Analysis of Aggregate Turnover in GST

Turnover is the very essence of every business in existence. In common parlance, it is the total volume of sales, be it of goods or services or both, done by the company during the year. In GST, the turnover bears greater significance as it is what defines whether the business has to register in GST or not. This article delves upon the concept of aggregate turnover in GST:

Definition of Aggregate Turnover –

As per the provisions of Section 2(6) of CGST Act, 2017, aggregate turnover is defined as the aggregate value of –

1. All taxable supplies included zero rated supplies

(excluding inward supplies on which tax is payable on reverse charge basis)

2. Exempt supplies

3. Export of goods or services of both

4. Inter-state supplies of all persons having the same Permanent Account Number (‘PAN’) and computed on all India basis.

Exclusions –

Aggregate Turnover does not include the CGST, SGST, IGST, UTGST and GST Compensation Cess.

Important Definitions relevant to Aggregate Turnover in GST

A. Taxable supplies – As per Section 2(108) of CGST Act, 2017, ‘taxable supply’ means supply of goods or services or both which is leviable to tax under GST.

B. Zero-rated supplies – As per Section 16 of IGST Act, 2017, ‘zero rated supply’ means any of the following supplies of goods or services or both, namely –

(a) Export of goods or services or both; or

(b) Supply of goods or services or both to an SEZ unit or an SEZ developer.

C. Exempt supplies – As per Section 2(47) of CGST Act, 2017, ‘exempt supply’ means supply of any goods or services or both –

(a) Which attracts NIL rate of tax; or

(b) Which may be wholly exempt from tax under Section 11 of CGST Act or under Section 6 of IGST Act; and

(c) Includes non-taxable supply.

D. Inter-state supplies – As per Section 7 of IGST Act, inter-state supply means the following –

(a) Subject to the provision of Section 10 (for goods) and Section 12 (for services) of IGST Act, supply where the location of the supplier and place of supply are in –

• • 2 different states
  • 2 different union territories
  • State and union territory it shall be treated as inter-state supply.

(b) Supply of goods imported into India, till they cross the customs frontiers of India

(c) Supply of services imported into the territory of India

(d) Supply of goods or services or both when the supplier is located in India and the place of supply is outside India;

(e) Supply of goods or services or both to or by a Special Economic Zone developer or a Special Economic Zone unit; or

(f) Supply of goods or services or both in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

E. Zero-rated supply vs Exempt supply – In case of zero-rated supplies, ITC of inputs and input services is admissible whereas in case of exempt supply, ITC of inputs and input services is not admissible.

F. Exempt supply vs Nil rated supply – In case of exempt supplies, the supplies are chargeable to tax but are exempt by way of exemption notification whereas in case of Nil rated supplies, there is no GST tariff on the supply itself is Nil as a result of which no tax is levied.

Aggregate Turnover vs Turnover in a state

1. The aggregate turnover is calculated for a single PAN on all India basis whereas turnover in a state is the statewise calculation of turnover for a PAN.

2. Aggregate turnover is calculated for determining GST registration threshold limit and eligibility for composition scheme whereas turnover in a state is used for calculating the amount of composition levy to be paid to the government.

Specific inclusions and exclusions in Aggregate Turnover

Sr No	Particulars	Included/ Excluded
1	Non-GST supply (example – alcoholic liquor for human consumption and petroleum products)	Included
2	Supplies made by agent on behalf of principal	Included (in aggregate turnover of agent)
3	Taxes other than GST	Included
4	Outward supplies taxable under RCM	Included
5	Inter-state self supplies	Included
6	Goods supplied to job-worker on principal to principal basis	Included
7	Goods supplied to job-worker for job work	Excluded

Relevance of Aggregate Turnover

1. Determine the obligation to obtain registration under GST. If the aggregate turnover exceeds the specified threshold limit, registration is required to obtained under GST.

2. Determine the threshold limit for obtaining registration under composition scheme.

3. Calculation of late fee in case of delay in filing of annual return.

4. Determination of periodicity of filing of GSTR-1 return (monthly or quarterly).

5. Determination of limit for filing of GST Annual Return – GSTR-9.

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Disclaimer – The views expressed in this article are personal views of the author based on study of GST laws and its understanding.