Audit and requirements for commission income

Hey! Here’s a rundown to help you with commission income documentation and audit readiness:

a) Documents to keep for audit:

• Commission agreement or contract with your counterpart clearly stating the commission terms.

• Invoices raised by you for commission earned.

• Bank statements showing receipt of commission payments.

• Any proof of sales or underlying transactions from the supplier (if possible).

• Correspondence/emails confirming the commission arrangement.

• Payment vouchers or receipts.

b) About giving a simple commission invoice:

• Yes, issuing a proper commission invoice to your colleague is advisable. It should clearly state your name, GST details (if applicable), commission amount, and payment terms.

• Avoid informal arrangements; invoices formalize your income for tax and audit purposes.

c) For fixed commission like Rs 50 per PC:

• Maintain a sales register or log detailing the number of PCs sold, date, client, and commission calculation.

• Issue invoices based on this register.

• Keep any communication with your colleague or supplier confirming the fixed commission structure.

d) Transferring funds from current to saving account:

• You can simply transfer funds online or via cheque.

• No formal declaration is usually required for transferring between your own accounts.

• Maintain bank statements reflecting these transfers for record keeping.

Additional tips:

• If you are registered under GST, ensure that commission invoices comply with GST invoicing rules.

• Keep your books updated regularly.

• Keep a copy of all documents digitally and physically.

• If your turnover crosses threshold limits, file returns accordingly.