Sec 44 ad - commission

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2014 Dear sir

My question is;

1. Whether Indent commission & Consignment agent commission to be added to gross receipts while calculating turnover u/s 44AD so that 8% profit can be applied ?

i.e. Is commission covered u/s 44 AD ?

2. If not, then how to separate the expenses incurred for commission earned.
As there are not separate books of accounts are maintained.
Common office overhead are being incurred for all business carried out.

3. Does tax audit applies in case of commission income ?

Kindly advise.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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16 July 2014 1. No commission is not covered under 44AD.

2. you need to follow 44AA/44AB for maintaining books and audit respectively.

3. classification of expenses is to be based on matching principle. you need to maintain books for commission income.

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2014 Thanks for your prompt feedback.

Then what are the limits to apply for tax audit in case of only commission income ?

Under what circumstances the tax audit has to be carried out only in case of commission income ?

Does tax audit apply in following cases;
1. Commission income Rs. 1.25 crs
2. Commission income Rs. 50 lacs

Clearly, sec 44 AD limits does not apply as this section is irrelevant.

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CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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16 July 2014 commission income is not covered under sec 44AD OR UNDER SEC 44AA. HENCE NORMAL LIMIT OF 1 CR WILL APPLY FOR TAX AUDIT