Aggregate Turnover in GST – Everything you need to know

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As per the definition of aggregate turnover in GST described by the Goods and Service Tax law, it includes the value of:

  • All taxable supplies of goods and services,
  • Exempt supplies of goods and services,
  • Supplies that have a nil rate of tax,
  • Exports of goods or services or both, including zero-rated supplies,
  • Inter-State supplies of persons having the same Permanent Account Number.

If a person is having several branches across the world but uses the same PAN for purpose of income tax:

In such a case, the turnover of the assessee for all such branches is required to be aggregated.

Exclusions from the definition:

However, the above definition does not include the following:

  • value of inward supplies of goods and services,
  • value of inward supplies on which the recipient is required to pay GST on Reverse Charge Mechanism basis,
  • Central Goods and Service tax, state tax, Union Territory Tax, integrated tax and any kind of cess.

Importance of aggregate turnover:

  • Aggregate turnover is relevant to determine whether the person is required to be registered under GST or not.

It is mandatory for every business to get registered under GST if the aggregate turnover in the preceding financial year:

  • is more than Rs. 40 Lakhs in case of goods
  • and Rs. 20 Lakhs in case of services.

However, for the North-eastern hilly states and the special category states, the threshold limit is set at Rs. 20 Lakhs. For calculating threshold limit of an agent, all the supplies made by him for all the principals shall be considered.

  • Aggregate turnover is important as it helps to determine the eligibility of a taxpayer for the composition levy scheme. An individual can opt for composition scheme if he is not exempt from GST. As announced in the 32nd GST Council Meeting, a person is eligible for this scheme only if:

the aggregate turnover in the previous year is less than:

  • Rs 1.5 crore in case of goods and
  • Rs 50 Lakhs in case of services.

Benefits of composition levy scheme:

Assessees registered under the composition levy scheme get a number of benefits.

  • They can file returns and pay their taxes on a quarterly basis rather than monthly basis. This can help to save time and money as well.
  • Small assessees opting for composition levy scheme are provided with the facility of free accounting and billing software. But this is available only for assessees whose turnover is up to Rs 1.5 crore in the previous financial year.
  • The taxpayer gets an advantage of paying taxes at a flat percentage of his annual turnover. For the suppliers of goods, tax rate is 1% of annual turnover while it is 6% for the service providers.
  • It helps to avoid issuance of complicated invoices.
  • It will also bring better and more practical policies for small businesses.

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An MBA in finance, I like to cover the wide range of topics related to Taxation, SEBI, Finance and anything that is Public Helpful. The motive is always to make it simpler for the taxpayers understand the system better and take informed decisions.

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