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Are taxes included for computing turnover u/s 44ad

Neha sharma (-) (1246 Points)

17 January 2017  

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


 7 Replies

Suresh Pai S (Senior Audit Assistant) (1003 Points)
Replied 17 January 2017

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

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (109020 Points)
Replied 17 January 2017

Yes.                           

saurabh shahu (Audit Assistant) (142 Points)
Replied 17 January 2017

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.

Koushik D C (Proprietor/Freelancer) (938 Points)
Replied 17 January 2017

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]

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (109020 Points)
Replied 17 January 2017

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

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (109020 Points)
Replied 17 January 2017

@ Saurabh Sahu: Yes

Koushik D C (Proprietor/Freelancer) (938 Points)
Replied 17 January 2017

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


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