Section 44AD

while considering gross receipts for aplicability of 44AD, as per my knowledge, we will not include Value of materials supplied by customer to compute 40 lakhs gross receipts.

here, my question is whether the same logic shall be applied for computing 8% of gross receipts?? i.e. whether we have to include the value of materials supplied by customer for calculating 8% of gross receipts?

Example: turnover of X is 36,00,000;  value of materials supplied by customer is 6,00,000. Here in this case whether 8% will be calculated only on 36 lakhs or it should be calculated on total 42 lacs??

Example2: turnover of X is 24 lacs and value of materials supplied by customer is 12 lacs. here in this case whether 8% will be calculated on 36 lacs or only on 24 lacs??

Thanks

Prasanth Kuralla

Replies (1)

As Gross receipts are the amount received from the client for the contract and will not include the value of material supplied by the client, and income from business will be estimated at 8 percent of the gross receipt so material supplied by the client will not be included in income.

source:Taxman's ready reckoner

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