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Scrutinizing the definition of "Aggregate Turnover" in GST

Under GST, ‘Aggregate turnover’ is a crucial parameter for deciding various issues which are relevant under the Act. Therefore, it is very important to calculate aggregate turnover correctly. The aggregate turnover computed for the entire financial year between April of a year up to March of next year is called annual aggregate turnover.

As per section 2(6) of CGST Act, 2017 ‘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;

For simplification, Aggregate turnover is aggregate value of following, calculated on all India basis having same PAN:

Inclusions in Aggregate Turnover:

1. All Taxable supplies including supplies which are taxable under RCM
2. Zero rated supplies (Exports & Supplies to SEZ)
3. Exempt Supplies
4. Inter State supplies
5. An agent making supplies on behalf of his principal (whose invoice is in the principal) would be included in the Aggregate turnover.
6. Taxes other than prescribed under the CGST Act

Exclusions in Aggregate Turnover:

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

Points to be noted:

• 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
  1. ‘NIL’ rate supplies;
  2. supplies that are wholly exempted from GST u/s 11 of CGST Act or u/s 6 of IGST Act; and
  3. Non taxable supplies – Section 2(78) of the CGST Act - supplies which is not leviable to tax under the CGST or IGST Act (alcoholic liquor for human consumption and petroleum products).

• Nil Rated Supply: - Meaning of Nil Rated supply is nowhere explained in GST Law. The main basic difference between Nil Rated & Exempted Supply is that, in case of Nil Rated Supply the tariff is nil due to which there is no tax whereas in case of exempted supply the tariff is greater than 0% but this is exempted by way of Exemption Notification (i.e. NN 02/2017 - CT(R) dated 28.06.2017 & NN 12/2017 - CT(R) dated 28.06.2017 for goods and services respectively).

• Interest income shall be included while calculating aggregate turnover. Interest includes value of exempted interest income earned by way of extending deposits in PPF & Bank Saving accounts and loans and advances given to his family/friends (Authority For Advance Rulings, Gujarat- In re, Shree Sawai Manoharlal Rathi)
• Tax collected (TCS) from the customers u/s 206C (1H) of Income tax Act, 1961 will not be included in aggregate turnover as this amount is being collected by the seller as an agent of the government.

• As per Authority For Advance Rulings, Karnataka- In re, Anil Kumar Agrawal, following income shall be included/excluded from the  ‘Aggregate turnover’ of an unregistered person -

Inclusion-

1. Salary received as Director from a (P.) Ltd. Company (If director give service a as non-executive director)
2. Rental income on Residential Property
3. Rental income on Commercial Property
4. Interest income received from different sources-  Interest on Partners fixed/ variable  capital credited to partner's capital account, loan given, advance given, deposit/fixed deposit, Debentures, Post office depos, National Savings certificate, PF account , Accumulated Interest (along with principal) received on closure of PF account, National Pension Scheme (NPS) and Interest income on PPF

Exclusion-

1. Salary received as partner from  partnership firm
2. Salary received as Director from a (P.) Ltd. Company(If Director is employee for example - Executive Director)
3. Income earned out of securities, which are excluded from the definition of goods or services. Therefore they are not relevant to the aggregate turnover and hence are not required to be added to the aggregate turnover for registration under the provisions of GST Act.
4. Receipt of income out of maturity proceeds of life insurance policies

Relevance of Aggregate Turnover:

1. To determine the requirement of obtaining registration under GST. If the aggregate turnover exceeds the specified threshold limit, registration is required to be obtained under GST.
2. To determine the threshold limit for eligibility under composition scheme.
3. For calculation of late fee in case of delay in filing of annual return, i.e. upto a maximum of 0.5% (CGST+SGST) of Turnover in the State or Union Territory.
4. For calculation of Interest & Late Fee relating to COVID-19 relaxations.
5. To determine the Late Fee w.e.f. the tax period/ quarter ending June, 2021 onwards.
6. To ascertain periodicity of filing of GSTR-1 & 3B return (monthly or quarterly).
7. To ascertain the requirement for filing of GST Annual Return in FORM GSTR - 9 & Reconciliation Statement in Form GSTR - 9C.
8. To ascertain the requirement to mention HSN codes on Invoice.
9. To ascertain the applicability of E-Invoicing.

Valuable information... Thanks

Is turnover of Schedule I supplies not included in annual aggregate turnover.I think that it is left out by mistake.

Replied to Rajesh Advani

Schedule 1 items are also considered for determining aggregate turnover

There is word supply is used but which suplply inward or out ward?
If a person's outward supply is39 lakh but inward supply crossies 40 lakh. duri g the year is he liable for registration

Replied to Bakulkumar

There is outward supply only to be considered for determining aggregate turnover

Do we need to considered capital gain for the purpose of agreegate turnover ?
Kindly explain the same?

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