Turnover is the amount of money a businessman is making in a particular time period. The term Aggregate Turnover defined by the government under GST law means the aggregate value of all taxable and non-taxable supplies including exports of the person having the same PAN (Permanent Account Number). It is to be determined on all India basis. This does not include taxes charged under the following acts
- CGST (Central Goods and Services Tax)
- SGST (State Goods and Services Tax)
- IGST (Integrated Goods and Service Tax)
Suppose, if someone has more than one branch of his company in different parts of the country under the same PAN filing single income tax return, the turnover for all such branches will be aggregated. Inward supplies are not included in an aggregate turnover on which tax is imposed on reverse charge basis. The value of such supplies on which tax is paid by recipient, would not form part of the ‘aggregate turnover’ of the recipient of such supplies. However, the value of such supplies would continue to be part of the ‘aggregate turnover’ of the supplier of such supplies.
The aggregate turnover is different from turnover in a State. The former is used for determining the threshold limit for registration as well as eligibility for Composition Scheme. However, the composition levy would be calculated on the basis of turnover in the State.
The significance of Aggregate Turnover
A person whose aggregate turnover from business in a financial year exceeds Rs. 20 lakhs is bound to register under GST. For the North-Eastern and hilly states it is set at Rs. 10 lakhs because they are considered as special category states.
Ram and Shyam both are farmers and their annual turnover is Rs. 40 lakhs. As the income is agriculture-based, the turnover is exempted from GST. Unlike Shyam, Ram supplies jute bags with his crops and has separate charges for it. Turnover from the sale of bags is Rs. 2 lakhs, so this transaction is chargeable to GST. In simple words we can say, Ram’s aggregate turnover is Rs. 2 lakhs and Shyam’s is zero.
From above we can conclude that Ram is required to register under GST because his aggregate turnover exceeds the threshold limit of Rs. 20 lakhs and Shyam doesn’t have to as he is exempted from doing so.
It is a much-discussed topic if GST going to expand the taxpayer base in India or not? From the above it can be seen that GST includes all the non-taxable supplies and exempt supplies including exports, in such cases, people who were earlier benefited by the exemption will not be able to enjoy the same anymore. For the small taxpayers, the proposed scope of aggregate turnover may not produce the desired benefits. Maybe as a small based business, you may not attract the interest of tax authorities up till now, but it is high time to get registered under GST.
If you are still confused about GST as a business owner, feel free to consult the GST experts at Legal Raasta. You can get comprehensive assistance with GST Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance.