PRAVESH JAIN (EMPLOYEE) (144 Points)
02 March 2010Dear sir,
My client has taken distributorship of Airtel for mobile recharge voucher . Thus whether this sale of recharge voucher and topup card would be considered as sale for the purpose of Tax Audit. As he is intermeidary and acting on behalf of his Principle i.e. Airtel. Thus it is a principle agent relation and thus only the commission paid by airtel on sale of recharge voucher. And not Sale of recharge voucher considered for turnover for tax audit limit
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 02 March 2010
Hi namit, in such recharge vouchers.... They can't be considered as SALES TURNOVER...
Moreover, in few special cases they are considered, but ur seems the normal case.. So here it will not be applicable...
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 02 March 2010
Only commission income to be considered as turnover.
Poornima
(Search on.... for knowledge)
(129 Points)
Replied 02 March 2010
Dear Namit,
Agree with Dhiraj and Aditya, only commision is considered as income because
1.Mr. X is just distributing those vouchers on behalf of Airtel.
2.If those vouchers are not sold then Mr. X have to either return to Airtel or buy himself.
3. Mr.X cant change MRP of those vouchers.
Bimal Thacker
(Proprietor)
(762 Points)
Replied 02 March 2010
What if Mr X is not distributor and he is retailer selling to individual customer?
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 02 March 2010
Dear Mr. Bimal,
If Mr. X is not acting as a distributor and is acting as a retailer, then no commission is to be paid to Mr. X and the sale of voucher is to be included in the turnover of Mr. X.
Amir
(Learner)
(4016 Points)
Replied 02 March 2010
Dear Bimal Sir,
I was thinking on exactly same lines what u have just said.
In that case the Total amount will be included in turnover..
Poornima
(Search on.... for knowledge)
(129 Points)
Replied 02 March 2010
| Originally posted by : Vivek Angrish | ||
 |
Dear Mr. Bimal, If Mr. X is not acting as a distributor and is acting as a retailer, then no commission is to be paid to Mr. X and the sale of voucher is to be included in the turnover of Mr. X. |
 |
Bimal Thacker
(Proprietor)
(762 Points)
Replied 02 March 2010
Dear all
In case of recharge voucher sell in retails- selling margin of retailer is only 2 to 3 percent, If Mr. X is in retail business, Yearly turnover is only Rs. 5 lakhs i.e. income will be Rs. 10,000 to 15000 gross, whether section 44AF is applicable and showing profit less then 5 % whether tax audit is applicable?
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 02 March 2010
Dear Mr. Bimal,
Yes you have to get your accounts audited as you are showing profit of less than the 5% of the total turnover.
Definition of Eligible Business : Any businesss other than business of plying, hiring or leasing goods carriage. So your business falls in the category of Tax Audit.
One more thing this limit of 5% is going to enhance to 8% w.e.f A.Y 2011-12
ejaz naiyer
(C.A. FINAL)
(293 Points)
Replied 02 March 2010
In this case of voucher sale what will be the procedure for accounting.
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 02 March 2010
Mr. Bimal
Sec. 44AF is related to special provisions for computing profits and gains of retail business, in which it is clearly mentioned that the 5% of the total turnover or as the case may be, a sum higher than the aforesaid sum shall be deemed to be the profits and gains .
Clause (5) of sec. 44AF clearly states that an assesse may claim lower profits and gains if he keeps and maintain such books of account and other documents as required under sub section (2) of sec. 44AA and gets his accounts audited and furnishes a report of such audit as required under sec. 44AB
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 02 March 2010
Accrual basis of accounting will be there
Bimal Thacker
(Proprietor)
(762 Points)
Replied 02 March 2010
As asked by Namit Jain, so far as I under stood in this type of distributership, distributor has to pay first for recharge voucher or E topup voucher and selling to retailer by their bill, When in this case turn over is considered as commission then why not in case of retailer. Further retailer is also acting as a middle man between the company and customer as by selling voucher or transfering E topup the customer actually will get service from main company Airtel, Idea etc.
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 02 March 2010
Dear Mr. Bimal ,
In distributorship the ownership of the property is with the principle company, as in the case of retail the ownership of the property is transferred to the retailer and also in retail business when the ownership is transferred to the retailer, retailer will earn income from sale and the principle company has to do nothing with it.
CAclubindia
