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Audit of Tax, Cess Receipt Session Title. Training Module on Audit of ULBs Session 62 Session Overview In this session we will discuss  tax and cess.

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Presentation on theme: "Audit of Tax, Cess Receipt Session Title. Training Module on Audit of ULBs Session 62 Session Overview In this session we will discuss  tax and cess."— Presentation transcript:

1 Audit of Tax, Cess Receipt Session Title

2 Training Module on Audit of ULBs Session 62 Session Overview In this session we will discuss  tax and cess collection procedure, and  audit points thereon.

3 Training Module on Audit of ULBs Session 63 Learning Objective The necessary information will enable the participants,  to acquire basic concepts of power to impose tax,  to understand procedure for collection of taxes, and  accounting system of property and other taxes along with Cess.

4 Training Module on Audit of ULBs Session 64 Taxation: Power to impose Municipal Taxation This is to be adopted as per State specific scenario The Board of Councillors of a municipality shall have the power to levy the following taxes: property tax on lands and buildings, tax on advertisements, other than published in the newspapers, tax on cart, tax on carriage, on ferries and bridges.

5 Training Module on Audit of ULBs Session 65 Power to impose Municipal Taxation The Board of Councillors may levy –a fee per head or per vehicle for providing municipal services in connection with any congregation like pilgrimage, fair etc. within a municipal area.

6 Training Module on Audit of ULBs Session 66 The Board of Councillors may frame –regulations for the rate of levy, and –the mode of collection. Power to impose Municipal Taxation

7 Training Module on Audit of ULBs Session 67 Board of Councillors may also – levy fee for licenses issued or permissions granted under the provisions of the relevant Act, and –impose charges for any specific services. The St. Govt. may prescribe –the scale at which such fees may be levied or charges imposed. Power to impose Municipal Taxation

8 Training Module on Audit of ULBs Session 68 Property tax on lands and buildings Property Tax –main source of income of most ULBs. –levied on residential and commercial properties, and –collected from the citizens and organisations.

9 Training Module on Audit of ULBs Session 69 Property tax on lands and buildings In Government undertakings, property tax is –received directly from undertakings, or –from the State or Central Government.

10 Training Module on Audit of ULBs Session 610 Property tax on lands and buildings It may be comprised of the following: –General Tax –Water Tax –Conservancy Tax or Sewerage Tax –Development Cess, and

11 Training Module on Audit of ULBs Session 611 Property tax on lands and buildings –Tax on Vehicles, Boats and Animals –Dog Tax –Fire Cess –Any other taxes

12 Training Module on Audit of ULBs Session 612 Property tax on lands and buildings The Property Tax Department may also collect –Property Transfer Charges –Notice Fee, Warrant Fee, Other Fees, –interest and penalties charged for delays, and –defaults made by the taxpayers.

13 Training Module on Audit of ULBs Session 613 Property tax on lands and buildings A property tax, imposed by the Municipality shall be calculated as follows: –Where the annual value of land and buildings does not exceed Rs.999/-, the property tax shall be determined in accordance with the formula shown in the next slide.

14 Training Module on Audit of ULBs Session 614 Annual value [% of the annual value] Property tax on lands and buildings

15 Training Module on Audit of ULBs Session 615 Where the annual value of lands and buildings exceeds Rs.999/-, tax shall be determined in accordance with the formula shown below: Annual value [% of the annual value] ,000 Property tax on lands and buildings

16 Training Module on Audit of ULBs Session 616 Provided that –property tax shall not exceed 40% of the annual value of lands and buildings, and –in calculating the percentage of property tax, the decimal figure below 0.5 shall be ignored and 0.50 or above shall be rounded off to Property tax on lands and buildings

17 Training Module on Audit of ULBs Session 617 State Government may revise this formula, and no such revision shall be made more than once in five years. Property tax on lands and buildings

18 Training Module on Audit of ULBs Session 618 Levy of Surcharge Surcharge shall be levied –on commercial, industrial or other holdings; –at a rate not less than 20% and not exceeding 50% of the total amount of the property tax; Rate of surcharge shall form part of property tax for the purpose of recovery.

19 Training Module on Audit of ULBs Session 619 Where a holding is used by the owner exclusively for his own residential purposes – a rebate, not exceeding 20% of the property tax may be allowed by the Board of Councillors. Levy of Surcharge

20 Training Module on Audit of ULBs Session 620 Exemption of Central Government Property Lands and Buildings of the Union government shall be exempted from the property tax. –Provided that the Board of Councillors may levy a service charge on the annual value of such buildings at such rate as may be determined by the Central Government from time to time.

21 Training Module on Audit of ULBs Session 621 Power to reduce rates The Board of Councillors may – reduce levy of property tax on any holding, and –such reduction or remission shall have effect for one year.

22 Training Module on Audit of ULBs Session 622 Determination of Annual Valuation The annual value of a land or building shall –be the gross annual rent including service charge, less an allowance of 10% for the cost of repairs and other expenses necessary to maintain such land or building.

23 Training Module on Audit of ULBs Session 623 Determination of Annual Valuation The annual value of a vacant land shall –be an amount equal to, but may not exceed, 5% of the estimated market value of such land at the time of assessment.

24 Training Module on Audit of ULBs Session 624 Determination of Annual Valuation If the gross annual rent of any holding can not be easily estimated – the annual value shall be an amount  not less than 5%  but not exceeding 10%, of the value of the holding --by adding the estimated cost of erecting the building at the time of assessment  less an amount to be deducted on account of depreciation to the estimated present market value of the holding.

25 Training Module on Audit of ULBs Session 625 The annual value as determined shall be –rounded off to the nearest ten rupees. Determination of Annual Valuation

26 Training Module on Audit of ULBs Session 626 Periodic Assessment The annual value of a land or building, which has been determined before, shall –remain in force until a fresh valuation list is enforced.

27 Training Module on Audit of ULBs Session 627 Periodic Assessment The Chairman-in-Council shall –review valuation of all holdings at periodic intervals, and –ensure that there is a revision of annual valuation of all holdings at the termination of successive period of six years.

28 Training Module on Audit of ULBs Session 628 Collection of Taxes The Executive Officer, or the Finance Officer, or the Secretary, or the Tax Collector, –shall collect the taxes.

29 Training Module on Audit of ULBs Session 629 Collection of Taxes Chairman-in-Council may divide the municipality into collecting circles as decided. Each circle shall be numbered and a Collecting Sarkar shall be appointed for each circle.

30 Training Module on Audit of ULBs Session 630 Whenever property tax, surcharge, rents or other dues are not received in the municipal office the Chairman-in-Council shall arrange –for the verification of the receipts granted to the tax payers with the duplicate copies filed in the office, and –for the enquiry in all the cases in which taxes have been outstanding. Collection of Taxes

31 Training Module on Audit of ULBs Session 631 Assessment Register and Demand & Collection Register Separate Assessment Register and Demand & Collection Register for each circle shall be maintained. Assessment Register shall be maintained in the prescribed form and there should be separate volume for each collecting circle.

32 Training Module on Audit of ULBs Session 632 Assessment Register and Demand & Collection Register All charges shall be entered in an Assessment Register from which the Demand & Collection Register shall be posted. The bills shall be prepared from the Demand & Collection Register. The details of the totals on completion shall be compared with the entries in Assessment Register for the quarter.

33 Training Module on Audit of ULBs Session 633 Maintenance of Assessment and collection of records The Assessor shall –keep the Assessment Register, and the Collection Department shall deal with collections, remission etc. and post them in the Demand & Collection Register.

34 Training Module on Audit of ULBs Session 634 Maintenance of Assessment and collection of records The Collecting Sarkar shall not be allowed to have access to the Assessment Register and Demand & Collection Register. The Finance Officer or in his absence an officer authorized by Chairman shall in every case check the remission.

35 Training Module on Audit of ULBs Session 635 Verification as to correctness of quarterly demand The annual value and quarterly demands showed in the Assessment Register and abstract of demand and collection shall be –totalled at least a month before the beginning of the first quarter of the year.

36 Training Module on Audit of ULBs Session 636 Verification as to correctness of quarterly demand When the total has been struck, the executive officer or any other officer authorized by Chairman shall –carefully check the entries and –sign the register.

37 Training Module on Audit of ULBs Session 637 Verification as to correctness of quarterly demand The Assessor shall be responsible for seeing that –it is correctly prepared and –all alterations made therein are attested by the proper authority.

38 Training Module on Audit of ULBs Session 638 Verification as to correctness of quarterly demand The Executive Officer or any such officer authorised by Chairman shall check that –the Assessment Register and Demand & Collection Register are free from erasing; – no alterations are made in then except under the initials of the Executive Officer or any officer authorised in this behalf.

39 Training Module on Audit of ULBs Session 639 Receipt Forms When the tax is paid, –the Tax Collector or the Collecting Sarkar shall grant a receipt in prescribed form. The tax receipt form shall be –numbered consecutively for the year and –bound up in books of 100 duplicate forms each.

40 Training Module on Audit of ULBs Session 640 All the unused tax receipts forms/books shall be – kept under personal custody of the Chairman or –any Council member nominated by the Chairman in this behalf. A register of the Tax Receipts forms/books shall be maintained by the Chairman-in-Council. Receipt Forms

41 Training Module on Audit of ULBs Session 641 Register of Daily Collection of Taxes The Collecting Sarkar shall maintain –a register of daily collection with counterfoils in both ends, and –a separate Challan Book for cash collections and collection by cheques. The particulars in the counter foils shall also be furnished by him.

42 Training Module on Audit of ULBs Session 642 The Tax Collector shall –maintain a Hand Book showing the monthly circle-wise collection position. –prepare annual statement of month-wise collection position of all the circles from the challans, registers. Register of Daily Collection of Taxes

43 Training Module on Audit of ULBs Session 643 Collection of Taxes As soon as the Tax is paid the collector shall – fill in the printed receipt and –make over the original receipt to the tax-payer and –simultaneously note the fact with date in the duplicate of the bill.

44 Training Module on Audit of ULBs Session 644 Collection of Taxes The Collecting Sarkar shall deliver to the cashier –all the moneys he has collected together with the Daily Collection Register and –the Receipt Book in his possession after all the entries are verified by the Tax Collector.

45 Training Module on Audit of ULBs Session 645 Collection of Taxes The Tax Collector shall check the account –by comparing the credits with the duplicate of receipts. After completion of necessary checks by the Cashier, the Collecting Sarkar then –handover the Challan to the tax collector for necessary posting in the Demand and Collection Register

46 Training Module on Audit of ULBs Session 646 Collection of Taxes The Accountant shall –verify total collections of any month as per his Cash Book –with the cumulative total of collections as worked out by the Collecting Sarkar by the Challans for the last working day of the month, and –put his signature accordingly. Any discrepancy shall be reconciled immediately.

47 Training Module on Audit of ULBs Session 647 Collection of Taxes Every item of collection, remission or rebate shall –be posted daily in the demand and collection register from the Collecting Sarkar’s daily collection, Challans or from the other relevant documents. Collecting Sarkar is not allowed to have access to the Demand and Collection Register.

48 Training Module on Audit of ULBs Session 648 Miscellaneous Revenue When the collection of revenue is leased for fixed amount the recovery shall be watched through Demand and Collection Register. Few such sources are –Market Rent, –Ferry Rent, –Fishery Rent, –Holiday-home Rent, –Town-hall Rent etc.

49 Training Module on Audit of ULBs Session 649 Miscellaneous Revenue A separate page or sets of pages of the register shall be set apart for each of the above kinds of revenue for which there is fixed monthly, quarterly, half-yearly or annual demand.

50 Training Module on Audit of ULBs Session 650 Miscellaneous Revenue The Accountant shall fill up the current year’s register in respect of the arrear demands from the previous register and lay before the executive officer for his initials.

51 Training Module on Audit of ULBs Session 651 Miscellaneous Revenue Payments made in satisfaction of the demand shall be posted by the Accountant from –the daily collection, –Challan or –the Cashier’s Cash Book

52 Training Module on Audit of ULBs Session 652 Miscellaneous Revenue When collection of revenue is managed departmentally instead of being leased out to lessees, it shall be collected by means of bilingual tickets in prescribed form.

53 Training Module on Audit of ULBs Session 653 Miscellaneous Revenue The tickets shall be obtained by the Board of Councillors from some press outside the municipality and shall be of different colours for different values. Before issue to the collecting staff, the tickets shall be stamped with the seal of the Board of Councillors.

54 Training Module on Audit of ULBs Session 654 Miscellaneous Revenue The stock account of their receipts, issues and balance shall be –kept by the Head Clerk in prescribed form and the tax collector shall give his receipt in the proper column for tickets made over to him periodically.

55 Training Module on Audit of ULBs Session 655 Miscellaneous Revenue The number of tickets issued to the Sarkar by the Tax Collector shall be – counted and entered by him in the Sarkar’s Debit and Credit Account of tickets.

56 Training Module on Audit of ULBs Session 656 Miscellaneous Revenue The Accountant shall –check this account when verifying the Cash Book and the Executive Officer shall check it fortnightly like other subsidiary registers.

57 Training Module on Audit of ULBs Session 657 Miscellaneous Revenue At the end of the day the Sarkar shall bring his collection money and the balance of tickets in hand to the Municipal Office and make them over to the Cashier; Cashier shall check the cash and the balance of tickets in hand with the Sarkar’s Debit and Credit Account of Tickets.

58 Training Module on Audit of ULBs Session 658 Miscellaneous Demands Miscellaneous Demands Register shall be maintained and the entries in the respective columns of the register should be posted after the bills are signed and payments are made. The money shall then be credited into the Cashier’s Cash Book.

59 Training Module on Audit of ULBs Session 659 Accounting system for property and other taxes Now we will discuss –the recommended accounting system for Property and Other Taxes related transactions as prescribed by Ministry of Urban Development, Government of India in National Municipal Accounts Manual.

60 Training Module on Audit of ULBs Session 660 Procedure of accounting of records Tax Bill A Summary Statement of Bills raised shall be prepared ward-wise and tax-head-wise, in prescribed form on monthly basis within 7 days from the end of the previous month.

61 Training Module on Audit of ULBs Session 661 Procedure of accounting of records The postings in the Ledger Account of “Receivables for Property Tax” Account and Revenue accounts shall be carried out as per ‘General Accounting Procedures’. The postings in the Ledger Accounts shall be similarly carried out in respect of all other accounting entries. Whenever, the cash or the bank account is involved, there will be no entry in the Journal Book.

62 Training Module on Audit of ULBs Session 662 Procedure of accounting of records It is a normal practice for the ULB to include the arrears of the tax dues while issuing the fresh demand. Entries in respect of the arrears would have already been recorded in the earlier years..

63 Training Module on Audit of ULBs Session 663 Procedure of accounting of records Cesses/Levies collected on behalf of State Government together with property tax demand shall be reckoned and credited to control account, “State Govt. Cesses / levies in Property Taxes - Control account”. However the liability to the State Government arises only upon collection. The treatment of this is discussed subsequently.

64 Training Module on Audit of ULBs Session 664 Procedure of accounting of records In case of new assessments, demand may be raised for a period earlier to the financial year in which the assessment is made. In such case the demand should be split –according to the period to which it relates and –income related to earlier period be accounted as Prior period Income.

65 Training Module on Audit of ULBs Session 665 Procedure of accounting of records Any demand raised earlier may undergo changes by court order / by the order of Commissioner / by any other competent authority. This may either lead to increase or decrease in demand amount.

66 Training Module on Audit of ULBs Session 666 Procedure of accounting of records A summary statement of all changes in Demand Raised shall be prepared in prescribed Form on monthly basis within 7 days from the end of the previous month. This forms the base for accounting.

67 Training Module on Audit of ULBs Session 667 Procedure of accounting of records In case the revised demand is more than what was recorded earlier, then, the entry to be passed is same as accounting of existing demand. In case the revised demand is less than what was recorded earlier, the entry passed earlier has to be reversed for the difference.

68 Training Module on Audit of ULBs Session 668 Procedure of accounting of records The reversal shall be reflected in the current year revenue in case the revision in demand relates to the current year; In any other case the reversal shall be accounted as prior period expenses. The remission / refund amount shall be adjusted against Receivables if the demand is outstanding.

69 Training Module on Audit of ULBs Session 669 Procedure of accounting of records If the demand is already paid –it will either be taken as credit and adjusted against future payments or –will be paid to the tax payee as refund depending on the governing principle of the ULB.

70 Training Module on Audit of ULBs Session 670 The amount of refunds/remissions shall be credited to the account ‘Advance Collection of Revenues’ with proper account code when it is to be adjusted against future payments. If it is to be refunded then it shall be credited to the Refunds payable account. Procedure of accounting of records

71 Training Module on Audit of ULBs Session 671 Collection of Taxes Based on Summary of Daily Collection received from the various Collecting Offices / Centres, the Accounts Department shall pass the following entry: Code of Account Accounting Entry Dr./ Cr. Debit Amt. (Rs.) Illustrative figures Credit Amt. (Rs.) Illustrative figures Books to be entered into (a) (a) Bank Account* To Receivables Control Accounts- Property Taxes Dr. Cr. 5,10,000 Cash Book, Ledger * name of the Bank and account number (a) Insert Detailed Head Codes of Account as applicable

72 Training Module on Audit of ULBs Session 672 Collection of Taxes The total amount collected should be credited to “Receivables Control Accounts - Property Taxes” Account. The collection made shall be segregated into year wise, head wise collection on a monthly basis.

73 Training Module on Audit of ULBs Session 673 Collection of Taxes A Summary Statement of Year-wise/ Head- wise Collection of Property & Other Taxes in prescribed form on a monthly basis shall –be prepared and sent to the Accounts Department to record the details of collection. Interest shall be recognised as income only on collection.

74 Training Module on Audit of ULBs Session 674 Collection of Taxes To record the break-up of collections into year-wise recovery, tax received in advance and to record the interest income the Accounts Department shall pass the following entry: Code of Account Accounting Entry Dr./ Cr. Debit Amt. (Rs.) Illustrative figures Credit Amt. (Rs.) Illustrative figures Books to be entered into (a) (a) (a) (a) (a) Receivables Control Accounts -Property Taxes To Receivables for Property Taxes (Yr.) To Advance Collection of Revenues – Property Taxes* To Other Interests – Receivables To Penalties and Fines Dr. Cr. 5,10,000 4,40,000 55,000 11,000 1,000 3,000 Journal Book, Ledger (a) Detailed Head Codes of Account as applicable

75 Training Module on Audit of ULBs Session 675 Transfer of amount outstanding in respect of arrears from specific year account to general account The arrears of Property and Other Taxes shall be carried forward year-wise, up to five years. On completion of the 5th year, the amount outstanding in the specific year-wise receivable account shall be transferred to a general arrears account. An example is given in next slide.

76 Training Module on Audit of ULBs Session 676 Transfer of amount outstanding in respect of arrears from specific year account to general account - an example the tax receivable in respect of the demand raised during the accounting year shall be carried forward in “Receivables for Property Taxes (1999)” Account up to the year ending March 31, On March 31, 2004, the balance outstanding in this account shall be transferred to “Receivables for Property Taxes (Others)” Account.

77 Training Module on Audit of ULBs Session 677 Internal controls on property & other taxes The Tax Department shall ensure –Bills / Demands are raised on a quarterly/half yearly basis for Property and Other Taxes.

78 Training Module on Audit of ULBs Session 678 Internal controls on property & other taxes The Head of the Accounts Department shall ensure that –taxes are accrued in the month in which it is due and –journalisation of all the demands/bills raised for property & other taxes before accounting for the collection.

79 Training Module on Audit of ULBs Session 679 Internal controls on property & other taxes The Hd. of the Accounts Deptt. and the Hd. of the Tax Deptt. shall reconcile –the balance at the beginning of the accounting year in respect of the year-wise Property and Other Tax Receivables (as appearing in the Balance Sheet of the previous year) –with the year-wise total of the arrears recorded in the Demand Register.

80 Training Module on Audit of ULBs Session 680 CESS Cess is –the tax levied along with any other tax or –in lieu of tax and is considered income of the ULB –normally collected by self-declaration made in the returns filed under the relevant provisions..

81 Training Module on Audit of ULBs Session 681 CESS Every person (individual/entity) who is liable to pay Cess –gets registered with the Cess Department. The registered individual/entity voluntarily assesses –their Cess liability and pays the same to the ULB at specified periodic intervals.

82 Training Module on Audit of ULBs Session 682 CESS The Cess Deptt. undertakes an assessment of the returns filed to determine the actual Cess liability. Additional demand is raised for Cess, interest and penalties if the Cess paid voluntarily is less than the assessed Cess liability. In case the Cess paid is more than the assessed Cess liability, the excess Cess collected is refunded.

83 Training Module on Audit of ULBs Session 683 CESS In addition to Cess, following may be collected by the Cess Department: –Cess Registration Fee at the prescribed rates from the dealers applying for registration. –Penalties and/or interest in the event of evasion and for delays and defaults made by the dealers.

84 Training Module on Audit of ULBs Session 684 Cess Collection on Registration and filing of returns Based on Summary of Daily Collection in prescribed form received from the various Collecting Offices / Centres, the Accounts Deptt. shall pass the following entry: Code of Account Accounting Entry Dr./ Cr. Debit Amt. (Rs.) Illustrative figures Credit Amt. (Rs.) Illustrative figures Books to be entered into (a) (a) Bank Account* To Cess –Gross Income Dr. Cr. 9,00,000 Cash Book, Ledger *name of the Bank and Account number (a) Insert Detailed Head Codes of Account as applicable

85 Training Module on Audit of ULBs Session 685 Cess Collection on Registration and filing of returns The summary of daily collections does not provide –the details in respect of the year-wise head-wise collections made in respect of Cess. Hence, the total amount collected should be credited to “Gross Cess Income” Account;

86 Training Module on Audit of ULBs Session 686 Cess Collection on Registration and filing of returns The Cess deptt. updates –the Head wise & year wise collection register maintained in prescribed form for collection based on the collection statement received from collection centres along with bills if any.

87 Training Module on Audit of ULBs Session 687 Cess Collection on Registration and filing of returns A Summary Statement of Year-wise/ Head- wise Collection of Cess in prescribed form shall be prepared on a monthly basis and sent to the Accounts Department to record the details of collection.

88 Training Module on Audit of ULBs Session 688 Cess Collection on Registration and filing of returns To record the head-wise break-up of the collections made and to record cess received in advance –the Accounts Deptt. shall pass the entry shown in the next slide

89 Training Module on Audit of ULBs Session 689 Cess Collection on Registration and filing of returns Code of Account Accounting Entry Dr./ Cr. Debit Amt. (Rs.) Illustrative figures Credit Amt. (Rs.) Illustrative figures Books to be entered into (a) (a) (a) (a) Cess - Gross Income To Empanelment Registration Charges – Cess To Cess - Net Income To Advance Collection of Revenues- Cess* Dr. Cr. 9,00,000 45,000 8,50,000 5,000 Journal Book, Ledger (a) Detailed Head Codes of Account

90 Training Module on Audit of ULBs Session 690 Write-offs In case of write-off of any Cess Income dues – the details of the write off has to be entered in the ‘Statement of Write off’ by the respective deptt. in prescribed form; This form has to be prepared on a monthly basis and forwarded to the Accounts Deptt. and based on which, the write off shall be adjusted against the provision made.

91 Training Module on Audit of ULBs Session 691 Transfer of amount outstanding in respect of arrears from specific year account to general account The arrears of Cess shall be carried forward year-wise, i.e., in “Receivables of Cess Income (Yr.)” Account up to 3 years.

92 Training Module on Audit of ULBs Session 692 Transfer of amount outstanding in respect of arrears from specific year account to general account On completion of the 3rd year –the amount outstanding in the specific year-wise receivable account shall be transferred to a general arrears account, i.e. “Receivables of Cess Income (Others)” Account. An example is given in next slide:

93 Training Module on Audit of ULBs Session 693 The cess receivable in respect of the demand raised during the accounting year shall be carried forward in “Receivables of Cess Income (2001)” Account up to the year ending March 31, On March 31, 2004, the balance outstanding in this account shall be transferred to “Receivables of Cess Income (Others)” Account. Transfer of amount outstanding in respect of arrears from specific year account to general account- An Example

94 Training Module on Audit of ULBs Session 694 Internal controls The Hd. of the Accounts Deptt. and the Hd. of the Cess Deptt. shall reconcile –the balance at the beginning of the accounting year in respect of the year-wise Cess Receivable (as appearing in the Balance Sheet of the previous year) –with the year-wise total of the arrears recorded by the Cess Deptt.

95 Training Module on Audit of ULBs Session 695 Internal controls A quarterly reconciliation shall be carried out by the Hd. of the Accounts Deptt. and the Hd. of the Cess Deptt. –in respect of the amount collected and the year- wise amount outstanding between the balances standing in the relevant Ledger Accounts maintained in the Accounts Deptt., and –the records/registers maintained in the Cess Deptt.

96 Training Module on Audit of ULBs Session 696 Internal controls The officers designated by the municipality/corporation for operating the Designated Cess Bank Account shall –co-ordinate with the banks on a daily basis, and –ascertain the status of the cheques/drafts deposited by them.

97 Training Module on Audit of ULBs Session 697 Internal controls The Hd. of the Cess Deptt. Shall- –annually co-ordinate with the department handling the Shop and Establishment registrations –ascertain that the dealers who have been granted new registrations are liable to Cess have registered with the Cess Department.

98 Training Module on Audit of ULBs Session 698 Internal controls The Cess Deptt. shall ensure that the Receipt / Summary of Daily Collection prepared, provides reference to the Cess Collection Register; The Chief Executive Officer/Head of the municipality/municipal corporation shall specify such appropriate calendar of returns /reports for monitoring.

99 Training Module on Audit of ULBs Session 699 Internal controls All Reconciliation Statements shall be certified by the Head of the Accounts Department.

100 Training Module on Audit of ULBs Session 6100 Presentation in the financial statements The various heads of account used for the accounting of Cess related transactions shall be reflected in the Financial Statements or –in the Schedules attached to the Financial Statements; All such Financial Statements and schedules should be –affixed with signature and seal of designated authorities.

101 Training Module on Audit of ULBs Session 6101 Presentation in the financial statements The provision against the outstanding Cess Income receivable is to be –disclosed under the major head ‘Accumulated Provisions’ as a separate line item in the Balance Sheet below ‘Sundry Debtors’.

102 Training Module on Audit of ULBs Session 6102 Audit Points Could the auditor ensure that –the levy, assessment and collection of taxes were made as per prescribed rules and bye-laws? –the Board of Councillors actually framed regulations specifying the occasions for imposition of levy, rate of levy and mode of collection? –the arithmetical accuracy of the computation of the Property Tax?

103 Training Module on Audit of ULBs Session 6103 Audit Points Did the Board of Councillors impose any charges for any specific services rendered in pursuance of concerned Act? Did the State Government prescribe the scale for levy of fees or imposition of charges?

104 Training Module on Audit of ULBs Session 6104 Audit Points Was the Property Tax imposed on the annual value of the lands and buildings? Was the computation of the Property Tax in accordance with the prescribed norms?

105 Training Module on Audit of ULBs Session 6105 Audit Points Was there any case where the Property Tax imposed exceeded 40% of the annual value of the lands and buildings? Was revision of the Property Tax made more than once in five years?

106 Training Module on Audit of ULBs Session 6106 Audit Points Was there any case –of non-levy of surcharge on Property Tax in case such holding was used wholly or in part for commercial, industrial or such other non- residential purposes? –where the amount of surcharge was less than 20% or more than 50% of the total amount of the Property Tax?

107 Training Module on Audit of ULBs Session 6107 Audit Points Was the rebate allowed on holdings used exclusively for residential purposes exceeded 20% of the Property Tax? Did the Board of Councillors levy a service charge on the buildings owned by the Central Government? Was there any case where reduction or remission of Property Tax was allowed more than once in a year?

108 Training Module on Audit of ULBs Session 6108 Audit Points Could the auditor ensure that the valuation of all municipal holdings was reviewed at the termination of each successive period of six years? Was the duty for collection of taxes performed by the authorized personnel under the written order of the Chairman?

109 Training Module on Audit of ULBs Session 6109 Audit Points Were separate Assessment Register and Demand and Collection Register maintained for each circle in the prescribed form? Were the details of the totals on completion compared with the entries in the Assessment Register for a quarter?

110 Training Module on Audit of ULBs Session 6110 Audit Points Was the Collecting Sarkar ever allowed access to the Assessment Register and Demand and Collection Register? Were the columns showing the annual value and quarterly demands in the Assessment Register and abstract of demand and collection totalled at least once in a month?

111 Training Module on Audit of ULBs Session 6111 Audit Points Did the Executive Officer or any other officer authorized by the Chairman/Mayor carefully check the entries after the total had been struck and sign the register in token of having made the check? Could the auditor ensure that all the alterations made in the Assessment Register were attested by the appropriate authority?

112 Training Module on Audit of ULBs Session 6112 Audit Points Could the auditor ensure that all the unused tax receipt forms/books were kept under the personal custody of the Chairman/mayor or a member of the Council nominated by the Chairman/Mayor? Was the Register of the Tax Receipt forms/books maintained by the Chairman/Mayor-in-Council?

113 Training Module on Audit of ULBs Session 6113 Audit Points Did the Tax Collector maintain a Hand Book showing therein the circle-wise collection position of each month? Could the auditor reconcile the position shown in the annual statement of month-wise collection with the position shown in the Hand Book?

114 Training Module on Audit of ULBs Session 6114 Audit Points Could the auditor ensure (on a detailed check of the position for a fixed period) that –the Collecting Sarkar delivered every day to the Cashier all the moneys collected together with the Daily Collection Register and the Receipt Book and the same was properly verified?

115 Training Module on Audit of ULBs Session 6115 Audit Points Could the auditor trace the postings of the Daily Collection register from those of the Cash Book and the counterfoil of the Challan? Did the Tax Collector make necessary postings in the Demand and Collection Register from the Challan handed over to him by the Collecting Sarkar?

116 Training Module on Audit of ULBs Session 6116 Audit Points Was the Collecting Sarkar given access to the Demand and Collection Register? If so, the same should be pointed out. Did the Accountant verify total collections of every month as per his Cash Book with the cumulative total of collections as worked out by the Collecting Sarkar and put his signature accordingly?

117 Training Module on Audit of ULBs Session 6117 Audit Points Did the municipality/corporation take steps to follow the National Accounting System as recommended by the Ministry of Urban Development, Government of India? If not, the reasons therefore should be analysed and audit observations furnished.

118 Training Module on Audit of ULBs Session 6118 Audit Points Could the auditor ensure that –in case of a demand (new assessment) raised for a period earlier to the financial year in which assessment is made, –the demand was split in the Accounts Office according to the period to which it related to earlier period and the same was accounted as “Prior Period Income”? The End


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