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Tax audit

GAUTAM SHARMA (Audit Assistant) (353 Points)

06 December 2013

whether Guidance Note by ICAI on Tax audit require compliance.

As per Sec. 44AB , if gross turnover Exceeds Rs. 1 Crore, then asseses is liable to tax audit.Wheher Sales Return, discount, Rebates are to be deducted?

As per Guidance note, it is to be deducted, but i m confused whether such guidance is applicable for Sec.44AB.

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2 Replies

Shruthi (Article Assistent) (336 Points)
Replied 06 December 2013

Yes the Guidence Note is applicable to 44AB.

In case of discounts, you can consider the below details:

Trade Discount: Trade Discounts can be deducted from sales. Trade Discounts are generally allowed in the sales invoice, therefore the discount allowed in the sales invoice will reduce the sale price and therefore can be deducted from the turnover.

Cash Discount: Cash Discount otherwise than that allowed in a cash memo/sales invoice is in the nature of a financing charge and a revenue receipt and is not related to turnover. Hence the same should not be deducted from turnover