GP margin

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2010 Sales of a proprietory concern has increased from 35 lakh to 65 lakh and corresponding Gp margin has declined from 6.4% to 4.4%.Assessee is wholesaler in cloth.Whether decline in GP margin is justified?

Also tell whether significant accounting policies form part of audit report u/s 44AB

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
Follow

27 September 2010 It is justified if:

1. There is a reduction is selling price (to gain more sales), sales mix has changed with lower GP items voluming more high GP items, discount given to gather sales, etc.

2. Cost of input has gone up which is not shifted to the customer, or higher cost items are sold more than lower cost items.