Gross receipts include the total amounts your business or organization receives from all sources during its annual accounting period without subtracting expenses or other deductible items. Basically, gross receipts are the total amount of revenue your business collects during the year. Gross receipts components and rules can vary by state and municipality. To ensure you understand what your state or locality considers gross receipts, consult your state or city.
Following receipts shall be included in the gross receipts:
- Out of pocket expenses, recovered by way of consolidated fees, would form part of gross receipts.
- Cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of Government.
- Any duty drawback is payable to any person against exports under specified schemes.
- The aggregate gross interest income received by a money lender, commission, brokerage, service, and other incidental charges received in the business of chit funds.
- Reimbursement of expenses incurred .However, if the same is credited to a separate account in books, only net surplus on this account should be added to gross receipt or turnover.
- Hire charges of cold storage.
- Liquidated damages.
- Insurance claims except those which are linked with the fixed assets.
- Sale proceeds of scrap, wastage, etc., unless treated as part of sale turnover, whether or not credited to a miscellaneous income account.
- Lease rent in the business of operating lease.
- Finance income to reimburse and reward the lessor for his investment and services.
- Hire charges and Installments received in the course of hire purchase.
- Advance received and forfeited from customers.
- The value of any benefit or perquisite, whether convertible into money or not, arising from business or exercise of a profession.
What are the Differences between Gross Sales and Gross Receipts?
The IRS defines “gross receipts” as “The total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.” The federal government uses “Gross sales” to define income based on the total sales price of your reported inventory sold.
What Is a Gross Receipts Tax?
A gross receipts tax is a tax applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding.