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Whether turnover includes taxes as per companies act ?

1684 views 6 replies

saumil thakkar

chartered accountants

25 Points Posted on 05 September 2018

Hello Professional Collegues,

As per Companies Amendment Act 2017, Section 2(91) "turnover" means the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year;'.

Does the above definition includes taxes charges ?

Thanks in advance.

Replies (6)

Vatsla Alagh

1545 Points Posted on 05 September 2018

Turnover is always calculated by excluding the taxes paid

RAJA P M

"Do the Right Thing...!!!"

128152 Points Posted on 05 September 2018

Yes... I agreed to Ms Vatsla Alagh.,

Turn Over Calculated Exclude for the Taxes.

saumil thakkar

chartered accountants

25 Points Posted on 06 September 2018

Dear Both, Some legal interpretation says that it should be interpreted as follows: "Gross amount".....of revenue recognised in PL account. i.e GROSS amount. Confusion arises because revenue recognised in PL is net of taxes and they are asking for Gross amount. Please help with your view.

Vatsla Alagh

1545 Points Posted on 06 September 2018

@ saumil-If it is inclusive of taxes, then no tax payable or receivable would have be shown in financials.. So here turnover is exclusive of taxes

saumil thakkar

chartered accountants

25 Points Posted on 06 September 2018

Vatsla, just to let you know I consulted legal experts and they are of the opinion that as Schedule-III is applicable which states that

Revenue from Operations less: Excise Duty/GST i.e Net Revenue disclosed in PL account.

Hence provision is of view to take Gross Amount rather than Net. i,e Including Taxes.

Thanks for yout time.

Vatsla Alagh

1545 Points Posted on 06 September 2018

So u mean to say turnover as per companies act is amount inclusive of taxes and for the purpose of financials, amount shown as revenue in PL is exclusive of taxes.. Right?