Concept of Aggregate Turnover in GST

Turnover, in common parlance, is the total volume of a business. The term aggregate turnover has been defined in section 2(6) of CGST Act 2017 :-

  Meaning of Aggregate Turnover

 “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

Inclusion in calculating Aggregate Turnover :-  Taxable supply , exempt supply , Nil Rated supply , Zero rated supply , Non GST supply and supply to distinct person ,need to be included in calculation of aggregate turnover . Meaning of these supplies has been explained as follows :-

Taxable supply :– Taxable supply has been broadly defined and means any supply of goods or services or both which, is leviable to tax under the Act.( Sec 2(108) of CGST Act)

Exempt Supply :- As per  section 2(47) of the CGST Act, 2017 , Exempt Supply means supply of any goods or services or both which attracts nil rated of tax or which may be wholly exempt under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes Non- Taxable supply.

Notification No. 02/2017- Central Tax (Rate) for goods and Notification No. 12/2017- Central Tax (Rate) for services have been issued by using power given under section 11 of CGST ACT. So goods and services mentioned in these two notifications are exempted goods as per definition of exempt supply.

NIL Rated supply :-  Nil rated supply is nowhere defined in GST Law.  The basic difference between nil rated and exempt supply is that the tariff is higher than 0% in case of exempt supply. But there is no tax payable due to exemption notification. Whereas in case of NIL rated supply, the tariff is at NIL rate so there is no tax without the exemption notification.

The rates of goods are notified under section 9(1) vide Notification No. 01/2017- Central Tax (Rate) which contains six schedules specifying tax rates at 2.5%, 6%, 9%, 14%, 1.5% and 0.125%. There is no schedule levying tax at 0% i.e. NIL rated.

In case of services, there is only one service which is notified as Nil rated in Notification No. 11/2017- Central Tax (Rate) at S.No. 24 i.e Support services to agriculture, forestry, fishing and animal husbandry.

Zero Rated Supply As per sec 16(1) of IGST Act any supplies made by a registered dealer as an export (Both goods or services) or supply to an SEZ qualifies for Zero Rated Supplies in GST.

Non GST Supply :- Goods or services on which GST is not leviable are called Non GST supply. Examples of Non-GST supplies are alcohol for human consumption, petroleum products, electricity etc.

Supply to Distinct person :-  According to section 25(4) of CGST Act a person who has obtained or is required to obtain more than one registration whether in one State or Union territory or more than one State or Union territory shall in respect of each of such registration would be treated as “Distinct person”.

Aggregate turnover is an all-encompassing term covering all the supplies effected by a person having the same PAN.

Exclusion in calculating Aggregate Turnover : The following  charges must be excluded while calculating aggregate turnover:

• Taxes & Cess with respect to CGST, SGST or IGST Acts
• Value of taxes payable on reverse charge mechanism
• Value of inward supplies of goods and services

How to calculate Aggregate Turnover :  Aggregate Turnover will be calculated as follows :-

Value of all (taxable supplies+ exempted supplies +Nil Rated supplies + Zero rated supplies +Non GST supplies ) – ( Taxes & Cess under GST Act + inwards supplies +supplies under reverse charge ) of a person having the same PAN(Permanent Account Number) across all his business entities in India.

Relevance of Aggregate turnover : The aggregate turnover is a crucial parameter for determining the following aspects :-

Determine the obligation of registration  :- Aggregate Turnover is relevant  for  a person to determine threshold limit to obtain registration under the Act

Threshold limit for exclusively supply of goods : RS 40 lakh (Rs  20 lakh in case of supplies effected  from special category states) & for supply of Services or (goods and services both)) : RS 20 lakh (Rs  10 lakh in case of supplies effected  from special category states)

Determine the limit of compounding levy :-Threshold limit to opt for composition scheme: Rs 1.5 crore in a financial year (Rs 75 lakh in case of supplies effected from special category states).

Determine the “Taxable person  Section 2 of CGST Act defines the “taxable person” as a person who has obtained registration or is liable to register as per section 22 and 24 of CGST Act. Here the Section 22 provides a liability to register when the tax payer’s turnover exceeds the limit as determined in certain cases. . This criteria is again based on aggregate turnover.

Calculation of Late fee  :- Under section 33 any registered taxable person person who fails to file the return u/s 30 i.e Annual return shall be liable to pay a late fees of Rs. 100 for every day when such failure continues subject to a maximum of an amount of .25% of his aggregate turnover. This can escalate the amount of late fee because aggregate turnover will include all supplies except reverse charge.

Relevance for an Agent :- For an agent, the supplies made by him on behalf of all his principals would have to be considered while analyzing the threshold limits

Relevance for job worker:-  the following supplies effected on completion of job work would not be included in this aggregate turnover when working under Sec 143

a.. Goods returned to the principal

b. Goods sent to another job worker on the instruction of the principal

c. Goods directly supplied from the job worker’s premises (by the principal); it would be included in the aggregate turnover to the principal.

Aggregate Turnover for Audit : Registered persons with an aggregate turnover exceeding the prescribed GST audit limit of Rs 2 Crore during a financial year are liable for GST Audit. The term Aggregate Turnover is defined in section 2(6) as “All India PAN based turnover for a particular financial year”. This includes Exports , Inter state supplies , Exempt supplies , Stock transfer etc .These supplies of transfers forming a part of the Aggregate Turnover are exclusive of GST and Compensation CESS.

The turnover limit of Rs 2 Crore is same for the registered tax persons across all States and UTs. Thus, no separate turnover limit is defined for Special Category States for GST Audit.

Difference between Aggregate Turnover and Turnover in a State :The aggregate turnover is different from turnover in a State. The former is used for determining the threshold limit for GST  registration as well as eligibility for Composition Scheme. However, the composition levy would be calculated on the basis of turnover in the State.