the explanation to Rule 3 clearly states how the average needs to be computed.
For your reference:
"For the purpose of this rule, the average quantum of activity shall be taken to be-
(a) the average of the quantum of activity during the three financial years immediately preceding the relevant financial year, or
(b) if three financial years have not been completed since the establishment of the branch office the average of the quantum of activity during the two financial years or, as the case may be, the quantum of activity during the year, immediately preceding the relevant financial year, or
(c) in other cases, the quantum of activity during the relevant financial year.
the avg quantum of activity is to be compared with the highest of rs2lacs or 2% of avg total turnover of company, to decide the examption status.
i understood the avg quantum of activity calculation but my query is how to calculate 2% of avg total turnover of company ? is it the same 3 years as in case of avg quantum of activity ?
CAclubindia
