Cash transactions and kacha pakka artiya
This query is : Resolved
16 February 2020
Data
A and B are in business of General insurance Selling. A is registered with companies like Future generali, Iffco Tokyo etc. A gets business from two channels.
1. Direct Customers walkin or his known contacts.
2. People like B(who is not registered anywhere) has their own clients. B comes to A, give his credit card, recharge A’s portal and buy insurance for his clients (let say C). Now B goes back to C give his insurance policy to C and C pays B in cash (considering non business customers so Sec 40A(3) not attracted). Policy was for Rs 10k. B paid 10k to A via his own credit card and charges C with Rs 12k.(10k plus 2Khis commission.) B deposit cash everytime in bank and pay his credit card bill.
Questions
1. For tax audit, A will be considered pakka artiya and B will be kacha artiya ? correct me if wrong.
2. Can they both use presumptive taxation and pay tax on 8%/6% ? if yes then what will be the turnover. Will it be same as decided in question 1 ?
3. If A is pakka artiya, Does he require to maintain his account completely for every transaction instead of just checking his whole year commission under presumptive taxation ?
4. implication for B for cash transactions
A and B are in business of General insurance Selling. A is registered with companies like Future generali, Iffco Tokyo etc. A gets business from two channels.
1. Direct Customers walkin or his known contacts.
2. People like B(who is not registered anywhere) has their own clients. B comes to A, give his credit card, recharge A’s portal and buy insurance for his clients (let say C). Now B goes back to C give his insurance policy to C and C pays B in cash (considering non business customers so Sec 40A(3) not attracted). Policy was for Rs 10k. B paid 10k to A via his own credit card and charges C with Rs 12k.(10k plus 2Khis commission.) B deposit cash everytime in bank and pay his credit card bill.
Questions
1. For tax audit, A will be considered pakka artiya and B will be kacha artiya ? correct me if wrong.
2. Can they both use presumptive taxation and pay tax on 8%/6% ? if yes then what will be the turnover. Will it be same as decided in question 1 ?
3. If A is pakka artiya, Does he require to maintain his account completely for every transaction instead of just checking his whole year commission under presumptive taxation ?
4. implication for B for cash transactions
04 June 2020
Please do mail me at ashakantasharma@gmail.com with all the details for complete analysis of the same.
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