As we all know that GST registrations are mandatory for anyone with an aggregate turnover, in a financial year exceeding Rs.20 lakhs or Rs.40 lakh for a supplier of goods has to mandatorily register under Goods and Services Tax.
For all those who might have a confusion as to what is aggregate turnover in GST registration and how to calculate it, this article is all you need to understand it. This article will explore the following points.
- What is aggregate turnover?
- Purpose of aggregate turnover.
- List of special category states.
- How to calculate aggregate turnover?
Let’s delve into it!
What is Aggregate Turnover?
Aggregate turnover is the aggregate value of all taxable supplies, 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 an all-India basis but excludes Central tax, State tax, Union territory tax, Integrated tax and cess.
This excludes the value of inward supplies on which tax is payable by a person on reverse charge basis. The annual aggregate turnover is calculated from April of a year and ends March of the next year. But what is the purpose of the aggregate turnover? Let’s try to understand.
Purpose of Aggregate Turnover
The main term for GST registration is the aggregate turnover. As per GST law, any entity with an annual turnover of above Rs.20 lakh can opt-out of registering GST. For special category states excluding the State of Jammu and Kashmir entities with an annual turnover of above Rs.10 lakh can opt-out of registering GST.
The GST shall calculate the accumulated turnover by taking together the value in respect of the activities carried by all the entities of the concerned person on a pan-India basis.
List of Special Category States
Here is a list of states that are assigned special status under Goods and Services Tax:
- Arunachal Pradesh
- Jammu & Kashmir
- Himachal Pradesh
The aggregate turnover for all the above states has been kept at Rs. 10 lakh. So a similar model will apply here as well, however the numbers will get adjusted.
How to Calculate Aggregate Turnover in GST Registration?
For the purpose of registration, where turnover limit applies, one has to calculate the aggregate turnover during the year. The Aggregate Turnover of the year shall be sum of following:
1. Value of all taxable supplies
2. Value of all exempt supplies
3. Value of export supplies
4. Value of inter-state supplies
5. Turnover of all entities of a person under the same PAN
Incase of the special states, take for instance, the aggregate turnover of farmer Mr. Sumi living in Nagaland earns Rs. 15 lakh from agriculture. His taxable turnover from the sale of plastic bags is only Rs. 50,000. Mr. Sumi will still have to register under GST as his aggregate turnover exceeds the threshold limit of Rs. 10 lakh for special category states.
The Government may, at the request of a special category State and on the Council’s recommendations, increase the aggregate turnover referred to in the law from ten lakh rupees to such level, not exceeding twenty lakh rupees, and subject to such conditions and limitations, as may be prescribed in the CGST Act, 2018.
As a result, the threshold limit for the states of Jammu and Kashmir, Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand remains Rs.20 lakhs as of 1st January 2019, and Rs.10 lakhs for the states of Manipur, Mizoram, Nagaland, and Tripura.
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Here is a quick tutorial for your reference
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A business whose aggregate turnover in a financial year exceeds Rs.20 lakhs or Rs.40 lakh for a supplier of goods has to mandatorily register under Goods and Services Tax.
- Value of all taxable supplies, value of all exempt supplies, value of export supplies, value of inter-state supplies, turnover of all entities of a person under the same PAN.
- If a person who is not eligible or not willing to opt for composition scheme has to opt for regular scheme.
- Opt-ing for composition scheme, taxpayers with Aggregate Turnover lesser than 1.5 crores (INR 75 lakh in case of supplies from special category states) can opt to pay a fixed rate as GST under the Composition Scheme.
- Registered persons whose Aggregate Turnover exceeds INR 2 crore during a financial year are liable for GST Audit.
- Aggregate Turnover is calculated on the Permanent Account Number (PAN) basis. This means if an individual has four branches (having the same PAN) in 4 different states, turnover of all branches will be considered to ascertain Aggregate Turnover.
- The value of exported goods or services, exempted goods or services, inter-state supplies between distinct persons having the same PAN would be added to ‘Aggregate Turnover.’