28 December 2014
Dear Sir, Will the O/Put tax billed and recovered from customer will form part of turnover for calculation of 100 Lakhs w.r.t Sec. 44ab.
Let suppose in a case where basic sales amount to 90 Lakhs and it totals to 110Lakhs after adding VAT will the assessee be rquired to get audited u/s 44ab??
29 December 2014
Section 145A of IT Act states that sale should take into account any tax,cess, duty. Hence for sec 44AB applicability Sale should include the VAT amount. In the above case 44AB would be applicable.
29 December 2014
This is an excerpt from the recently issued guidance note on tax audit: Para 5.19 Page 23 "The term ‘turnover’ for the purposes of this clause may be interpreted to mean the aggregate amount for which sales are effected or services rendered by an enterprise. If sales tax and excise duty are included in the sale price, no adjustment in respect thereof should be made for considering the quantum of turnover. Trade discounts can be deducted from sales but not the commission allowed to third parties. If, however, the Excise duty an / or sales tax recovered are credited separately to Excise duty or Sales tax Account (being separate accounts) and payments to the authority are debited in the same account, they would not be included in the turnover. However, sales of scrap shown separately under the heading ‘miscellaneous income’ will have to be included in turnover. "
29 December 2014
It evidently states that if vat is not included in sale price and credited to separate account e.g Vat payable it should not be included in the calculation of turnover. This is the interpretation of ICAI. Plzz guide further.
CAclubindia
