Meaning of gross turnover u/s 44ab in travel agent business

For the purpose of Turnover, only if the commission receipts exceed Rs. 60 lakhs, then Tax Audit shall be applicable. The cost of ticket shall not be included in Gross Turnover but only the commission will be considered.

Regards,

Devendra K

Thanks!!!!!!

Please let me know source of your answer.

AGREEE WITH DEVENDRA

agree with Devendra. Further you can refer Guidance Note on Tax Audits issued by ICAI.

The following items would NOT form part of "gross receipts in business" for purposes of section 44AB.

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

Source:

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

If we consider only Commission then Tax Audit Limit will be Rs. 15 lacs or as Devendra write Rs. 60 Lacs?

Dear Prafull,

As per the guidance note of ICAI on Tax audit, Travel Agency is classified as Business so The limit of 60 Lac will be applicable on Travel Agents.

As conclusion we can say that:

1. Travel Agency is a Business so the turnover limit of 60 lac will be applicable for the purpose of Tax audit.

2. The total turnover of the travel agency will be calculated as follows:

a) Commission on Tickets or bookings (Separately charged, work on commission basis, e.g. booking of an air ticket from Delhi to Mumbai, or booking a room in a hotel)

b) Amount charged for tour packages (including or excluding airtickets, e.g. Rs. 25k charged from a client for Thailand tour packages)

Example: Ram Tour agency has following transactions during 2011-12:

a) Booked air tickets on behalf of clients, Total Payment to Airlines company- 62,50,000 and Total Receipts from Clients 67,00,000.

b) Sold Singapore package to a group of 12 people @ 80,000 per person.

c) Book rooms in Sky hotels during the year and pay them 12,50,000 and collect Rs. 18,00,000 against these bookings from clients.

Is Tax audit applicable on Ram tour Agency, Calculate Turnover

Ans:

Calculation of turnover for Tax Audit purpose:

Commission on sale of air tickets (67,00,000-62,50,000)          =                             4,50,000

Sales value of tour packages (80000*12)                                      =                              9,60,000

Commission on hotel bookings (18,00,000-12,50,000)                              =                              5,50,000

Total Turnover                                                                                    =                              19,60,000

Hense Tax audit is not applicable on Ram Tour Agency.

Reasoning, Why Commission is taken for Turnover calculation?

Ans Because Receipts for Air Tickets and Hotel booking is nothing but just reimbursement

Source:
 

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

what if the agent is not mentioning the commission amount separately to the invoice issued to the customer??

Dear Sunil,

I would suggest that only the commission charged to client will be taken as turnover for the purpose income tax. Merely for the purpose of invoicing the nature of transaction cannot be changed. The details pertaining to commsion would be available from the airline portal used by the agent. As there is no requirement of invoicing in the income tax act. Futher to add that for the purpose of service tax the above invoicing will not be valid and whole amount will get charged to service tax.

Thank you

what will be consequensy if TRAVEL AGENT CO. does not show the commission separately in bill which is issued to customer??? plz solve it ASAP.

WHAT WILL BE SALE FOR ENTERTAINMENT PARK TICKETS SALE WILL BE SALE ?????

TRAVEL AGENT BUSINESS NOT ELIGIBLE FOR PRESUMPTIVE AS ITS A AGENCY BUSINESS, AND IS ALSO NOT UNDER SECTION 44AB AS TURNOVER IS LESS THAN PRESCRIBED LIMIT. IF THE PROFIT IS BELOW 8% THEN THE TAX AUDIT IS NECASSARY ?

Can anyone tell me the format of invoice for the travel agent and the treatment of Commission income in P&L Account

plz send me the proper section