Whether GST is to be taken as part of turnover for Sec. 44AD of Inc

Whether GST is to be taken as part of turnover for Sec. 44AD of Income tax?

Professional community seems to be divided between Yes and No on this. To me, answer is a clear NO- For determining turnover for Sec.44AD, GST is NOT requied to be considered as part of turnover. The answer comes out from the phraseology  of the act itself.Lets do an analysis :

Income Tax Act does not define “turnover”. However it has been specifically defined in Sec. 2(112) of CGST Act where turnover “excludes Central Tax, State Tax, Union Territory Tax, integrated tax and cess.”

In Income tax, issue of inclusion of GST in turnover arises due to Sec. 145A. Relevant part of Sec. 145A reads as follows :

Method of accounting in certain cases :
145A. For the purpose of determining the income chargeable under the head “Profits and gains of business or profession”,—
(i) the valuation of inventory shall be made …..;
(ii) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation.

Reasons of GST not being part of turnover for Sec. 44AD

Reason 1
Sec. 145A(ii) does not specifically refers to GST. It provides for inclusion of those taxes which are “paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation.”
GST on Sales (output GST) does not fit the criteria. It is NOT a tax for bringing the goods to the place of its location and condition as on the date of valuation.

Reason 2
Sec. 145A is not for computation of Income. As the heading of section mentions, it is for the method of accounting.
Since S. 44AD does not require any accounting, there is no “Method of Accounting” here and as such S. 145A has NO applicability for S. 44AD.