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Defective return

RAHUL B. (CHARTERED ACCOUNTANTS) (92 Points)

25 February 2020

Hello ,

Gross receipts more than 1 crore i.e 1.2 crore from travel agency business. However commission income is low . Return filed under normal provisions declared defective and asked tax audit report.

1) can i revise return u/s 44AD now as the limit is 2 crore

2) how do i escape tax audit ? No details maintained by assessee.

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11 Replies

RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 25 February 2020

No... Commission income can't be presumptive taxation scheme u/s 44ad.

Normal provisions applicable and Tax Audit also applicable as Your turn over...

No way for escape.

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 25 February 2020

Limit for tax audit is 1crore only.
But for presumptive basis alone limit is 2crores.

That means even if tax audit applicable , the tax payer has option to choose presumptive basis taxation if the turnover is upto 2cores.

But the tax payer of commission income is not eligible for presumptive scheme of taxation

RAHUL B. (CHARTERED ACCOUNTANTS) (92 Points)
Replied 25 February 2020

Thanks..

but he purchases & sells airline tickets... he charges service charge on it . which is almost 5% of gross receipts. so in that case will his service charge be the gross receipts or total ticket sales value ?

Kapadia Pravin (17249 Points)
Replied 25 February 2020

44AD is not applicable for commission income.

Actual your gross receipts will be to the extent of your commission income. What you are considering as GROSS RECEIPTS ?

If you are acting as Travel agent and gets in return COMMISSION from Travel Operators then take commission receipts as your gross receipts and prepare accounts accordingly.

pl clarify above. Re-cast your accounts and file revised return if for AY 2019-2020. As you said commission income is low then if it's below 1 crore then no tax audit issue.

RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 25 February 2020

You can consider the Gross receipts as per Your Service charges...

But,
How about Your billing details...?!

RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 25 February 2020

Yes... I agreed to Mr Kapadia Pravin...

RAHUL B. (CHARTERED ACCOUNTANTS) (92 Points)
Replied 25 February 2020

Service charge is 4.5 Lacs ... total receipt is 1.2 crore

RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 25 February 2020

How about Your billing details...?!

How to You give bills to passengers...?

RAHUL B. (CHARTERED ACCOUNTANTS) (92 Points)
Replied 25 February 2020

Flight ticket 5000
service charge 500
gst @ 18% on 500 = 90
total = 5590

Kapadia Pravin (17249 Points)
Replied 26 February 2020

As flight ticket money goes to Airline Company, it's not your receipt for the purpose of 44AB.

Flight ticket billing is on behalf of Airline Company. it's not your revenue.

CA Prasanth S S (Chartered Accountant ) (32 Points)
Replied 26 February 2020

As per Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961,

Refer Para 5.17 - The following items would not form part of "gross receipts in business" for purposes of section 44AB:-

(viii) - In the case of a travelling agent, the amount received from the clients for payment to the airlines, railways etc. where such amounts are received by way of reimbursement of expenses incurred on behalf of the client. If, however, the travel agent is conducting a package tour and charges a consolidated sum for transportation, boarding and lodging and other facilities, then the amount received from the members of group tour should form part of gross receipts.