44ab or 44ad

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2012 if a businessman income through commission on sale of a product and commission only 2%. than this man covered under 44AB or 44AD ? his total income based on this particulat percentage. how he raised his income 2% to 8% .

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 September 2012 If he is commission agent then total commission received by his consider as turnover. If such commission exceeds Rs.60 lacs then comes under section 44AB tax audit other wise comes under section 44AD and has to offer minimum income of 8% on his gross commission received.

OM SAI SRI SAI JAI JAI SAI

Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2012 thanks, but it total income is 2% of turnover. than he covered under audit

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 September 2012 You are saying about the amount of commission received. And the same treating as net income by comparing with the sales made by that agent. Here for the purpose of Agent the commission is received by the agent is consider as turnover. For your clarification the following example.

Assume Mr.X is a commission agent of PQR&CO who receives 2% commission on the sale of PQR&CO products. So assume Mr.X sold the products of PQR&CO which have the value of Rs.500000 so Mr.X will receive Rs.10000(2% on Rs.500000) as commission from PQR&CO.
For X purpose turnover is Rs.10000 and for PQR&CO turnover is Rs.500000. So thus total gross commission received by the Mr.X during the year is not exceeded Rs.60 lacs then he can offer income under section 44AD i.e minimum 8% on gross commission I.e for this example Rs.800(8% on 10000).
Is you know understanded.

OM SAI SRI SAI JAI JAI SAI

Querist : Anonymous

Querist : Anonymous (Querist)

08 September 2012 thanks. it means turnover for agent is Rs.10000/- and he covered u/s 44AD.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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08 September 2012 Yes,

OM SAI SRI SAI JAI JAI SAI

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