Income from karyana shop and labour supply contractor

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2016 Sir,
Thanks! in advance.
income from karyana shop and labour supply sub comtractor covered karyana shop us 44ad (showing 12% income under same head) labour supply commission as business/professional income (showing 10% income under same head)
query:- is their essential to make balance sheet and P & L for labour work.
is their need to show karyana shop recipts also in balance sheet and p&l becoz if not showing karyana recipts than it is not showing income of karyana in itr summary (no accounts maintain)
pl advise
regards
vikas

Querist : Anonymous

Querist : Anonymous (Querist)

20 December 2016 experts please reply waiting
thanks

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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30 July 2024 Based on your description, it appears you are dealing with income from two different sources: a karyana shop and a labor supply subcontractor business. Let’s address your queries step-by-step regarding the need for maintaining a balance sheet and profit & loss (P&L) account, particularly in the context of income tax reporting.

### **1. Income from Karyana Shop and Labor Supply Contractor**

#### **Karyana Shop:**

- **Section 44AD:**
- If you are using Section 44AD for the karyana shop, it implies that you are opting for the presumptive taxation scheme where 12% of the gross receipts is deemed as income. Under this scheme, detailed books of accounts are not mandatory. However, you are still required to maintain a record of the gross receipts and expenses.

- **Balance Sheet and P&L Account:**
- While under Section 44AD, you are not required to prepare a detailed balance sheet and P&L account for the karyana shop, it is advisable to maintain basic records of receipts and expenditures to substantiate the gross receipts and the presumptive income claimed. This will help in case of any scrutiny or queries from the tax authorities.

- **ITR Summary:**
- For income under Section 44AD, you typically report the gross receipts and the presumptive income in your Income Tax Return (ITR). The details should be sufficient if you are using the presumptive taxation scheme. You do not need to provide a detailed balance sheet or P&L account if you are not maintaining them.

#### **Labor Supply Contractor:**

- **Income Reporting:**
- For the labor supply subcontractor business, which is treated as a professional or business income, you need to report the income under the head “Profits and Gains of Business or Profession.” Since this is not under Section 44AD, detailed accounting is required.

- **Balance Sheet and P&L Account:**
- Even if the income from the labor supply contractor is reported separately, it is essential to maintain a detailed P&L account and balance sheet. This is because the income from this activity is considered under normal accounting principles, and maintaining detailed accounts helps in proper tax filing and reporting.

### **2. Essential Documentation and Reporting**

#### **For Karyana Shop:**

- **Documentation:**
- **Receipts and Expenses:** Maintain records of gross receipts and major expenses, even if you are not preparing a formal balance sheet and P&L account.
- **Tax Filing:** Ensure that the gross receipts and presumptive income are correctly reported in your ITR.

- **Reporting:**
- **ITR Summary:** The ITR summary should reflect the gross receipts and the presumptive income as per Section 44AD. You don't need to show a detailed balance sheet or P&L account unless specifically required by the tax authorities.

#### **For Labor Supply Contractor:**

- **Documentation:**
- **Balance Sheet and P&L Account:** It is essential to prepare and maintain a detailed P&L account and balance sheet to accurately report the income and expenses. This documentation is necessary for tax filing and can be crucial in case of audits or tax assessments.

- **Reporting:**
- **ITR Summary:** Ensure that the income and expenses from the labor supply contractor are correctly reported in the ITR, supported by the balance sheet and P&L account.

### **Summary**

- **Karyana Shop:** For income under Section 44AD, you do not need to prepare a detailed balance sheet and P&L account but should maintain basic records of receipts and expenses. Ensure accurate reporting of gross receipts and presumptive income in your ITR.

- **Labor Supply Contractor:** Detailed accounting is necessary, including a balance sheet and P&L account. This will ensure accurate reporting of income and expenses and compliance with tax requirements.

If you need further clarification or assistance, especially in case of complex tax situations, consulting with a tax professional or accountant is recommended. They can provide tailored advice and ensure that all tax filings and documentation meet legal requirements.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow