Go AD-Free with CAclubindia Pro and Daily Mobile Updates. Subscribe Now!

gross profit ratio

08 September 2018

In a commodity business there is no fixed rate of profit ... every year turnover may increase but the profit doesn't becoz there will price variations daily... at this point how should we keep the profit ratio .... if we show less profit ratio is there a chance of getting scrutiny

Reply
Follow
Share

7 Replies

Rohit Tibrewal (Student) (3193 Points)
Replied 08 September 2018

You are trading for own or working as agent?

Pramod Kuruvatti (136 Points)
Replied 08 September 2018

No for own we purchase cotton and process(ginning) it. later we sell it as cotton seeds and cotton lint ... even we do trading in that like purchasing cotton lint from others and selling it to others.. but trading shows heavy transaction becoz for one bill of cotton lint values 20 lakhs but profit may be only 10 thousand rs

Rohit Tibrewal (Student) (3193 Points)
Replied 08 September 2018

It means you are doing manufacturing and trading in cotton seeds and cotton lint? Did you take the registration under GST? And You are maintaining books of accounts?

1 Like

Pramod Kuruvatti (136 Points)
Replied 08 September 2018

yes our transaction is 48cr this year...

Rohit Tibrewal (Student) (3193 Points)
Replied 08 September 2018

Than you need to make your expenses proportionately, as you are showing trading profit and manufacturing profits separately.

Pramod Kuruvatti (136 Points)
Replied 08 September 2018

we are not showing profit separetly

Rohit Tibrewal (Student) (3193 Points)
Replied 08 September 2018

Scrutiny is not depend only on GP, it depends upon many things, Expenses incurred suddenly in particular year in particular expense, increase in any expenses not-evenly etc.