Sec 44ab related (turnover)..??
This query is : Resolved
04 June 2014
Dear Expert,
My uncle has got a Petrol Pump..He earns Commission on Turnover Basis from Indian Oil.
My question is that whether we have to get the accounts audited if the Sales crosses Rs 1 Crore..??
Urgent !!!
My uncle has got a Petrol Pump..He earns Commission on Turnover Basis from Indian Oil.
My question is that whether we have to get the accounts audited if the Sales crosses Rs 1 Crore..??
Urgent !!!
04 June 2014
yes...tax audit will apply.
04 June 2014
Since i am not trading, hence, gross profits wont apply..Commission income is the only main source..hence only P&L A/c is relevant..
M i right ?
M i right ?
04 June 2014
yes...only profit and loss account is relevant.
04 June 2014
Then where do i have to show Sales & purchases ?
04 June 2014
Whether you are showing Opening and Closing Stock ?
.
If no, then same policy may be followed and as such you are not required to show the sales and purchases also. Keep the figures in your memorandum accounts only.
.
.
If no, then same policy may be followed and as such you are not required to show the sales and purchases also. Keep the figures in your memorandum accounts only.
.
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04 June 2014
Sir..Can you please provide me the format.?
23 July 2025
For your **uncle's petrol pump** business, the key question is whether the **tax audit** (under **Section 44AB**) is applicable based on the turnover or commission income.
### **Answering Your Queries:**
1. **Applicability of Tax Audit under Section 44AB**:
* If the **commission income** from the sale of petrol/diesel crosses **Rs. 1 crore** in a financial year, **tax audit** will indeed apply.
* Since the business is earning **commission** rather than directly selling goods, your uncle's **gross turnover** or **gross receipts** would be calculated based on the **commission** received, not the total sales at the pump.
2. **Profit and Loss Account**:
* Since this is a **commission-based business**, your uncle will report the **commission income** in the **Profit and Loss (P\&L)** account, not the total sales or purchases of petrol/diesel.
* You’re correct in stating that **only the P\&L account** will be relevant here because there’s no inventory involved, and therefore, **opening/closing stock** wouldn’t be necessary unless you have some inventory-related operations (like sales of accessories).
3. **Sales & Purchases**:
* If the business doesn’t involve buying or selling goods (like petrol/diesel), **sales and purchases are not relevant** in the accounts.
* **Sales and purchases** are more relevant when you are buying and reselling goods, which is not the case here for a commission-based income model.
* As per your understanding, you may **not need to show sales/purchases** in your accounts, and only the **commission income** will be shown in the **P\&L account**.
4. **Memorandum Accounts**:
* If required, you can maintain a **memorandum record** to track sales and purchases for your reference, but they are not required to be shown in the final accounts for tax purposes.
5. **Format of Accounts**:
* Since your uncle is earning **commission income** and is not directly selling petrol or goods, the format of the accounts would primarily consist of:
* **Profit & Loss Account** (where you show the commission income as **Revenue from Operations**).
* **Balance Sheet** (which should only reflect the business’s assets and liabilities, no inventory needed).
### **Example Format for Accounts**:
* **Profit & Loss Account**:
* **Revenue from Operations**: Commission income from Indian Oil.
* **Other Income**: Any other income (if applicable).
* **Expenses**: Any expenses like electricity bills, rent, maintenance, etc. related to the petrol pump.
* **Balance Sheet**:
* **Assets**: Cash/bank, receivables, etc.
* **Liabilities**: Any loans, creditors, etc.
* No need to show **stock** or **purchases** unless there is an incidental purchase of items (like accessories) that is also part of the business.
### **To Sum Up**:
* **Yes**, tax audit under **Section 44AB** applies if your uncle's **commission income exceeds Rs. 1 crore**.
* Only **commission income** is relevant for the **P\&L Account**; there’s no need to show **sales and purchases** unless you are dealing with physical stock.
* You don’t need to show opening/closing stock unless involved in actual sales of goods.
### **Answering Your Queries:**
1. **Applicability of Tax Audit under Section 44AB**:
* If the **commission income** from the sale of petrol/diesel crosses **Rs. 1 crore** in a financial year, **tax audit** will indeed apply.
* Since the business is earning **commission** rather than directly selling goods, your uncle's **gross turnover** or **gross receipts** would be calculated based on the **commission** received, not the total sales at the pump.
2. **Profit and Loss Account**:
* Since this is a **commission-based business**, your uncle will report the **commission income** in the **Profit and Loss (P\&L)** account, not the total sales or purchases of petrol/diesel.
* You’re correct in stating that **only the P\&L account** will be relevant here because there’s no inventory involved, and therefore, **opening/closing stock** wouldn’t be necessary unless you have some inventory-related operations (like sales of accessories).
3. **Sales & Purchases**:
* If the business doesn’t involve buying or selling goods (like petrol/diesel), **sales and purchases are not relevant** in the accounts.
* **Sales and purchases** are more relevant when you are buying and reselling goods, which is not the case here for a commission-based income model.
* As per your understanding, you may **not need to show sales/purchases** in your accounts, and only the **commission income** will be shown in the **P\&L account**.
4. **Memorandum Accounts**:
* If required, you can maintain a **memorandum record** to track sales and purchases for your reference, but they are not required to be shown in the final accounts for tax purposes.
5. **Format of Accounts**:
* Since your uncle is earning **commission income** and is not directly selling petrol or goods, the format of the accounts would primarily consist of:
* **Profit & Loss Account** (where you show the commission income as **Revenue from Operations**).
* **Balance Sheet** (which should only reflect the business’s assets and liabilities, no inventory needed).
### **Example Format for Accounts**:
* **Profit & Loss Account**:
* **Revenue from Operations**: Commission income from Indian Oil.
* **Other Income**: Any other income (if applicable).
* **Expenses**: Any expenses like electricity bills, rent, maintenance, etc. related to the petrol pump.
* **Balance Sheet**:
* **Assets**: Cash/bank, receivables, etc.
* **Liabilities**: Any loans, creditors, etc.
* No need to show **stock** or **purchases** unless there is an incidental purchase of items (like accessories) that is also part of the business.
### **To Sum Up**:
* **Yes**, tax audit under **Section 44AB** applies if your uncle's **commission income exceeds Rs. 1 crore**.
* Only **commission income** is relevant for the **P\&L Account**; there’s no need to show **sales and purchases** unless you are dealing with physical stock.
* You don’t need to show opening/closing stock unless involved in actual sales of goods.
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