{"title":"Why External Confirmations Under SA 505 Really Matter for Auditors","summary":"SA 505 external confirmations strengthen audit quality by ensuring independent, verifiable, and reliable evidence. They:\r\n 1. Validate financial balances\r\n 2.  Reduce fraud and audit risk\r\n 3. Reinforce trust in financial reporting\r\nIn today’s era of transparency and accountability, external confirmations are not just a procedure they are a safeguard for trust in auditing.","content":"

Understanding SA 505: The Power of External Confirmations in Auditing

\r\n\r\n

In auditing, evidence is everything. An auditor’s opinion is only as strong as the audit evidence behind it. While management’s explanations are useful, they can’t always be trusted at face value, that’s where SA 505 – External Confirmations come in.

\r\n\r\n

Issued by the Institute of Chartered Accountants of India (ICAI), SA 505 guides auditors on how to obtain independent confirmations from third parties like banks, suppliers, or customers. These confirmations help verify balances, validate transactions, and enhance audit evidence quality through independence and reliability.

\r\n\r\n

\"\"Why Independence Matters

\r\n\r\n

Relying solely on management’s word can be risky. External confirmations allow auditors to cross-check key information directly with third parties, reducing bias and strengthening audit credibility. This independence makes SA 505 confirmations a cornerstone of high-quality audits.

\r\n\r\n

Checking If the Numbers Are Real

\r\n\r\n

External confirmation procedures help auditors verify whether the recorded balances and transactions actually exist. For example, confirming receivables with customers or loan balances with banks ensures that assets and liabilities are real  not just numbers on paper.

\r\n\r\n

Defense Against Fraud

\r\n\r\n

Fraud often hides behind fake accounts or inflated receivables. External confirmations under SA 505 expose such issues early. When banks or customers deny information that management claims, it immediately raises red flags, helping auditors detect fraud efficiently.

\r\n\r\n

\"\"

\r\n\r\n

 

\r\n\r\n

Reducing Risk and Showing Professional Skepticism

\r\n\r\n

Every audit carries risk. External confirmations in audit minimize uncertainty by validating data independently. This not only reduces audit risk but also demonstrates the auditor’s professional skepticism, a key trait under auditing standards SA 505.

\r\n\r\n

More Than Just a Formality

\r\n\r\n

Confirmations aren’t optional. SA 505 compliance requires auditors to seek them wherever they can provide relevant and reliable evidence. Ignoring this step weakens the audit and may raise regulatory concerns.

\r\n\r\n

Wrapping Up

\r\n\r\n

SA 505 external confirmations strengthen audit quality by ensuring independent, verifiable, and reliable evidence. They:
\r\n 1. Validate financial balances
\r\n 2.  Reduce fraud and audit risk
\r\n 3. Reinforce trust in financial reporting

\r\n\r\n

In today’s era of transparency and accountability, external confirmations are not just a procedure they are a safeguard for trust in auditing.

","created_at":"2025-10-15T12:19:29.838992+05:30","updated_at":"2025-10-15T12:25:18.843401+05:30","slug":"why-external-confirmations-under-sa-505-really-mat","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/d82142fa-ec7f-42b8-a899-357dddc7f933.png","keywords":"Income Tax","tags":[{"id":5,"name":"Income Tax"},{"id":8,"name":"SA505"},{"id":9,"name":"External Confirmation"}],"catagory":[{"id":6,"name":"Income Tax"},{"id":7,"name":"SA505"},{"id":8,"name":"External Confirmation"}],"author":{"id":559,"name":"MAYANK GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2026-01-05_at_11.45.24.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"},"related_posts":[{"title":"From Form 15CA/15CB to Form 145/146: A Paradigm Shift in Foreign Remittance Compliance\r\nIntroduction","summary":"The transition from Form 15CA/15CB to Form 145/146 marks a fundamental shift in foreign remittance compliance.","content":"

The Income-tax Rules, 2026 have introduced a completely revamped framework for reporting foreign remittances by replacing:

\r\n\r\n\r\n\r\n

This is not a mere procedural change—it represents a structural overhaul in reporting, documentation, and tax determination for cross-border payments.

\r\n\r\n

1. Change in Legal Framework – Rule 37BB vs Rule 220

\r\n\r\n

Under the new regime:

\r\n\r\n\r\n\r\n

As per Rule 220: (Form 145 & 146)

\r\n\r\n\r\n\r\n

While the broad classification of Parts (A to D) remains largely consistent with the earlier framework under Rule 37BB, the primary change lies in:

\r\n\r\n\r\n\r\n

2. Significant Expansion in Remitter Details

\r\n\r\n

Form 145/146 now requires comprehensive profiling of the remitter:

\r\n\r\n

Newly Mandatory Fields:

\r\n\r\n\r\n\r\n

These were not required in earlier Form 15CB, indicating a shift towards identity-based compliance tracking.

\r\n\r\n

3. Strengthened Reporting for Remittee

\r\n\r\n

The new rules significantly enhance global traceability.

\r\n\r\n

Additional Requirements (Mandatory):

\r\n\r\n\r\n\r\n

This aligns with international tax transparency standards.

\r\n\r\n

4. Authorised Dealer & Banking Transparency

\r\n\r\n

New disclosures include:

\r\n\r\n\r\n\r\n

This ensures end-to-end traceability of remittance channels, which was missing earlier.

\r\n\r\n

5. Explicit TDS Computation under the Act

\r\n\r\n

A critical shift:

\r\n\r\n\r\n\r\n

This ensures that:

\r\n\r\n

Tax under domestic law is determined first, before applying DTAA relief

\r\n\r\n

6. Additional Details Required for DTAA Reporting

\r\n\r\n\r\n\r\n

7. Pre-Filled Data & System Integration

\r\n\r\n

The rules explicitly state:

\r\n\r\n\r\n\r\n

This enhances:

\r\n\r\n\r\n\r\n

8. Form 146 (CA Certificate) – More Structured

\r\n\r\n

Form 146 now requires:

\r\n\r\n\r\n\r\n

9. Change in Verification Clause

\r\n\r\n

There is a notable change in the verification/declaration section in Form 145/146 as compared to Form 15CA/15CB.

\r\n\r\n

Key Enhancements:

\r\n\r\n\r\n\r\n

This reflects a clear shift towards greater legal accountability of the remitter and certifying professional.

\r\n\r\n

Conclusion

\r\n\r\n

The transition from Form 15CA/15CB to Form 145/146 marks a fundamental shift in foreign remittance compliance.

","created_at":"2026-03-27T15:32:56.433649+05:30","updated_at":"2026-04-09T11:06:41.188395+05:30","slug":"from-form-15ca15cb-to-form-145146-a-paradigm-shift","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/9a12c1f7-8ba3-43de-afb7-2c171dafb830.jfif","keywords":"Form 15CACB\r\nForm 145 & 146\r\nTax Residency Certificate\r\nDouble Taxation Avoidance Agreement","tags":[{"id":3,"name":"15CACB"},{"id":7,"name":"Updates"},{"id":5,"name":"Income Tax"},{"id":27,"name":"Form No 145 & 146"},{"id":28,"name":"Foreign Remittance"}],"catagory":[{"id":3,"name":"Amendment in direct tax"},{"id":5,"name":"Updates"},{"id":6,"name":"Income Tax"}],"author":{"id":411,"name":"VASHU GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/4a469bc6-4bd0-43a2-86fb-aca525fa55d0.jpg","qualification":"CA Finalist","bio":"Finance & Taxation Enthusiast"}},{"title":"From 1961 to 2025: Navigating the New Era of Indian TDS Compliance","summary":"The Income-tax Act, 2025:\r\nConverts section-based TDS to Table-based system (Clause 393)\r\nRationalises thresholds\r\nRetains majority rates\r\nClarifies TDS vs TCS hierarchy\r\nIntroduces structural simplification","content":"

Introduction: The Great Tax Migration

\r\n\r\n

For over six decades, the Income-tax Act, 1961 served as the primary bedrock of Indian fiscal regulation. However, decades of incremental amendments, combined with the explosive growth of a complex digital economy, eventually necessitated a significant structural overhaul. This transition, brought about by the Finance Act, 2025, represents a modernization of the existing framework—a migration from a legacy system toward a streamlined, data-driven compliance environment.

\r\n\r\n

For tax professionals and financial controllers, the most immediate challenge of this "Great Migration" is the retirement of familiar compliance landmarks. The long-standing numbering system for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) forms is being overhauled, replaced by a logical 138–144 series. As a strategist, it is essential to look beyond the surface level of these renumberings to understand the consolidated architecture that now governs reporting.

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TDS Comparison

\r\n\r\n

Old Income-tax Act, 1961 vs Income-tax Act, 2025

\r\n\r\n

(Clause 393 – Table Based Framework)

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As we all know, the Income-tax Act, 2025 removes the earlier section-wise TDS structure (like 194C, 194J, 194H etc.) and consolidates all deduction provisions into:

\r\n\r\n

Clause 393 – TDS (Table Driven Structure)
\r\nClause 394 – TCS (Table Driven Structure)

\r\n\r\n

Each nature of payment is now governed through a Table Serial Number (Sl. No.), instead of separate sections.

\r\n\r\n

Below is the perfected comparison.

\r\n\r\n
 
\r\n\r\n

1. Salary

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 192)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Salary Entry)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

Basic exemption slab

\r\n\t\t\t		\r\n\t\t\t

Basic exemption slab

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

As per slab

\r\n\t\t\t		\r\n\t\t\t

As per slab

\r\n\t\t\t
\r\n\t\t\t

Timing

\r\n\t\t\t		\r\n\t\t\t

At time of payment

\r\n\t\t\t		\r\n\t\t\t

Same

\r\n\t\t\t
\r\n\r\n

✔ No structural change except codification shift.

\r\n\r\n
 
\r\n\r\n

2. Interest on Securities

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 193)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 5)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹5,000 (listed securities – certain cases)

\r\n\t\t\t		\r\n\t\t\t

Same

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

Rates in Force

\r\n\t\t\t
\r\n\r\n

✔ “Rates in Force” concept introduced in place of fixed % in certain cases.

\r\n\r\n
 
\r\n\r\n

3. Dividend

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 1)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹5,000

\r\n\t\t\t		\r\n\t\t\t

₹10,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Threshold enhanced.

\r\n\r\n
 
\r\n\r\n

4. Interest (Other than Securities)

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194A)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold (General)

\r\n\t\t\t		\r\n\t\t\t

₹5,000

\r\n\t\t\t		\r\n\t\t\t

₹5,000

\r\n\t\t\t
\r\n\t\t\t

Bank / PO

\r\n\t\t\t		\r\n\t\t\t

₹40,000

\r\n\t\t\t		\r\n\t\t\t

₹40,000

\r\n\t\t\t
\r\n\t\t\t

Senior Citizens

\r\n\t\t\t		\r\n\t\t\t

₹50,000

\r\n\t\t\t		\r\n\t\t\t

₹50,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Threshold retained.

\r\n\r\n
 
\r\n\r\n

5. Contractor Payments

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194C)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Single Contract

\r\n\t\t\t		\r\n\t\t\t

₹30,000

\r\n\t\t\t		\r\n\t\t\t

₹30,000

\r\n\t\t\t
\r\n\t\t\t

Aggregate

\r\n\t\t\t		\r\n\t\t\t

₹1,00,000

\r\n\t\t\t		\r\n\t\t\t

₹1,00,000

\r\n\t\t\t
\r\n\t\t\t

Rate – Individual/HUF

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t
\r\n\t\t\t

Rate – Others

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\r\n

✔ No change except structural.

\r\n\r\n
 
\r\n\r\n

6. Commission / Brokerage

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194H)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹15,000

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\r\n

✔ Major rationalisation.

\r\n\r\n
 
\r\n\r\n

7. Professional / Technical Services

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194J)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹30,000

\r\n\t\t\t		\r\n\t\t\t

₹50,000

\r\n\t\t\t
\r\n\t\t\t

Rate – Technical

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\t\t\t

Rate – Professional

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\t\t\t

Director Fees

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Threshold increased.

\r\n\r\n
 
\r\n\r\n

8. Rent

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194I)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹2,40,000 (annual)

\r\n\t\t\t		\r\n\t\t\t

₹50,000 per month

\r\n\t\t\t
\r\n\t\t\t

Plant & Machinery

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\t\t\t

Land/Building

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Monthly alignment introduced.

\r\n\r\n
 
\r\n\r\n

9. Purchase of Immovable Property

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194IA)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

10. Purchase of Goods

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194Q)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 8(ii))

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t
\r\n\r\n

✔ TDS overrides TCS (Clause 394).

\r\n\r\n
 
\r\n\r\n

11. E-Commerce Operator

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194O)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 8(v))

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹5 Lakh (Individual/HUF)

\r\n\t\t\t		\r\n\t\t\t

₹5 Lakh

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

12. Virtual Digital Assets

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194S)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹10,000 / ₹50,000

\r\n\t\t\t		\r\n\t\t\t

Same

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

13. Benefits / Perquisites

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194R)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

14. Cash Withdrawal

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194N)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹1 Crore

\r\n\t\t\t		\r\n\t\t\t

₹1 Crore

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		 
\r\n\t\t\t

Non-filers

\r\n\t\t\t		\r\n\t\t\t

2% / 5%

\r\n\t\t\t		 
\r\n\r\n

✔ Retained.

\r\n\r\n
 
\r\n\r\n

15. Lottery / Online Gaming

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194B / 194BA)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹10,000

\r\n\t\t\t		\r\n\t\t\t

₹10,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

30%

\r\n\t\t\t		\r\n\t\t\t

30%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

16. Insurance Commission

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194D)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹15,000

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t
\r\n\r\n

✔ Threshold aligned.

\r\n\r\n
 
\r\n\r\n

17. Non-Resident Payments

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 195)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

No minimum

\r\n\t\t\t		\r\n\t\t\t

No minimum

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

Rates in Force

\r\n\t\t\t		\r\n\t\t\t

Rates in Force

\r\n\t\t\t
\r\n\r\n

✔ No structural change.

\r\n\r\n
 
\r\n\r\n

18. PAN Not Furnished

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Old Act (Sec 206AA)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 + Compliance Clause)

\r\n\t\t\t
\r\n\t\t\t

20% or applicable rate

\r\n\t\t\t		\r\n\t\t\t

20% or applicable rate

\r\n\t\t\t
\r\n\r\n
\r\n
\r\n\r\n

 Compliance Mechanics (Same in Substance)

\r\n\r\n\r\n\r\n
 
\r\n\r\n
 
\r\n\r\n

 

","created_at":"2026-02-20T15:34:35.956251+05:30","updated_at":"2026-02-21T14:41:02.219341+05:30","slug":"from-1961-to-2025-navigating-the-new-era-of-indian","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/thumbnail_final.png","keywords":"TDSComparison\r\nIncomeTax\r\nUpdates\r\nTDS\r\nBLOG","tags":[{"id":7,"name":"Updates"},{"id":5,"name":"Income Tax"},{"id":16,"name":"TDS"}],"catagory":[{"id":5,"name":"Updates"},{"id":6,"name":"Income Tax"}],"author":{"id":413,"name":"PRATHAM GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2025-10-15_at_11.21.49_AMedited.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"🚨 NFRA Penalizes Audit Firm & Engagement Partner for Gross Audit Lapses","summary":"NFRA penalized auditors for gross negligence, documentation failures, and SA non-compliance.","content":"

Order No. 019/2024 dated 05.07.2024

\r\n\r\n

National Financial Reporting Authority (NFRA), India’s independent regulator for auditing and accounting matters, issued Order No. 019/2024 on 5th July 2024 under Section 132(4) of the Companies Act, 2013, penalizing:

\r\n\r\n\r\n\r\n

for serious professional misconduct in the statutory audit of Vikas Proppant and Granite Limited for FY 2020-21.

\r\n\r\n

The action was initiated after information was received from Securities and Exchange Board of India (SEBI) highlighting accounting irregularities and audit failures.

\r\n\r\n

📌 Background of the Case

\r\n\r\n

NFRA’s investigation revealed that despite multiple red flags in the financial statements, the Engagement Partner issued an unmodified audit opinion.

\r\n\r\n

The regulator found widespread non-compliance with:

\r\n\r\n\r\n\r\n

NFRA categorized the failures across critical audit areas, reflecting gross negligence and lack of due diligence expected in audits of Public Interest Entities (PIEs).

\r\n\r\n

🔎 Key Audit Lapses Identified

\r\n\r\n

1️Failure in Audit Planning (SA 300 & SA 315)

\r\n\r\n\r\n\r\n

NFRA reiterated that absence of documentation equals absence of compliance.

\r\n\r\n

2️Failure to Verify Opening Balances (SA 510)

\r\n\r\n\r\n\r\n

The EP admitted that opening balances were not verified.

\r\n\r\n

3️Failure to Determine Materiality (SA 320)

\r\n\r\n\r\n\r\n

This reflects foundational audit failure.

\r\n\r\n

4️Non-Provisioning of Expected Credit Loss (Ind AS 109)

\r\n\r\n\r\n\r\n

Receivables were more than seven times annual sales.

\r\n\r\n

No ECL provisioning was made.
\r\nNo audit testing performed.
\r\nNo qualification in audit report.

\r\n\r\n

NFRA held that auditors cannot rely on management’s absence of policy to justify non-provisioning.

\r\n\r\n

5️Failure to Assess Going Concern (SA 570)

\r\n\r\n

Red flags included:

\r\n\r\n\r\n\r\n

Yet no going concern evaluation documentation existed.

\r\n\r\n

6️Improper Audit of Related Party Transactions (SA 550)

\r\n\r\n

Key alarming figures:

\r\n\r\n\r\n\r\n

Despite this:

\r\n\r\n\r\n\r\n

Yet the auditor certified compliance.

\r\n\r\n

7️Non-Charging of Depreciation (Ind AS 16 & 116)

\r\n\r\n\r\n\r\n

Ind AS 16 clearly states depreciation does not cease merely because an asset is idle.

\r\n\r\n

8️Failure to Assemble Audit File (SA 230 & SQC 1)

\r\n\r\n\r\n\r\n

Audit documentation is the backbone of defensible audit quality.

\r\n\r\n

9️⃣Critical Lapse: Failure to Obtain External Confirmations (SA 505)

\r\n\r\n

One of the most serious lapses noted was non-compliance with SA 505 – External Confirmations.

\r\n\r\n

The company had:

\r\n\r\n\r\n\r\n

However:

\r\n\r\n\r\n\r\n

NFRA clearly held that obtaining sufficient and appropriate audit evidence is the auditor’s responsibility, not management’s.

\r\n\r\n

💡 Practical Perspective: Leveraging Technology for SA 505 Compliance

\r\n\r\n

In today’s regulatory environment, manual balance confirmations create operational inefficiencies and documentation gaps.

\r\n\r\n

Digital confirmation platforms now enable:

\r\n\r\n\r\n\r\n

For example, tools like WrapTax Bulk Confirmation Tool help auditors comply with SA 505 effectively by digitizing and securing the confirmation process.

\r\n\r\n

🔗 You can explore the tool here:
\r\n👉 https://www.wraptax.com/bulkconfirmation

\r\n\r\n

Such technology solutions assist in:

\r\n\r\n\r\n\r\n

In light of NFRA’s strict stance, technology-backed confirmations are no longer optional — they are becoming a practical necessity.

\r\n\r\n

⚖️ Professional Misconduct Established

\r\n\r\n

NFRA held the Engagement Partner guilty under multiple clauses of the Chartered Accountants Act, 1949, including:

\r\n\r\n\r\n\r\n

The Audit Firm was also held liable for systemic failure in quality control mechanisms.

\r\n\r\n

💰 Penalty & Sanctions

\r\n\r\n

Under Section 132(4)(c) of the Companies Act, 2013:

\r\n\r\n

✔ Monetary Penalty

\r\n\r\n\r\n\r\n

✔ Debarment

\r\n\r\n\r\n\r\n

The order becomes effective 30 days from issuance.

\r\n\r\n

📊 Key Takeaways for Tax & Audit Professionals

\r\n\r\n

As professionals, this order reinforces critical principles:

\r\n\r\n

🔹 Documentation is Non-Negotiable

\r\n\r\n

Verbal explanations cannot replace audit evidence.

\r\n\r\n

🔹 Professional Skepticism is Mandatory

\r\n\r\n

Receivables disproportionate to sales demand investigation.

\r\n\r\n

🔹 Ind AS Compliance Must Be Independently Evaluated

\r\n\r\n

Idle assets still require depreciation.

\r\n\r\n

🔹 External Confirmations Must Be Obtained

\r\n\r\n

SA 505 compliance cannot be delegated to management.

\r\n\r\n

🔹 Quality Control is a Firm-Level Responsibility

\r\n\r\n

Firms must ensure robust engagement supervision and EQCR appointment.

\r\n\r\n

🏛 Final Thoughts

\r\n\r\n

This order by NFRA is a strong reminder that statutory audit is a public trust function, not a routine compliance activity.

\r\n\r\n

Failure to comply with Standards on Auditing, Ind AS, and statutory requirements will attract regulatory scrutiny and sanctions.

\r\n\r\n

For Chartered Accountants and audit firms, the message is clear:

\r\n\r\n

Audit quality, documentation, independence, and scepticism are not optional — they are the foundation of the profession.

","created_at":"2026-02-20T12:50:56.515139+05:30","updated_at":"2026-02-20T12:53:27.727621+05:30","slug":"nfra-penalizes-audit-firm-engagement-partner-for-g","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/22552cce-8acf-4ada-b749-2f7757cc1e05.png","keywords":"NFRA Order 019/2024\r\nAudit Negligence\r\nSA 505 External Confirmation\r\nInd AS Non-Compliance\r\nProfessional Misconduct Penalty","tags":[{"id":7,"name":"Updates"},{"id":5,"name":"Income Tax"},{"id":4,"name":"High Court"},{"id":8,"name":"SA505"},{"id":9,"name":"External Confirmation"},{"id":18,"name":"Accounts Receivable"},{"id":20,"name":"Accounts Payable"},{"id":25,"name":"CASE STUDY"}],"catagory":[{"id":2,"name":"Case Study"},{"id":5,"name":"Updates"},{"id":6,"name":"Income Tax"},{"id":7,"name":"SA505"},{"id":8,"name":"External Confirmation"}],"author":{"id":411,"name":"VASHU GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/4a469bc6-4bd0-43a2-86fb-aca525fa55d0.jpg","qualification":"CA Finalist","bio":"Finance & Taxation Enthusiast"}}]}