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Turnover for the purpose of Tax Audit

Posted @ July 23, 2013, 4:35 am under (TAX AUDIT)

According to ICAI Guidance Note the following points should be considered to determine Turnover for the purpose of Tax Audit :-
1. Where a person is carrying on 2 Business/2 Professions – the total turnover of both the businesses shall be
clubbed together and tax audit shall be liable to be conducted if the Total Turnover exceeds Rs. 1 Crore/ Rs. 25
Lakhs as the case may be.
2. Where a person is carrying on business as well as profession and the Turnover of the business is Rs. 1.2 Crore
and the Gross Receipts of the profession is Rs 22 Lakhs. In such a case, ICAI has clarified through a Guidance
Note that the Assessee is liable to get the Tax Audit done of both the business as well as profession because the
Gross Receipts from the business exceed the limit of Rs. 1 Crore. However, if his Total Turnover was Rs. 95
Lakhs and Gross Receipts from business was Rs. 22 Lakhs, he would not be required to get his Tax Audit done.
3. In case where a person has a total turnover of Rs. 98 Lakhs and has sold a Car for Rs. 8 Lakhs. In such a case,
the total amount on adding up becomes Rs. 1.06 Lakhs i.e. above Rs. 1 Crore. Confusion arose whether the
person is liable to get an audit done in this case and ICAI has clarified that the turnover will not include any
amount on the sale of the fixed asset as it was held by the person for business use and not for the purpose of sale.
ICAI has further clarified that the amount received from the following items shall not be included while computing the
Total Sales/Total Turnover/ Gross Receipts:-
  • Sale Proceeds of Fixed Assets
  • Sale Proceeds of Assets held as Investments
  • Rental Income
  • Income by way of Interest unless assessable as Business Income
  • Any expense which is reimbursable to the Agent by the Client

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