Importance & Calculation of Aggregate Turnover Under GST

Topic Covers:

1. Meaning of Aggregate Turnover
2. Other Important Definition
3. Aggregate turnover includes and excludes
4. How to Calculate?
5. Turnover in State
6. Reference of aggregate turnover in GST Act
7. Other Important Points

1. Meaning of Aggregate Turnover

‘Aggregate turnover’ is a crucial parameter for deciding the applicability of various matters under the GST law like; registration, E-invoicing, Annual return, audit etc. The aggregate turnover is the most important factor in determining the applicability of the provision of the specific category of taxable persons.

The term "aggregate turnover" is defined under section 2(6) of the CGST Act, 2017.  As per the section "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 a 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.

The aggregate turnover, computed for supplies done in the entire financial year starting from April to ending in March, is called annual aggregate turnover.

2. Other Important Definition

Some important definitions to understand the meaning of aggregate turnover, under the CGST Act are as follows:

The expression “taxable supply” is defined under section 2(108) of the SCGT Act:

"taxable supply" means a supply of goods or services or both which is leviable to tax under this Act.

The “exempted supply” as defined in section 2(47) of the CGST Act:

"exempt supply" means the supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply.

Section 2(78) of the CGST Act defines the “non-taxable supply” as

"non-taxable supply" means a supply of goods or services or both that is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;

3. Aggregate turnover includes and excludes

Based on the above provisions and definitions here are specific inclusions and exclusions:

1. Aggregate Turnover includes:

• All Taxable supplies including outward supplies which are taxable under RCM.
• Zero-rated supply (Exports and Supplies to SEZ)
• Exempt Supply
• Inter-State supply
• Supply by agent on behalf of his principal
• Taxes other than prescribed under the CGST Act

1. Aggregate Turnover excludes:

The aggregate turnover does not include the following:

• Inward supplies on which GST is payable under the RCM
• CGST, SGST, UTST, IGST or Compensation Cess
• Goods sent on Job Work to a Job worker, unless not considered to be deemed supplies.
• Goods returned to the Principal by the job worker.
• Schedule III activities (8 activities)

4. How to Calculate Aggregate Turnover in GST?

The calculation of Aggregate turnover is done on all India bases having the same PAN. It Means person supplying goods or services all over India with the same PAN, will be aggregated.

Let's take an example:

XYZ Pvt Ltd is a company registered in Delhi. During the financial year 2022-23, it made the following supplies:

Value of taxable supplies - ₹ 80,00,000 (₹ 40,00,000 in Delhi, ₹ 20,00,000 in M.P. and ₹ 20,00,000 in Maharashtra)

Value of exempt supplies - ₹ 20,00,000

Value of exports - ₹ 30,00,000

Taxes levied under GST Act - ₹ 4,00,000

Value of inward supplies - ₹ 8,00,000

Calculation of the aggregate turnover of XYZ Pvt Ltd.:

Aggregate Turnover = Value of all taxable supplies + Value of all exempt supplies + Value of all exports

Aggregate Turnover = 80,00,000 + 20,00,000 + 30,00,000

Aggregate Turnover = ₹ 1,30,00,000

Therefore, the aggregate turnover of ABC Private Limited for the financial year 2022-23 is ₹1,30,00,000.

5. Turnover in State

The definition of the term ‘turnover in State’ (or UT) is a replica of the term ‘aggregate turnover’, but for the fact that ‘turnover in State’ is restricted to the turnover of a taxable person within a state, as opposed to aggregate turnover with is PAN-based (i.e., all taxable persons having the same PAN, across States). In other words, “turnover in state” refers to the aggregate turnover of an entity within a particular state.

The expression “Turnover in state” or “Turnover in union territory” is used in different provisions of the act. The following references are made of the term in the Act:

• Composition scheme: Under the composition scheme tax payable by the taxable person is calculated on the value of ‘turnover in State’ within the state at the applicable tax rate. This tax should be paid by the taxable person in the State in which the registration is obtained.
• Distribution of input tax credit by an ISD: In case of the distribution of credit that is attributable to two or more units of the person, the credit shall be distributed amongst such units on a pro-rata basis (i.e., the ratio of their respective ‘turnover in State’ to the aggregate of the ‘turnover in State’ of all such units).
• Turnover in the State includes ‘all’ taxable supplies which includes exempt supplies. When tax is being paid under section 10 of the CGTS Act on ‘turnover in State’, the composition rate will need to be applied not on the value of supplies in respect of which composition is allowed but on other supplies also. The word used in the definition is ‘all taxable supplies’ in the State of each distinct person.

6. Reference of aggregate turnover in GST Act

Relevance of Aggregate Turnover is given under the GST law in different sections.

• GST registration: Every person supplying any goods or services that are chargeable to tax under GST is required to pay GST and resultantly required to obtain GST registration. However, there is a threshold limit for GST registration as per the law. If the aggregate turnover exceeds the specified threshold limit, registration is required to be obtained under GST.

The GST turnover limit for registration is as follows :

Category	Turnover Limit
Composition scheme	1.50 Cr ( or ₹ 75 Lakhs for special category states) in the previous financial year
Normal GST Registration
Special category States	10 Lakhs in Financial year
Other States	20 Lakhs in Financial year
A Person exclusively engaged in intra-supply of goods	40 Lakhs in Financial year

Special category States as per section 22 of the act are Manipur, Mizoram, Nagaland, and Tripura.

• Calculation of Late Fee: In case of late filing of annual return for calculation of late fee it is required to calculate the aggregate turnover.
• Applicability of e-Invoicing: E-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices and a few other documents are authenticated electronically by GSTN for further use on the common GST portal. This system of e-Invoicing is implemented on specific categories of persons, mostly large enterprises. The Aggregate turnover in any preceding financial years from FY 2017-18 is considered to check the applicability of the section.
• QRMP Scheme: To opt quarterly return monthly payment scheme in which GST liability is paid on a monthly basis and return is filed on a quarterly basis. The aggregate turnover in the previous financial year is calculated.
• Annual Return: To ascertain the requirement for filing of GST Annual Return in FORM GSTR - 9 & Reconciliation Statement in Form GSTR - 9C.
• HSN/SAC Code: HSN/SAC code is mandatory to mention in tax invoices. Relaxation has given to mention a four-digit HSN code on the turnover basis, to ascertain the requirement to mention HSN codes on the Invoice it is required to calculate aggregate turnover.

7. Other Important Points:

Here are other important points about the aggregate turnover:

• Schedule III activities are neither supply of goods nor services hence should not be included in Aggregate Turnover.
• Exempt Supplies: Section 2(47) of the CGST Act
  • ‘NIL’ rate supplies;
  • supplies that are wholly exempted from GST u/s 11 of CGST Act or u/s 6 of IGST Act; and
  • Non-taxable supplies – Section 2(78) of the CGST Act

• Nil Rated Supply: - The word “Nil Rated supply” is nowhere explained in GST Law. The main basic difference between Nil Rated and Exempted Supply is that, for Nil Rated Supply the tax rate is nil and therefore no tax is payable, whereas for the exempted supply the tax rate is greater than 0% but exemption is given on these supplies as per Exemption Notification of the act.
• The amount collected by the seller as an agent of the government Tax like in case TCS(tax collected at source) from the customers u/s 206C (1H) of Income Tax Act, 1961 will not be included in aggregate turnover.

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