Shashi Bhushan (Learner, Jalandhar) (996 Points)
04 October 2011Please friends let me know what will be Gross Turnover in case of travel agents.
My client is Booking Air, Train and Cruize tickets for clients. whether price of ticket will be taken as gross turnover or only commission they are charging from customer???
Devendra
(Chartered Accountant)
(4775 Points)
Replied 04 October 2011
For the purpose of Turnover, only if the commission receipts exceed Rs. 60 lakhs, then Tax Audit shall be applicable. The cost of ticket shall not be included in Gross Turnover but only the commission will be considered.
Regards,
Devendra K
Shashi Bhushan
(Learner, Jalandhar)
(996 Points)
Replied 05 October 2011
Thanks!!!!!!
Please let me know source of your answer.
Gopal Suthar
(Chartered Accountant)
(60 Points)
Replied 05 October 2011
agree with Devendra. Further you can refer Guidance Note on Tax Audits issued by ICAI.
Deepak Gupta
(CA Student)
(15922 Points)
Replied 05 October 2011
The following items would NOT form part of "gross receipts in business" for purposes of section 44AB.
In the case of a travelling agent, the amount received from the clients for payment to the airlines, railways etc. where such amounts are received by way of reimbursement of expenses incurred on behalf of the client. If, however, the travel agent is conducting a package tour and charges a consolidated sum for transportation,boarding and lodging and other facilities, then the amount received from the members of group tour should form part of gross receipts
Source:
Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 - The ICAI
Sheth Prafull R
(Accountancy)
(57 Points)
Replied 05 October 2011
If we consider only Commission then Tax Audit Limit will be Rs. 15 lacs or as Devendra write Rs. 60 Lacs?
CA MANDEEP MODI
(Senior Manager - F&A with Planetcast Media Services Ltd)
(63 Points)
Replied 21 August 2012
Dear Prafull,
As per the guidance note of ICAI on Tax audit, Travel Agency is classified as Business so The limit of 60 Lac will be applicable on Travel Agents.
As conclusion we can say that:
1. Travel Agency is a Business so the turnover limit of 60 lac will be applicable for the purpose of Tax audit.
2. The total turnover of the travel agency will be calculated as follows:
a) Commission on Tickets or bookings (Separately charged, work on commission basis, e.g. booking of an air ticket from Delhi to Mumbai, or booking a room in a hotel)
b) Amount charged for tour packages (including or excluding airtickets, e.g. Rs. 25k charged from a client for Thailand tour packages)
Example: Ram Tour agency has following transactions during 2011-12:
a) Booked air tickets on behalf of clients, Total Payment to Airlines company- 62,50,000 and Total Receipts from Clients 67,00,000.
b) Sold Singapore package to a group of 12 people @ 80,000 per person.
c) Book rooms in Sky hotels during the year and pay them 12,50,000 and collect Rs. 18,00,000 against these bookings from clients.
Is Tax audit applicable on Ram tour Agency, Calculate Turnover
Ans:
Calculation of turnover for Tax Audit purpose:
Commission on sale of air tickets (67,00,000-62,50,000) = 4,50,000
Sales value of tour packages (80000*12) = 9,60,000
Commission on hotel bookings (18,00,000-12,50,000) = 5,50,000
Total Turnover = 19,60,000
Hense Tax audit is not applicable on Ram Tour Agency.
Reasoning, Why Commission is taken for Turnover calculation?
Ans Because Receipts for Air Tickets and Hotel booking is nothing but just reimbursement
Source:
Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 - The ICAI
Sunil Tejwani
(Executive)
(22 Points)
Replied 02 August 2014
what if the agent is not mentioning the commission amount separately to the invoice issued to the customer??
CA Vinay Jain
(Partner)
(24 Points)
Replied 10 August 2014
Dear Sunil,
I would suggest that only the commission charged to client will be taken as turnover for the purpose income tax. Merely for the purpose of invoicing the nature of transaction cannot be changed. The details pertaining to commsion would be available from the airline portal used by the agent. As there is no requirement of invoicing in the income tax act. Futher to add that for the purpose of service tax the above invoicing will not be valid and whole amount will get charged to service tax.
Thank you
Rohan Chugh
(Chartered Accountant )
(69 Points)
Replied 11 December 2014
what will be consequensy if TRAVEL AGENT CO. does not show the commission separately in bill which is issued to customer??? plz solve it ASAP.
Rajesh Chadda
(Chartered Accountant)
(66 Points)
Replied 01 August 2016
WHAT WILL BE SALE FOR ENTERTAINMENT PARK TICKETS SALE WILL BE SALE ?????
Yashvardhan Singh
(Article )
(24 Points)
Replied 22 December 2016
TRAVEL AGENT BUSINESS NOT ELIGIBLE FOR PRESUMPTIVE AS ITS A AGENCY BUSINESS, AND IS ALSO NOT UNDER SECTION 44AB AS TURNOVER IS LESS THAN PRESCRIBED LIMIT. IF THE PROFIT IS BELOW 8% THEN THE TAX AUDIT IS NECASSARY ?
ashutosh
(Student CA IPC / IPCC)
(22 Points)
Replied 16 January 2017
Can anyone tell me the format of invoice for the travel agent and the treatment of Commission income in P&L Account
CAclubindia
