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