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Turnover includes gst or not for purpose of sec 44ad

ganesh (BUSINESSMAN) (23 Points)

17 July 2018

Suppose if we opt Presumptive basis then wether the turnover should include GST or not

Eg Sales is Rs 100 and GST is Rs 18 so total Receipt is Rs. 118 so u/s 44AD wether Rs. 100 should be considered for calculating 8% of Turnover or Rs. 118 should be considered for calculating 8% of Turnover.

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11 Replies

ABHIJIT MANNA (ACCOUNTANT) (444 Points)
Replied 17 July 2018

Turnover will be exclude of taxes thats mean 100

RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 17 July 2018

U/s 44ad the Turnover will be Calculate Rs. 118 (with GST / VAT) values and All receipts...

ABHIJIT MANNA (ACCOUNTANT) (444 Points)
Replied 17 July 2018

Sir

If turnover will be consider Rs.. 118 u/s 44AD so what will be the turnover reported for GST which is newly added this year

RAJA P M ("Do the Right Thing...!!!") (127140 Points)
Replied 17 July 2018

If we will opt presumptive Taxation u/s 44AD then T/O is Rs. 118...

If will opt u/s 44AA then T/O is Rs. 100

Jethmal Singhvi (Chartered Accountant-Practitioner) (140 Points)
Replied 26 September 2018

In my opinion and thought by practicle, Turnover shall be Rs. 100, as Rs. 18 hasbeen collected on behalf of Govt. from the buyers. However Section 145A of the Income Tax Act,1961 states that purchase , sale and inventory shall be valued by taking into account the amount of any tax, duty, cess or fee.

Sunil (Trader) (2611 Points)
Replied 17 March 2019

After introduction of GST the value of inventory we have is excluding GST as the GST component (IGST, CGST, SGST, UTGST) is all separately lying as Input GST in our books of account and these are adjusted against Output GST. Even GST excludes the GST from the turnover in calculating aggregate turnover.

As GSTR 3B for March is filed between 1st and 20th April you will have Input GST as your asset and Output GST as your liability as your return is not yet filed. Even if you deposit money in Cash Ledger it will reflect as asset in Cash Ledger.

This aspect of GST is one of the grey areas that ought to be ironed out in the Income Tax Act for Section 44AD. The legal fiction is the higher the rate of tax, the higher your presumptive income because GST Rate varies from Nil to 28%. There is also a situation of Composition dealers who do not charge customers the GST. For the same product there will be varying income under presumptive scheme. Someone with a small turnover of 10 lakhs maybe forced into GST just because of interstate supply. He will have a disadvantage against a URD.

What will happen is a person with 10 lakhs turnover in North East state will have to show a higher income than a person with same turnover in other states only because of GST.

CA Ankit Agarwal (CA, CS) (688 Points)
Replied 22 March 2019

If You are opting for presumptive scheme u/s 44AD then GST shall be added in Turnover.

But if If You will go for regular scheme u/s 44AA then GST shall not be added to Turnover.

In your case, GST will not be added.

2 Like

ABHIJIT MANNA (ACCOUNTANT) (444 Points)
Replied 25 March 2019

Dear Ankit Jee

my case was u/s 44AD and you told that GST shall be added in turnover but again you told in last line GST will not be added. So please don't misguide.

CA Ankit Agarwal (CA, CS) (688 Points)
Replied 26 March 2019

GST shall be added in your case.

Please ignore "NOT" in the last line above.

BMS LAW ASSOCIATES (ADVOCATE) (22 Points)
Replied 22 August 2019

I would suggest that do not include the GST amount in Turnover for Sec.44AD, unless we receive any clarification from CBDT or ITD reason for not including GST in TO is, presumptive income will also be calculated on the GST amount which is never consider as our income.

Therefore, I would say do not include GST amount in TO. Section 145A says about inclusion of tax for determining the income chargeable under the head Profits and gains of business & profession only and this section is not applicable for other purposes..