Tax audit applicability incase of Transporters
This query is : Resolved
06 January 2022
Dear Sir,
One of my client is into Transport business of Freight and his Income tax return is filed as a proprietor. He is also registered under GST wherein his Sales is exempt from GST.
The total turnover of his business is Rs. 3.5 crore. I want to know is he be liable for tax audit U/s. 44AB for F.Y. 2020-21.
Please help me in this matter.
Regards,
Divyesh Jain
One of my client is into Transport business of Freight and his Income tax return is filed as a proprietor. He is also registered under GST wherein his Sales is exempt from GST.
The total turnover of his business is Rs. 3.5 crore. I want to know is he be liable for tax audit U/s. 44AB for F.Y. 2020-21.
Please help me in this matter.
Regards,
Divyesh Jain
06 January 2022
As such tax audit applicable.
If 95% receipts and payments through bank tax audit not applicable.
In case of owning not more than 10 trucks and opting for 44AE tax audit not applicable.
If 95% receipts and payments through bank tax audit not applicable.
In case of owning not more than 10 trucks and opting for 44AE tax audit not applicable.
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07 January 2022
The entire transactions are through bank but there is a difference in Sales coming as per Bank and sales as per GST return filed.
This is due to the cash system followed by the proprietor in Income tax but as per GST billing system is followed. Hence the difference of Rs. 15 lacs.
If the amount Rs. 15 lacs is added to the sales (Freight received) to match it with the GST return it will lead to income which will become more than 5% of the total income earned leading to Tax audit applicable.
Is it correct to add income in cash to match it with GST return sales. Entire Sales income is exempt from GST as it is Transport income.
Please help me in this matter.
Regards,
Divyesh Jain
This is due to the cash system followed by the proprietor in Income tax but as per GST billing system is followed. Hence the difference of Rs. 15 lacs.
If the amount Rs. 15 lacs is added to the sales (Freight received) to match it with the GST return it will lead to income which will become more than 5% of the total income earned leading to Tax audit applicable.
Is it correct to add income in cash to match it with GST return sales. Entire Sales income is exempt from GST as it is Transport income.
Please help me in this matter.
Regards,
Divyesh Jain
07 January 2022
You cannot follow two method of accounting for one business. Its better to file the return as per GST returns and follow the accrual system
07 January 2022
Tax audit not applicable in such a case.
The condition is cash receipts and cash payments during the year do not exceed 5% of total receipts/payments.
The condition is cash receipts and cash payments during the year do not exceed 5% of total receipts/payments.
07 January 2022
Do I need to prepare a reconciliation of Sales as per Income tax and Sales as per GST showing the difference in Sales.
Is it allowed to follow 2 methods of accounting i.e. Income tax as cash basis and GST as accrual basis
Is it allowed to follow 2 methods of accounting i.e. Income tax as cash basis and GST as accrual basis
07 January 2022
Report sales as per GST return. Other wise you will receive query from income tax.
The condition is cash receipt and payment should not exceed 5%. Do declare sale as per GST return.
The condition is cash receipt and payment should not exceed 5%. Do declare sale as per GST return.
07 January 2022
Ok, Thanks for your reply
07 January 2022
You are welcome.........
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