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Are taxes included for computing turnover u/s 44ad

Tax queries 3153 views 7 replies

Do we include Indirect Taxes like VAT, Service Tax etc for the purpose of computing Turnover under Section 44AD?

Replies (7)
Taxes are not to be included in turnover. They are current liabilities to be remitted to the tax authorities.

Yes.                           

Assume that Whether Assesse is a Compostion Dealer under MVAT Act. so the Same amt should be Incorporate for Presumtive Taxation under Income Tax Act.

If sales tax and excise duty are included in the sale price, no adjustment in respect thereof should be made for considering the quantum of turnover.

If however, the excise duty or sales tax recovered are credited separately to Excise duty or sales tax a/c [being separate accounts] and payment to the authority are debited in the same account, they would not be included in the turnover.

[Source - GN of ICAI]

Here the query is specifically related to Turnover as related to section 44AD.

As per section 44AD:: Total Turnover / Gross Receipts are amount received/receivable from clients in respect of sale of Previous Year.

What are the receipts which forms Part of Turnover?

1) Sales Tax, excise duty, Cess, and other Levy.

2) Sales of unusables empties and Packages.

3) Service Charges charged for delivery

Then what are the Receipts which does not form Part of Turnover?

1) Sale of Property, Plant and equipments

2) Advance received from customers, deposits Received or retention money.

3) Any Security, retention or other deposit obtained from employees.

4) Interest Income or other similar receipts

5) Value of Inventory

@ Saurabh Sahu: Yes

Agree with your explanations but section 44AD does not defines the Total Turnover / Gross Receipts


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