calculation of tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2009 For civil contractors, if their turnover is less than 40 lakhs, 8% on the gross receipts can be taken for calculation as income for calculation of Income tax. From 2009-10 F.Y. is the scheme extended for all commission agents, wherein they can calculate @ 8% on gross commissions received. Kindly guide.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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06 December 2009 Commission agent does not come into the category of either business defined in Section 2(13) nor it is a profession u/s 2(36).

To understand the provisions -

Generally; commission agents receive 2% of turnover. To allow 92% as expenditure is not justifiable.

If they are maintaining their books of account as Pucca Aratia i.e. all the turnover showing in their name; then also they will not be able to show profit @ 8% before their gross commission is around 2%(supra).

Since no sale-purchase and consumption of material is there; hence these are not covered either in deeming provisions of 5% net profit in case of retail trade or 8% net profit of total turnover in case of contractor.

Hence you cannot claim 8% or 5% as net profit in case of commission agents.

CA Rakhecha, Surat

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