Branch audit exemption rules

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CA Prasanth Viswanadh (Querist)

01 November 2013 WHAT IS THE MEANING OF 2% OF AVERAGE OF TOTAL TURNOVER OF THE COMPANY, AS GIVEN IN COMPANIES BRANCH AUDIT EXEMPTION RULES 1961

HOW TO CALUCULATE ABOVE AVERAGE ?

IT IS SAME WAY AS THE AVERAGE CALUCULATED IN RESPECT OF AVERAGE QUANTUM OF ACTIVITY.?

Nikhil Kaushik

Nikhil Kaushik (Expert)

02 November 2013 Dear Prasanth,

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.

CA Prasanth Viswanadh

CA Prasanth Viswanadh (Querist)

04 November 2013 sir

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 ?

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