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

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

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 Agent

s. 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