Turnover crieteria for tax & vat audit of builders

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Querist : Anonymous

Querist : Anonymous (Querist)

07 November 2014 one of my client is a builder, the following is the case study: -
Project duration - 3 years
Total Flats:- 9
Total Shops:- 4

1st year No agreement done so clolsing WIP is same as actual cost incurred

2nd year:- 4 flat agreements are done, but no revenue recognising in that year. whatever cost incurred till date + profit margin = closing W.I.P. for the project which Exceeds Rs. 1 crore.
so my 1st question is whether Tax audit is applicable or not?
total agreement value is Rs. 92 lacs
so my 2nd question is whether vat audit is applicable or not?

Amol S Joglekar

Amol S Joglekar (Expert)
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07 November 2014 01. The word TURNOVER has many facets as decided in various case laws.
02. Why are you including PROFIT margin in WIP?
03. VAT audit is applicable.
04. Income tax, you may take chance. But prudent practice will be to conduct tax audit.

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Querist : Anonymous

Querist : Anonymous (Querist)

08 November 2014 Sir you are saying that vat audit is applicable but the turnover is only Rs. 92 lacs & limit for vat audit applicability is Rs. 1cr. so sir please tell me on what basis you are saying that vat audit is applicble.

Amol S Joglekar

Amol S Joglekar (Expert)
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08 November 2014 in VAT turnover may be measured from Purchase side as well as sale side.

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Querist : Anonymous

Querist : Anonymous (Querist)

08 November 2014 SO IN THIS CASE I HAVE TO CONSIDERED BOTH AGREEMENT VALUE RS.92 LACS + PURCHASE COST
RS. 82 LACS FOR APPLICABILITY OF BOTH.
BUT IN VAT LAWS IF SALES OR PURCHASE TURNOVER IS MORE THAN RS.1 CR. THEN ONLY VAT AUDIT IS APPLICABLE.

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