13 May 2012
MY MANY CLIENTS GETS COMMISION UNDER SECTION 194 H...HOW MUCH EXPENSES I CAN CLAIM AGAINST SUCH EARNINGS...? WHTS D AUDIT LIMIT FOR SUCH COMMISION UNDER 194 H
13 May 2012
Commission Income is assessed under the head Business Income. It's not defined as profession under Section 44AA or U/s 194J. Limit of 60.00 lac will apply. . You may claim genuine expenses incurred and recorded by the assessee and according to the facts of the indivdual commission agent. A common rule can not be framed by us as the circumstances and facts of each such assessee differ substantially. . While debiting any expense-
Always keep image of an interrogating assessing officer in your mind. Like a good student, you must remain in a position to secure at least 70% marks, had the AO been the examiner. .
13 May 2012
1. Whether your client has regularly received cheques towards commission throughout the year ? . First Possible Reply - Yes. . The manner in which he has made withdrawals from his Bank A/c has to be observed. He might have not withdrawn sufficient amount for incurring expenditure. Sometimes Brokers keep on spending with their unaccounted cash receipts and keep intact the bank balances For debiting expenditure you must have supporting withdrawals from his bank a/c and enough cash in hand. . Second Possible Reply - No. He is getting commission only when his account is finalised by the payer or otherwise?? . Such a situation may arise when the deductor credits his bill on 31.03.2012 or makes provision for commission payable. . In such a situation, expenditure should not be debited by taking cash loans or likewise if the assessee is not having sufficient cash in hand. . To my view, in such kind of unorganised situations, not more than 30% of Income should be shown towards incidental business expenditure to purchase piece of mind (by leaving a bigger share of the TDS to the Govt). 70% of Income Satisfies the AO, generally. . All such percentage are further to be- clientwise -reviewed by you . .
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