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Meaning of turnover under 44 ab

CA Raj Doshi (Practising CA) (8799 Points)

12 May 2014

Under Sec 44AB relating to tax audit, the Turnover limit/ Gross Receipts is 1 Crore for business. This limit is 1. the basic amount of sales or 2. basic + vat amount of sales. Because in tally the amount of sales reflected in Profit and loss is just the. basic and it is as per this figure generally the applicability of tax audit is decided. Any formula for calculating Turnover under tax audit will be really helpful

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9 Replies

Abdu Rahim.c (Calicut) (44 Points)
Replied 12 May 2014

simply tunover for the purpus of 44 AB= sales (excluding vat)- sales return refer the section for detailed adjustments

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 12 May 2014

AGREED WITH ABOVE

sagar kotak (article) (65 Points)
Replied 12 May 2014

It dependes on accounting policy follwed

if you followed inclusive method aof accounting then sales tax/vat is included for limit of 1 crore otherwise not..

Priyanka Soni Mantri (Article And Job) (38 Points)
Replied 12 May 2014

According to section 145A of Income Tax Act, for the purpose of tax filing and tax audit, the inclusive method should be used where as for the purpose of general purpose financial statements, the exclusive method should be followed.

Priyanka Soni Mantri (Article And Job) (38 Points)
Replied 12 May 2014

Aamir (Article Assistant) (36 Points)
Replied 13 May 2014

Turnover not defined in Income Tax Act Refer Guidance Note issued by ICAI on Tax Audit Turnover = Sales excluvise of VAT/Service Tax Less Sales Return Actual Basis (Whether belonh to this year or previous Year) Less Discount if Shown in Invoice.

Aamir (Article Assistant) (36 Points)
Replied 13 May 2014

Also in Mitchell Drilling International v/s DCIT (Delhi Tribunal) Held Service Tax is a statutory liabilty cannot form part of Turnover and element of profit. Accordingly, Cannot form part of Total Turnover/Receipts. Hence, Inference can be drawn that VAT/Service Tax/Excise cannot brcome part of Turnover aa these are statutory liabilities.

kcagarwal (chartered accountant) (103 Points)
Replied 13 May 2014

TURNOVER MEANS - SALES LESS RETURN

Whether the amount of vat shall be incuded or not. It dependes on the procedure folloewd for Vat. If the vat tax on the sales is ralised, and paid to the SALES TAX DEPARTMENT, The assesse is only collecting the tax on sales, and paid to the department, then vat shall not be included in the turnover. However if the assessee is following compounding scheme of vat, then the assessee is not collecting the vat separately , and he is paying the vat on sales at per prescribed rate. It means in the case of compuding , vat tax are in the sales value, which is not deducted for the calculation of turnover

C A K C AGARWAL