weaker Sections: Banks give loans
to weaker sections of the society at a low rate of interest.
Small artisans, landless agricultural labourers and poor
classes get cheap loans from the banks.
D. Assistance to Capital Market: Banks also take part in
the capital market by giving long-term loans to industry,
agriculture, small scale industry, traders, transporters etc

4. MODERN FUNCTIONS
A. Automated teller Machines (ATM) Cum Debit Cards:
Automated teller machines have revolutionised the
banking activities in the country in the last few years.
Many bankers have introduced ATMs to assist their
customers to withdraw and deposit cash without any
waiting time. The customer can withdraw or expand

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 money up to the amount of money in his/her account with
the bank
B. Credit Cards: Many bankers have introduced credit cards
in India among their customers. Credit card is plastic
money which acts as an instrument of credit. Credit cards
replace paper currency. The card holder may purchase
goods from many authorised dealers by using the credit
card at nominal rate of interest. The card holder can also
withdraw cash from ATMs, up to a specified limit,
maintained by the bank throughout the country. The
customers have to pay certain service charges to the bank
along with interest on the outstanding balances.
C. Mail Transfer and Telegraphic Transfer : The customer
of a bank has an option to transfer money from one place
to another through mail transfer or Telegraphic transfer.
D. Tele-Banking: Tele-Banking is increasingly used as a
delivery channel for marketing banking services. A
customer can do entirely non cash related banking over
the phone anywhere and at any time. Automatic Voice
Recorders (AVR) or ID number are used for rendering
tele-banking services which have added convenience to
customers.
E. Internet Banking: Internet has enabled banking at the
click of a mouse. Internet banking is a platform for
electronic delivery of banking services to the customers. In
Internet banking, a customer of a bank with a PC and a
browser can have accounts to his bank's website, and
thereafter perform various banking functions. Thus, he can
avail of the bank's services from anywhere and at any
time.
F. Round the Clock Banking: The modern banking system
facilitates performing basic banking transactions by
customers around the clock globally. World-wide by 24

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 hours and 7 days a week banking services are made
possible.

Functions of Regional Rural Banks

Banking Services RRBs provide banking services like
savings accounts, current accounts, deposits, and basic
transactions to rural areas.
1. Credit Facilities: RRBs offer loans to farmers, agricultural
labourers, artisans, and small entrepreneurs for
agriculture, livestock, machinery, housing, and small
businesses.
2. Agricultural and Rural Development: RRBs support
agricultural activities, rural infrastructure development, and
small-scale industries for overall rural growth.
3. Financial Inclusion: RRBs promote financial inclusion
by opening bank accounts, encouraging savings, and
providing institutional credit to unbanked and underbanked
rural areas.
4. Cooperative Banking Activities: RRBs work with
agricultural cooperatives and self-help groups to provide
financial support and foster cooperation among rural
communities.
5. Priority Sector Lending : RRBs prioritise lending to
sectors like agriculture, micro and small enterprises, and
weaker sections of society as mandated by the RBI. The
mandatory target for priority sector lending by RRBs is
currently set at 75%.

Functions of Cooperative Banks

1. Primary Urban Co-operative Bank (PUCBs):This type of
Co-operative banks provide their services to mainly urban
areas of India, they mainly provide advances in shares
and debentures to the small businessmen and also

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 provide these small businessmen loans with extension in
credit facilities.
2. District Central Co-operative Bank (DCCBs)-These
types of banks provide their services to the district or local
area. They make and implement the policies at a district
level and also provide credit facilities to the PACs and
PUBCs.
3. Primary Agriculture Credit Society (PACs)- PACs are a
type of Co-operative bank which provides loans to its
customers with less complexity, they also motivate their
customers to learn to save their money through deposits.
It also provides the benefits and development of the large
society.
4. State Co-operative Banks (SCBs)-SCBs are governed
by NABARD and acts as supervisor to the DCCBCs.
5. Land Development Banks (LDBs)- These banks help in
fulfilling the needs and requirements of the agricultural
sector and provide credit in local areas and also perform
all the general and basic functions of a bank. This type of
bank motivates and helps in the increase in agricultural
production in our country.

Different Ways to transfer money

These three payment methods- National electronic fund
transfer(NEFT), Real Time Gross Settlement(RTGS) and
Immediate Payment Service(IMPS) serve the same purpose of
transferring funds online but have slight differences.While
RTGS and NEFT were introduced in 2004 and 2005
respectively, IMPS was launched in 2010 with the help of NPCI.
● NEFT:National Electronic Funds Transfer (NEFT) is a
payment system that facilitates one-to-one funds transfer.
Using NEFT, individuals will electronically transfer cash
from an associate bank branch to someone holding an

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 account with the other bank branch, that is taking part in
the payment system. Fund transfers through the NEFT
system don't occur on a period-of-time basis and also the
fund transfer settles in twenty-three unit time batches.
● RTGS: Real-Time Gross Settlement (RTGS) is another
payment system within which the cash is attributable to
the beneficiary’s account in the time period and on a gross
basis. The RTGS system is primarily meant for big
transactions that need and receive immediate clearing.
The minimum amount to be remitted through RTGS is 2
lacs and no upper ceiling is there but however can vary
between banks.
● IMPS: Immediate Mobile Payment Services(IMPS) could
be a time period instant inter-bank funds transfer system
managed by National payment corporation of Bharat.
IMPS is obtainable 24/7 throughout the year together with
bank holidays, unlike NEFT and RTGS.

CASH BOOK
A cash book is a type of journal used to track the
transactions between a business and its bank.
There are three types of cash books: single column,
double column, and triple column.
Cash books are important because they allow businesses
to track their finances in a detailed and organised way.
It is essential for businesses to keep track of their finances
to comply with the law.
Why are Cash Books Important?
Cash books are important because they allow businesses
to track their finances in a detailed and organised way.
This information can be used to make important decisions
about the future of the business. Additionally, cash books
can be used to create financial statements. These will

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 provide a detailed overview of the business’ financial
health.

PASS BOOK
A bank passbook is a physical notebook held by bank account
holders. It records on paper the details of all banking
transactions, including elements such as:
● Debits
● Credits
● Loans
● Fixed deposits
● Recurring deposits
Why are Pass books important?
A bank passbook is a traditional method of keeping track of the
transactions made in a user account. It depicts all transactions,
whether they are credited or debited. It also shows where a
person spent money and who credited it into his bank account.
In a bank passbook, everything is precisely printed. However, a
user must have the transactions printed on a bank passbook
every time he or she visits the bank to keep it up to date.

Process of clearing a cheque

Following steps are to be taken during clearance of cheque:
Step 1st:The customer.
Step 2nd: The PRESENTING BANK where cheques are
presented by payee for deposit in his / her a/c
Step 3rd:The RCC: Regional collecting centre- to collect all
cheques from their presenting branch.
Step 4th:Clearing House: To collect cheques from RCC and
for settlement of cheques.
Step 5th:Drawee’s RCC:Again they collect cheques from the
clearing house and send to their drawee bank.

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Step 6th: Drawee Bank:It collects cheques from their RCC
and debits the customer a/c.

NIFTY 50
The NIFTY 50 is a benchmark Indian stock market index that
represents the weighted average of 50 of the largest Indian
companies listed on the National Stock Exchange
Nifty 50 is owned and managed by NSE Indices (previously
known as India Index Services & Products Limited), which is a
wholly owned subsidiary of the NSE Strategic Investment
Corporation Limited. NSE Indices had a marketing and
licensing agreement with Standard & Poor's for co-branding
equity indices until 2013. The Nifty 50 index was launched on
22 April 1996, and is one of the many stock indices of Nifty.
NIFTY 50 is the world's most actively traded contract. WFE,
IOM and FIA surveys endorse NSE's leadership position.]
Between 2008 & 2012, the NIFTY 50 index's share of NSE
market fell from 65% to 29% due to the rise of sectoral indices
like NIFTY Bank, NIFTY IT, NIFTY Pharma, and NIFTY Next
50.
The NIFTY 50 index covers 13 sectors of the Indian economy
and offers investment managers exposure to the Indian market
in one portfolio. As of January 2023, NIFTY 50 gives a
weightage of 36.81% to financial services including banking,
14.70% to IT, 12.17% to oil and gas, 9.02% to consumer
goods, and 5.84% to automobiles.

Sensex
The Sensex was launched on Jan. 1, 1986. It is both a
bellwether and an investable index used to track the
performance of India's 30 largest and most financially sound
companies. These companies are listed on the BSE (previously
known as the Bombay Stock Exchange) and represent some of

20
the biggest and most important sectors of the Indian economy.
As such, it is India's most-tracked index.
The Sensex is calculated in Indian rupees (INR) and U.S.
dollars. As of Aug. 31, 2021, the mean total market cap of the
index was 3.71 trillion rupees. The top five constituents listed
on the index were:
● Reliance Industries
● HDFC Bank
● Infosys
● Housing Development Finance Corp.
● ICICI Bank

INSURANCE
An insurance is a legal agreement between an insurer
(insurance company) and an insured (individual), in which an
insured receives financial protection from an insurer for the
losses he may suffer under specific circumstances.
Under an insurance policy, the insured needs to pay a regular
amount of premiums to the insurer. The insurer pays a
predetermined sum assured to the insured if an unfortunate
event occurs, such as death of the life insured, or damage to
the insured or his property.
Types of Insurance Policies
You can divide the insurance based on the type of coverage it
is providing as below:
● Life Insurance Policy: It is insurance on your life. You
buy life insurance to ensure that your loved ones are
financially secured even when you are not around. If you
are the only breadwinner, you would want your family
members to maintain the same living standards in the
event of your untimely demise. The nominee gets the sum
assured in case of your death.

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 ● Health Insurance Policy: Although health insurance is
usually counted as a general insurance contract, there are
a few differences. Health insurance covers your medical
costs for expensive treatments. You can avail two types of
health insurance policies:
(i) Mediclaim Insurance, which compensates you for the
medical expenses
(ii) Critical Health Insurance, which offers lump-sum
payments for dangerous and life-threatening health conditions
● Non-life Insurance Policy: These compensate for the
losses sustained arising from a specific financial event
that is not related to life. Non-life insurance could be car
insurance, home insurance, etc.
You can avail insurance benefits under the following two
types of policies:
Because of these two variants health insurance falls
perfectly between general and life insurance policies.
Also, both health insurance policies are important in
ensuring complete financial safety for you and your family.

LOAN
A loan is a vehicle for credit in which a lender will give a sum of
money to a borrower or borrowing entity in exchange for future
repayment. The borrower has to pay back the initial amount
(principal balance) with an additional amount (interest), the rate
of which varies in each case.
Types of Loans
There are endless variations and structures to loans, just like
there are for mergers and acquisitions. A few big types are
secured, unsecured, conventional, open-ended, and close-
ended.

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● Secured loan: A secured loan often has collateral
security like in the case of a car loan (they can repossess
the car if you do not make the payments).
● Unsecured loan: An unsecured loan has no recourse
besides legal action for the lender to get their money back
(this would be like consumer credit card debt where the
lender does not have anything in return for the credit card
in the wallet, and they cannot put a lien on the person’s
house to mitigate the risk of nonpayment).
● Conventional loan:A conventional loan is a common type
of mortgage plan for homeowners that the government
does not insure, subsidise or guarantee. Other lending
types that assist homebuyers in the form of lower down
payments, lower rates, or insurances would be FHA and
VA loans.
● Open-ended loans:Open-ended loans do not have any
prepayment penalties,whereas close-ended ones do.
Typically one can pay back an open-ended loan early with
no problem (such as getting a 30-year loan for the
apartment building in the example above but selling the
asset in 10 years).
● Close-ended loans:Close-ended loans will have a large
fee, such as a percentage point or two if a person pays
early or outside the agreed-upon time frame for payments.

Subsidy
A subsidy is a benefit given to an individual, business, or
institution, usually by the government. It can be direct
(such as cash payments) or indirect (such as tax breaks).
The subsidy is typically given to remove some type of
burden, and it is often considered to be in the overall
interest of the public, given to promote a social good or an
economic policy.

23
 Types of Subsidies
● Direct vs. Indirect Subsidies: Direct subsidies are those
that involve an actual payment of funds toward a particular
individual, group, or industry. Indirect subsidies are those
that do not hold a predetermined monetary value or
involve actual cash outlays. They can include activities
such as price reductions for required goods or services
that can be government-supported. This allows the
needed items to be purchased below the current market
rate, resulting in savings for those whom the subsidy is
designed to help.
● Government Subsidies: There are many forms of
subsidies given out by the government. Two of the most
common types of individual subsidies are welfare
payments and unemployment benefits. The objective of
these types of subsidies is to help people who are
temporarily suffering economically. Other subsidies, such
as subsidised interest rates on student loans, are given to
encourage people to further their education.

PMEGP
Prime Minister’s Employment Generation Programme
(PMEGP) is integrated with two earlier schemes, viz.
Prime Minister Rojgar Yojana (PMRY) and the Rural
Employment Generation Programme (REGP) were
working along similar lines to generate employment
among the youth.
The Prime Minister’s Employment Generation Programme
(PMEGP) is a credit-linked subsidy programme launched
by the Ministry of MSME to generate employment
opportunities in both rural and urban areas. With the help
of the PMEGP scheme, the Government offers subsidies
up to 35% on the total project cost. The project cost

24
covered is up to Rs. 20 lakh for service units and Rs. 50
lakh for manufacturing units.
Under this scheme, the business owners need to invest
only 5%-10% of the project cost while the Government
provides a subsidy of 15%-35% of the project based on
different criteria. The Banks offer funds in form of Term
Loan, Working Capital Loan in form of Cash Credit and
Composite Loan.

Companies Act 2013

The Companies Act 2013 is an act of the Parliament of
India on Indian company law which regulates the
incorporation of a company, responsibilities of a company,
directors, and dissolution of a company. The 2013 Act is
divided into 29 chapters containing 470 sections against
658 sections in the Companies Act, 1956 and has 7
schedules. However, currently, there are 484 (470-43+57)
sections in this act. This act replaced The Companies Act
of 1956 (in a partial manner) after receiving the assent of
the President of India on 29 August 2013. Section 1 of this
act came into force on 30 August 2013. 98 different
sections came into force on 12 September 2013 with a
few changes.A total of another 183 sections came into
force from 1 April 2014.
● Public Limited Company: A Public Limited
Company means a company where the general
public can hold the company shares. There is no
maximum shareholders limit for a public limited
company, but there needs to be a minimum of seven
members to establish a public company. The
company needs to have two directors and can have a
maximum of fifteen directors.

25
● Private Limited Company: A Private Limited
Company is a company where there cannot be more
than 200 members. A minimum of two members are
required to establish a private limited company. The
members cannot transfer their share, and it is
suitable for businesses that prefer to register as
private entities. There needs to be a minimum of two
directors, and there can be a maximum of 15
directors in a private limited company.
● Listed Company: A listed company is a company
which is registered on various recognised stock
exchanges within or outside India. The shares of the
listed companies are freely traded on the stock
exchanges. They have to follow the guidelines given
by the Securities Exchange Board of India (SEBI).
A company that wishes to list its shares on stock
exchanges should issue a prospectus to the general
public for subscribing to its debentures or shares. A
company can list its shares through an Initial Public
Offer (IPO), while an already listed company can
make a Further Public Offer (FPO).
● Unlisted Company: An unlisted company is a
company that is not listed on any recognised stock
exchange, and its shares are not freely tradable on
the stock exchanges. These companies fulfil their
capital requirements by obtaining funds from friends,
family members, relatives, financial institutions, or
private placement. An unlisted company must
convert to a public company and issue a prospectus
if it wishes to list its securities on the stock
exchanges.

26
Indian Partnership Act 1932
Most of the businesses in India adopt a partnership
business, so to monitor and govern such partnership The
Indian Partnership Act was established on the 1st October
1932. Under this partnership act, an agreement is made
between two or more persons who agrees to operate the
business together and distribute the profits they gain from
this business.

MUTUAL FUNDS
A mutual fund is a pool of money managed by a
professional Fund Manager.
It is a trust that collects money from a number of investors
who share a common investment objective and invests the
same in equities, bonds, money market instruments and/or
other securities. And the income / gains generated from
this collective investment is distributed proportionately
amongst the investors after deducting applicable
expenses and levies, by calculating a scheme’s “Net
Asset Value” or NAV. Simply put, the money pooled in by
a large number of investors is what makes up a Mutual
Fund.
Here’s a simple way to understand the concept of a
Mutual Fund Unit.
Let’s say that there is a box of 12 chocolates costing ₹40.
Four friends decide to buy the same, but they have only
₹10 each and the shopkeeper only sells by the box. So
the friends then decide to pool in ₹10 each and buy the
box of 12 chocolates. Now based on their contribution,
they each receive 3 chocolates or 3 units, if equated with
Mutual Funds.

27
India's Income Tax Laws are framed by the Government
The Government imposes a tax on taxable income of all
persons who are individuals, Hindu Undivided Families
(HUF's), companies, firms, LLP, association of persons,
body of individuals, local authority and any other artificial
juridical person. According to these laws, levy of tax on a
person depends upon his residential status. Every
individual who qualifies as a resident of India is required to
pay tax on his or her global income. Every financial year,
taxpayers have to follow certain rules while filing their
Income Tax Returns (ITRs).
Income Tax Return - What is it?
An Income tax return (ITR) is a form used to file
information about your income and tax to the Income Tax
Department. The tax liability of a taxpayer is calculated
based on his or her income. In case the return shows that
excess tax has been paid during a year, then the
individual will be eligible to receive a income tax refund
from the Income Tax Department. It comes under the
Income Tax Act of 1961.
As per the income tax laws, the return must be filed every
year by an individual or business that earns any income
during a financial year. The income could be in the form of

28
 a salary, business profits, income from house property or
earned through dividends, capital gains, interests or other
sources.
Tax returns have to be filed by an individual or a business
before a specified date. If a taxpayer fails to abide by the
deadline, he or she has to pay a penalty.
Who should file Income Tax Returns?
According to the Income Tax Act, income tax has to be
paid only by individuals or businesses who fall within
certain income brackets. Mentioned below are entities or
businesses that are required to compulsorily file their ITRs
in India:
● All individuals, up to the age of 59, whose total
income for a financial year exceeds Rs 2.5 lakh. For
senior citizens (aged 60-79), the limit increases to
Rs. 3 lakh and for super senior citizens (aged 80 and
above) the limit is Rs. 5 lakhs. It is important to note
that the income amount should be calculated before
factoring in the deductions allowed under Sections
80C to 80U and other exemptions under section 10.
● All registered companies that generate income,
regardless of whether they've made any profit or not
through the year.
● Those who wish to claim a refund on the excess tax
deducted/income tax they've paid.
● Individuals who have assets or financial interest
entities that are located outside India.
● Foreign companies that enjoy treaty benefits on
transactions made in India.
● NRIs who earn or accrue more than Rs. 2.5 lakh in
India in a single financial year.

INCOME TAX RETURNS

29
 ● ITR-1 Form
This form is also known as the Sahaj form. Individual taxpayers
should go for ITR 1 filing. Any other taxpayer is not eligible to
choose this form for ITR returns.
● ITR-2 Form
ITR 2 income tax is eligible for those individuals who have their
income by selling assets or properties. Individuals having
incomes from outside of India can also use this form.
Furthermore, HUFs can also apply for ITR 2 form to file income
tax returns.
● ITR-3 Form
Individual taxpayers or HUFs operating as partners in a firm
without conducting any business under the firm are eligible to
apply for ITR 3. Taxpayers looking in search of the meaning of
ITR 3 should be thorough with the eligibility criteria of the said
form.
● ITR-4S Form
Also known by the name Sugam, ITR 4 means that individuals
who run a business and accrue income from it or other
professions can file for IT returns by using this form. With this
income, they can club the earning from any windfall and apply
for this form. Additionally, taxpayers from professions like
doctors, shopkeepers, designers, retailers, agents, contractors,
etc., can file their ITR using this form.
● ITR-5 Form
Business trusts, firms, etc., must opt for this form to file ITR.
ITR 5 means forms that are eligible for partnership firms or
LLPs. To understand the meaning of ITR 5 in detail, one should
know in-depth about the taxpayers eligible under this form and
those who are not.

● ITR-6 Form

30
ITR 6 means an income tax return form eligible for companies
to file tax returns. Companies can file income tax by this form
only electronically.
● ITR-7 Form
Individuals or companies required to furnish returns under
Section 139(4A) or 139(4C) or 139(4D) or 139(4E) or 139(4F)
must utilise ITR 7 form to file income tax returns.

What are the Heads of Income Under the Income Tax Act?
Under the Income Tax Act, there are five heads which are
known as the heads of income.
Heads of Income Tax
The 5 heads of income are:
● Income from salary
● Income from house property
● Income from profits and gain of business or profession
● Income from capital gains
● Income from other sources

● Income from Salary

The first head of income is income from salary. If there exists a
relationship between payer and payee in a firm or agreement,
and the relationship is between employer and employee where
the employee is being paid a certain amount of remuneration
for their services, then the income can be charged under this
head of income. A salary could be any sort of monetary
compensation. This could be any basic and normal wage,
annuity, pension, gratuity, leave encashment, etc.

● Income from House Property

31
Another head of the Income Tax Act is income from house
property. This part sheds light and detail about the taxation
policy on the house or real estate that you, as a taxpayer, are
residing in. Vacant house property is considered as 'self-
occupied' in regards to the purpose of income tax. In the
situation that a taxpayer owns more than a single self-occupied
house, then only one house is treated and considered as a
single self-occupancy house property. Rest is considered to be
let out.

● Income from Profits and Gain of Business or

Profession
This is the third head of income under the Income Tax Act. A
business includes any kind of trade, commerce, manufacturing,
or any nature of trade. Profession implies the acquisition of
specific or special knowledge in a particular field after a period
of education and verified examination. Under this head of
income, profits and gains made during the tenure of business
are subjected to complete and total taxation. Profits incurred on
the sale of imports, incentives, any interest or form of salary or
bonus, and a commission from a firm are all taxable under this
head of income in the Income Tax Act. For an income to be
charged under the head of income from profits and gains from
business or profession, there are some rules and conditions
that must be fulfilled according to Section 28 of the Income Tax
Act.

● Income from Capital Gains

Being the fourth head of income under the Income Tax Act,
income gained from any capital asset, be it movable or
immovable, is deemed taxable. Capital gains are divided into
two parts: long-term capital gains and short-term capital gains.

32
These gains are taxed under the head of income – income from
capital gains.When a person sells his capital assets after
holding them for 36 months or more, they will fall under long-
term capital gain. The applicable tax rate is 20% in the case of
LTCG. Alternatively, if he sells capital assets within 36 months,
it will be termed as short-term capital gain, and the rate of tax
will be 15%. In the case of securities, this is applicable if one
sells his holdings within 12 months from the purchase date

● Income from Other Sources

The fifth and last head of income under the Income Tax Act is
income from other sources. Any income derived from sources
other than the previously mentioned four heads is considered to
be under this category of income. Some examples of income
from other sources include interest gained from bank deposits,
winning in the lottery, or even any sum of money which is more
than Rs. 50,000 received from another individual who does not
form a part of the taxpayer relative, spouse or if the money is
acquired via inheritance or will. All these sources, even if it is
gambling or even card games, are chargeable for tax under
Section 56(2) of the Act.

Which Types of Income Come Under Income from Other

Sources?
● Dividend income
● Interest income
● Family pension income
● Gifts received
● Royalty income.

What is an Income Tax Slab?

33
Depending on the individual's Income, he/she may fall under a
different tax slab. Therefore, individuals with a higher income
will need to pay more taxes. The slab system was introduced to
maintain a fair tax system in the country.

Net Taxable Income New Tax Regime Old Tax Regime Income
Income Tax Slab Rates Tax Slab Rates FY 2022-
FY 2022-23 23

Up to Rs 2.5 lakh Exempt Exempt

Rs 2,50,001 to Rs 5 lakh 5% 5%

Rs 5,00,001 to Rs 7.5 10% 20%

lakh

Rs 7,50,001 to Rs 10 lakh 15%

Rs 10,00,001 to Rs 12.5 20% 30%

lakh

Rs 12,50,001 to Rs 15 25%
lakh

Over Rs. 15 lakh 30%

How to calculate Income Tax?

Assessment Year
The Assessment Year is the 12 month-period that comes right
after the financial year. It is the period from April 1 to March 31,
during which revenue produced during the fiscal year is taxed.
For example, the Assessment Year for any revenue produced
between April 1, 2022, and March 31, 2023, would be 2023-24.
In layman terms, the assessment year is the year in which
income is taxed and all taxes are paid and tax returns are filed.
Always remember to file your income tax return within the
relevant AY.

House Rent Allowance (HRA)

34
HRA is a tax exemption that can be claimed by salaried
individuals who live in rented accommodation.
The amount of HRA exemption is calculated based on the
actual rent paid, the basic salary, and the location of the
residence.
Self-employed individuals can also claim HRA exemption under
Section 80GG of the Income Tax Act.
You must submit rent receipts or other supporting documents to
claim an exemption.

National Pension System (NPS)

The National Pension System (NPS) is a defined-contribution
pension system in India regulated by Pension Fund Regulatory
and Development Authority (PFRDA) which is under the
jurisdiction of Ministry of Finance of the Government of
India.National Pension System Trust (NPS Trust) was
established by PFRDA as per the provisions of the Indian
Trusts Act of 1882 for taking care of the assets and funds under
this scheme for the best interest of the subscriber.

Tax Deducted at Source (TDS)

The concept of TDS was introduced with an aim to collect tax
from the very source of income. As per this concept, a person
(deductor) who is liable to make payment of specified nature to
any other person (deductee) shall deduct tax at source and
remit the same into the account of the Central Government.
The deductee from whose income tax has been deducted at
source would be entitled to get credit of the amount so
deducted on the basis of Form 26AS for TDS certificate issued
by the deductor.

35
TDS Rate Chart

Tax Collected at Source

Tax Collected at Source (TCS) is a tax payable by a seller
which he collects from the buyer at the time of sale of goods.
Section 206 of the Income Tax Act mentions the list of goods
on which the seller should collect tax from buyers.

Employees’ Provident Fund or EPF

The Employees’ Provident Fund or EPF is a popular savings
scheme that has been introduced by the EPFO under the
supervision of the Government of India.
The employee and employer each contribute 12% of the
employee's basic salary and dearness allowance towards EPF.
The current rate of interest on EPF deposits is 8.15% p.a.
The accrued interest on the EPF is tax-free and can be
withdrawn without paying for the same. Employees avail of a
lump-sum amount on their retirement, which is inclusive of the
accrued interest.

SECTIONS COME UNDER INCOME TAX

36
Section 88 TTA : Section 80TTA of the Income Tax Act, 1961
provides a deduction of up to Rs 10,000 on the income earned
from interest on savings made in a bank, co-operative society
or post office. There is no deduction for interest earned from
fixed deposits.

Section 88 TTB : Section 80 TTB is a provision under the

Indian Income Tax Act that offers tax benefits to senior citizens
on their interest income.As per the Income Tax Act, a “senior
citizen” is one who is a resident individual of age 60 years or
above at any time in the relevant financial year. As per this
newly introduced section, any senior citizen as a resident
individual in India can claim a deduction of up to Rs 50,000
from the interest income earned on deposits (saving or fixed)
during the concerned financial year.

Section 80 U : Section 80U of the Income Tax Act, 1961

includes provisions for tax deduction benefit to individual
taxpayers suffering from a disability.
● Person with Disability: If a person is suffering from at
least 40% disability, he/she can claim a tax deduction of
up to Rs.75,000 on the taxable income under section 80U.
● Person with Severe Disability: If a person is suffering
from severe disability i.e. suffering 80% disability (either
from one or multiple ailments) can claim a tax deduction
up to Rs. 1.25 lakh under section 80U.

Type of Deduction
Disability Limit Under
Section 80U

37
General Rs. 75,000
Disability
Severe Rs. 1.25 lakh
Disability Rs.
1.25 lakh

38
Vouching
Definition: Vouching is a procedure followed in the process of
the audit to authorise the credibility of the entries entered in the
books of accounts. In simple and easier words, it is a precise
investigation of the presented documents of the firm by an
auditor to check the correctness and accuracy of such
documents. It is the foremost step of the auditing process
based on which the auditor performs his work and prepare an
audit report.
Importance of Vouching
The importance of vouching is to determine that:
● Classification: Transactions have been classified &
disclosed in accordance with accounting policies.
● Accurate amount: Accurate amount has been recorded.
● Pertains to entity: Transactions pertain to an entity that
took place during the relevant period.
● Actual occurred: Transactions which have actually
occurred have been recorded.
● Proper Accounts: Transactions are recorded in the
proper account to the proper period.

39
Advantages of vouching:
● Vouching is an important tool for providing assurance of
the accuracy and reliability of financial statements. By
independently verifying the evidence supporting
transactions and account balances, vouching helps to
ensure that the financial statements accurately reflect the
financial position and performance of the organisation.
● One of the key advantages of vouching is its ability to help
detect and prevent fraud. By verifying the authenticity and
validity of financial transactions and account balances,
vouching can help to identify and flag any suspicious or
irregular activity.
● Vouching also helps to increase the credibility and
integrity of financial statements. By independently
verifying the evidence supporting transactions and
account balances, vouching helps to ensure that the
financial statements are accurate, reliable, and free from
material misstatement.
● Vouching also enhances the confidence of stakeholders in
the financial information provided by the organisation. By
providing assurance that the financial statements are
accurate and reliable, vouching helps to build trust in the
organisation and its financial reporting.
● Another advantage of vouching is that it facilitates
compliance with legal and regulatory requirements. Many
laws and regulations require that financial statements be
independently verified and audited, and vouching is an
important tool for meeting these requirements.
● Finally, vouching enhances the effectiveness and
efficiency of internal controls. By independently verifying
the evidence supporting transactions and account
balances, vouching helps to ensure that internal controls

40
 are functioning as intended and that any issues are
identified and addressed in a timely manner.
Disadvantages of Vouching:-
● Vouching can be time-consuming and resource-intensive.
Verifying and documenting the evidence supporting
transactions and account balances can take a significant
amount of time and effort.
● Vouching may not be able to detect all instances of fraud
or misstatement. Even with vouching, it is still possible for
fraud or misstatements to occur and go undetected.
● Vouching can be costly, as it typically requires specialised
knowledge and expertise, and may require the use of
outside professionals or consultants.
● Vouching may impede the normal functioning of the
business, as employees may be required to spend more
time and resources on vouching activities.
● Vouching may limit the flexibility of the business. For
example, vouching may require that certain transactions
be conducted in a certain way in order to be verifiable.
● Vouching may not be suitable for all types of organisations
or businesses. Smaller organisations, for example, may
not have the resources or expertise to effectively
implement vouching procedures.

VOUCHER
A voucher is nothing but a written or printed piece of
documentary evidence, which authenticates the
transactions, i.e. it proves that the entries made in the
books of accounts are real and genuine.
Vouchers can be sales invoice, purchase invoice, bank
statements, minutes book, cash memo, bills, bank paying
slip, purchase requisition slip, receipt, salaries and wage
sheet, gate keeper’s note, bank passbook, memorandum

41
 and articles of association, delivery challans, stores,
records, counterfoil of cheque book, etc.The points stated
hereunder are to be considered at the first place while
checking vouchers:
● It should be duly authorised by the stipulated signatory.
● Date of the voucher.
● Name of the party or client mentioned in the voucher.
● It should be complete.
● It belongs to the business entity.

Types of Vouchers
There are different types of vouchers in accounting.
● Debit or Payment voucher
● Credit or Receipt voucher
● Supporting voucher
● Non-Cash or Transfer voucher (Journal voucher)

(i) Receipt Voucher:

A Receipt voucher is used to record cash or bank receipt.
Receipt vouchers are of two types which are as follows:
(a) Cash receipt voucher – it denotes receipt of cash in hand.
(b) Bank receipt voucher – it indicates receipt of a cheque or
demand draft i.e. money is not received in the form of cash in
hand, instead, the money will be credited to the bank account
of the assessee.
(ii) Payment Voucher:
A payment voucher is just the opposite of a cash voucher. In
the above, cash/ bank was debited, while in this case, cash or
bank will be credited. In the above case, there was an inflow of
funds, while in this case, there is an outflow of funds. A
Payment voucher is used to record a payment of cash or
cheque. Payment vouchers are also of two types which are:
(a) Cash Payment voucher – it denotes payment of cash

42
(b) Bank Payment voucher – it indicates payment by cheque or
demand draft i.e. money is not paid in the form of cash in hand,
instead, the money will be debited from the bank account of the
assessee.
(iii) Non Cash Or Transfer Voucher or Journal Voucher:
These vouchers are used for non-cash transactions, they are
basically used as documentary evidence. e.g., Goods sold on
credit. In such cases, the cash or the bank account of the
assessee is unaffected. In the case of Goods sold on credit, the
Voucher would debit the Debtor to whom the goods are sold on
credit, while sales on credit account would be credited further.
( iv ) Supporting Vouchers:
These vouchers are the documentary evidence of transactions
that have happened. For example, you can attach the bill of an
expense along with the original voucher just to further support
the primary voucher. Petrol Bills attached with the conveyance
vouchers are a good example of Supporting Vouchers.

VERIFICATION
Verification means "proving the truth" or "confirmation".
Verification is an auditing process in which the auditor satisfies
himself with the actual existence of assets and liabilities
appearing in the Statement of Financial position.[1] Verification
is usually conducted through examination of existence,
ownership, title, possession, proper valuation and presence of
any charge of lien over assets.
Thus, verification includes verifying:
● The existence of the assets and liabilities.
● Legal ownership and possession of the assets
● Correct valuation, and
● Ascertaining that the asset is free from any charge

43
Verification in an audit process can be done off site or onsite.
Off Site verification means verification by checking documents,
official records, photos and by questioning staff responsible or
otherwise trusted to be a reliable source for the facility in
verification. Onsite verification[4] means the verifying party is
physically visiting the facility, getting introduced into due facts
about it on the site where the facility is located and operated.
The process may be regulated by law in certain countries.

Importance of Verification
1. Showing the Actual Financial Position: The Balance
Sheet is prepared to show the actual financial position of a
business. If proper valuation is not made, such a Balance
Sheet does not provide true and fair information. So, to provide
information about the real financial position, verification and
valuation of assets are essential.
2. Ascertaining the Real Position of Profit or
Loss:Depreciation and other expenses on assets will be
incorrect if proper valuation of assets is not made. So, to
calculate the actual amount of profit or loss, proper valuation of
assets and liabilities is necessary.
3. Increase Goodwill:Proper valuation gives fair information
about profitability and financial position of a business. So,
people can get information which creates a positive attitude
towards the company. The positive attitude of the public can
increase the goodwill of the concerned.
4. Assures Safe Investment to Shareholders: Verification
and valuation provide actual information about assets and
liabilities to the shareholders which assure safety of their
investment.
5. Easy for Sale: At the time of sale of the company, it can be
sold at the price which is enlisted in the Balance Sheet, but the

44
assets whose valuation is not made need valuation before
selling the company.
6. Easy to Get Loan: Companies disclose the Balance Sheet
provided by the auditor for public knowledge which increases
the trust of the company. Hence, companies can easily obtain
loans from financial Institutions.
7. Easy to Get Compensation: Whenever the loss occurs due
to any incident, the insurance company provides compensation
on the basis of valuation of assets. So, the company can easily
get compensation.

Advantages of Verification
● Process simplification: Verification makes the process of
software development easy and allows a team to create
an end product that conforms to set quality standards.
● Documentation: Verification usually occurs as per
comprehensive documents and reports, which creates a
knowledge resource that acts as a reference for the team.
● Error reduction: It helps in reducing the number of errors
that may appear during the later stages of development.
Verification in the initial development phase can help
prevent costly errors.
● Failure prevention: It helps in reducing the chances of
system failures and crashes. Verification helps in
developing a product that's functional and usable.
● Wastage reduction: Verification helps in reducing product
returns, wastage of resources and other expenses by
ensuring quality control.

Disadvantage of Verification

45
The most significant limitation of verification is the cost, as it
can be time-consuming. It's also susceptible to errors because
of higher reliance on manual checking, which can impact
accuracy

AUDITOR
In simple terms, an auditor is an individual who is appointed to
inspect the books of accounts of a company, the validity and
accuracy of the transactions contained therein. He also forms
an opinion on the overall view of the financial statements,
whether the statements depict a true and fair view of the
entity’s financial position.

Duties of the Auditor

The duties of an auditor have been laid down by the
Companies Act, 2013, provided in Section 143. The Act
explains the duties in a simplified manner, although the list
given is not exhaustive.
1. Preparing an Audit Report: An audit report is a review of a
business’s financial position. The auditor is responsible for
creating an audit report based on the company’s financial
statements. The books of accounts under examination must
adhere to the applicable laws. Additionally, the auditor must
ensure that the financial statements comply with relevant laws
such as the Companies Act, 2013 and Accounting Standards.
Moreover, the auditor must guarantee that the financial
statements present a precise and fair view of the company’s
financial position. A well-written audit report can help
businesses make informed decisions based on accurate
financial information.
2. Conducting Inquiries: One of the primary duties of an
auditor is to make inquiries as needed. This includes
investigating whether loans and advances made based on

46
security are properly secured, whether any personal expenses
are charged to the Revenue Account, whether loans and
advances are properly shown as deposits, and whether
financial statements comply with relevant accounting
standards.
3. Assisting with branch audits: If an auditor is a branch
auditor rather than the auditor of an entire company, they will
provide assistance in the completion of the branch audit. They
will prepare a report based on the accounts of the branch and
send it to the company auditor for inclusion in the main audit
report.
4. Complying with auditing standards: The auditor must
comply with Auditing Standards issued by the Central
Government in consultation with the National Financial
Reporting Authority to perform audit duties with relevant ease
and accuracy.
5. Reporting fraud: If the auditor suspects fraud or
discrepancies in financial statements, they must report the
matter to the Central Government immediately and in the
manner prescribed by the Companies Act, 2013.
6. Adhering to the code of ethics and conduct: The auditor
is obligated to adhere to both the Code of Ethics and the Code
of Professional Conduct. These codes encompass various
principles and guidelines that govern the auditor’s behaviour
and actions. They include fundamental principles such as
confidentiality, due care, and professional scepticism.

47