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Meaning of turnover

CHANDRA KUMAR CHANDAK (CHIEF EXECUTIVE) (57 Points)

10 March 2016

I am running a proprietorship business of railway contract.During assessment year 2015-16 (up to 31st march 2015 from 1st april 2014) I made a turnover of Rs 47 lakhs.During the year I earned commission of Rs 28 lakhs also .My profit is Rs 1 lakhs (less Than 8% of total receipts of Rs 70Lakhs(47+28).My querry is as below:-

(1) Whether I required to get my accounts audited?

(2) If Yes ,in that case can I offload Tax Audit now ? whether any Interest or Penalty?

(3) How much is my tunover for presumptive profit purpose and for Tax audit ?

(4) can I paid commission against commission earned?

(5) whether I have to upload Balance Sheet,P&L accounts of my proprietorship firm alongwith income tax return

Regards,

Chandak C.K.

9748454067

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1 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 10 March 2016

Commission Income is not a Business Income

Case:1 Commission business can not be offered for Presumptive Income u/s.44AD. As per Section 44AD, you have to offer Minimum of Rs.3,76,000 ( 47,00,000x8%) under the head P.G.B.P and offer Commission Income (net of Sub-commissions) under the head Income from other sources(assume it is not one of your principle businesses) and in this case as you dont have any other Business Income having turnover exceeding One Crore, not liablie to tax audit under section 44AB

Case:2 Since as per your assertion, Income from your business(even considering net Commission) does not exceed Rs.1,00,000, you can offer such business Income as Normal business and Commission under the head Income from other sources(assume it is not one of your principle businesses). As you offer Business Income less than 44AD (<8%) and your Income(Total) does not exceed Maximum amount not chargable to Tax, No liability to carry out tax audit u/s.44AB

Commission Income is also Business Income

Case:1 Since Commission Income can not be offered under Presumptive Income under section 44AD, You can offer Railway contract Income under 44AD and Commission Income net of Commission expenditure as Normal Income under the head PGBP. No liability of tax audit u/s.44AB

Case:2 Offer Rs.1,00,000 as Business head income. As Tax liability does not arise, not liable for tax audit u/s.44AB

In all cases Maintenance of books under Section 44AA is Manadatory as Turnover under all cases exceed Rs. Ten Lakhs and 44AB Tax audit is not necessary in all cases