Aggregate Turnover under GST Regime: GST is a dual tax structure based tax in which both Centre and State has authority to levy and collect tax and is a single rate tax meaning thereby that a particular GST rate on a product/ service is same in the whole India. The focus of the ‘ease of doing business policy’ is mainly on cutting out the tedious documentation and unnecessary paper work and getting the work done in a shorter time span. check more details for Aggregate Turnover under GST Regime from below…
The normal understanding of turnover or understanding under VAT/ CST would not be correct. The definition of “Aggregate Turnover” under GST needs to be understood.
Aggregate Turnover under GST Regime
1. Turnover, in common parlance, is the total volume of a business. The term ‘aggregate turnover’ has been defined in GST law as under:
“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.
2. The aggregate turnover is a crucial parameter for deciding the eligibility of a supplier to avail the benefit of exemption threshold of Rs. 40 Lakhs [Rs. 20 Lakhs in case of special category States except J & K] (new limit from 1st April 2019 ) and for determining the threshold limit for composition levy. Let us dissect the definition in small parts to understand the meaning clearly. There are certain terms used in the definition which need a bit of elaboration.
3. It may be noted that the inward supplies on which the recipient is required to pay tax under Reverse Charge Mechanism (RCM) does not form part of the ‘aggregate turnover’. The law stipulates certain supplies like, Goods Transport Agency services, services received from outside India, to name a few, where the recipient of service is made to pay the tax. The value of such supplies on which tax is paid, would not form part of the ‘aggregate turnover’ of 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.
4. The second element of value which would not be included in the ‘aggregate turnover’ is the element of central tax, state tax, union territory tax and integrated tax and compensation cess.
5. The value of exported goods/services, exempted goods/ services, inter-state supplies between distinct persons having same PAN would be added to ‘aggregate turnover’.
6. Last but not the least, such turnover is to be calculated by taking together the value in respect of the activities carried out on all-India basis.
7. 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.
Analysis of ATO
The definition of ATO. Sec. 2 (6) – means the aggregate value of all taxable supplies( excluding the value f inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and interstate supplies of person having the same permanent account number, to be compluted on all India basis but excludes central tax, Union territory tax, integrated tax and cess.
The definition of exempt supply. Sec 2(47) – means supply of any goods or services or both which attract nil rate of tax or which may be wholly exemption from tax under section 11 or under section 6 of the Integrated Goods and service tax Act, and includes non taxable supply.
ATO would there fore include the following:
- i. All taxable supplies other than reverse charge.
- ii. All supplies with distinct entities including interstate- Same PAN different GST registrations (in different States or separate business vertical).
- iii. Supplies of agents/ job worker on behalf of the principal.
- iv. Goods supplied / received back to/ from job worker on principal to principal basis.v. Exempt supply: exempt under notification, non taxable supplies ( Specified Petroleum Products like Diesel, Petrol, Liquor etc.
- vi. Export or zero rated supplies.
- vii. Taxes other than those under GST
ATO would exclude the following:
- i. Inward supplies (including those under reverse charge)
- ii. Taxes and cesses under GST
- iii. Goods sent for or received back under job work u/s 143
- iv. Intra state supplies
- v. Interstate supply of services
- vi. Transactions which are neither supply of services or goods: employee to employer, services by court or tribunal, MP, MLAs, posts as per Constitution of India, land or completed building and actionable claims other than betting, gambling or lottery.
- vii. Supplies provided and received outside India (Global business)