A tax audit is required if gross turnover or receipts from a business or profession exceeds the prescribed threshold limit. Sales, turnover, gross receipts are the buzzwords for Tax Audit, and Income-tax Act gives no clarity on calculating such sales, turnover, or gross receipts.

Before the taxpayer, various questions come up on computation of turnovers, such as, should it be gross sales or net sales? Should it include GST? Should it include commission, etc.?

This write-up discusses some of the questions about the computation of gross receipts/turnover for tax audits.