shekhar (Individual) 26 December 2009

Business Expenses

I am in the business of setting up gyms and supplying gym equipment. My profession requires me to meet with clients and understand their fitness needs. Since i do not have a car i travel by cab to reach clients. My queries are:

(a) How do i keep record or proof of taxi travel since i work for 24 days per month. Daily taxi fare amounts to 200/-. So can i implement this formula: 24 x 12 x 200/- = 57600/- and claim it as a deduction under Local Conveyance a/c?

(b) Similarly I spend about 120/- per day on snacks and lunch. So can i apply the above mentioned formula and claim 34560/- as deduction under Office Expenses a/c?

(c) In my profession, I have to pay commission to fitness coaches for giving vital tips / leads on new clients. The commission amt is always paid by cheque which ranges from 5000/- to 100000/-. I do not deduct TDS on comm payments. Is it ok to do so.

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2 Replies

Asha Pole (Legal) 26 December 2009

a. As per the Supreme court, there is no statutory obligation to collect bills and details expenses for conveyance allowance. So you can go with the formula.

b.However in case of lunch/snacks you can claim such expenses only with proper supportings, so a rough figure cannot be estimated and claimed under deduction.

c. The cut off amount for commission is 2500 p.a/- so since you have already crossed the limit you are advisable to deduct TDS on commission paid.

Vineet (Director) 27 December 2009

You need not to have bills for conveyance expenses if they are reasonable. Entries in books with internal vouchers are sufficient. Similarly for snacks etc, internal vouchers will do.

You need to deduct TDS as per IT provisions in respect of each person against payment of commission if your total turnover had exceeded Rs 40 Lakhs in immediate previous year. (Your case of being an Individual).