Tax audit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 April 2012 in case of jewellery bus and bus of lending of loans agnst jwellery , for calculating the tax audit limit whether both will be considered or only jewellery bus and net interest earned on lending will be considered?

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)
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04 April 2012 YOU CAN OPT FOR SECTION 44AD IN RESPECT OF JEWELLERY BUSINESS, IF JEWELLERY BUSINESS RECEIPTS ARE LESS THAN 60LAKHS IN THE F.Y 2011-12.
THAN FOR LENDING OF LOANS AGNST JEWELLERY CAN BE CONSIDERED SEPARATELY.

Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2012 A is having a business of mnf jewellery and also lending agnst jewellery. In that cse for calculating the tax audit limit of turnover whether net interest earned will be considered or gross amt gvn will be taken as turnover . what will be the effect in case if the main business includes gvn loans & advances agnst jewellery.....??????????????

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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26 July 2025 Here's how tax audit turnover calculation works in your case with **jewellery manufacturing business + lending against jewellery**:

1. **Jewellery Business Turnover:**
For jewellery manufacturing, turnover means **gross receipts from sale of jewellery**. You can opt for **Section 44AD (presumptive taxation)** if turnover is below ₹60 lakhs (for FY 2011-12), and no audit is required then.

2. **Lending Business Turnover:**
For lending against jewellery, turnover is generally considered as the **gross amount of loans given**, NOT just the interest earned. The gross lending amount counts as turnover because it reflects the total business activity.

3. **Combined Turnover for Tax Audit Limit:**

* If the lending is a **separate business**, calculate turnover separately and apply tax audit limits independently.
* But if lending is **part of the main jewellery business activity** (not separate), then turnover of both activities combined is considered.

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**Effect:**

* If lending is part of main jewellery business and gross lending amount is high, turnover may exceed ₹60 lakhs, making tax audit applicable.
* If lending is treated separately, only jewellery manufacturing turnover is considered for Section 44AD eligibility and tax audit limit.

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**Summary:**

* Jewellery turnover = gross sales value
* Lending turnover = gross loan amount given
* Decide whether lending is separate business or part of main business to compute turnover for audit applicability.

If you want, I can help draft a more detailed note or check relevant case laws for you.

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