Definition
The expression ‘aggregate turnover’ is defined under section 2(6) of Central Goods and Services Tax Act, 2017 (‘Act’ for short) as 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.
Taxable supply
The expression ‘taxable supply’ is defined under section 2(108) as supply of goods or services or both which is leviable to tax under this Act.
Exempt supply
The expression ‘exempt supply’ is defined under section 2(47) as 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.
Formula
The formula for calculation of aggregate turnover is-
Aggregate turnover = Value of [all taxable supplies + exempted supplies + NIL rated supplies + Zero rates supplies + Non GST supplies] – [Taxes and compensation cess + inward supplies + supplies under reverse charge] of a person having the same PAN across all his business entities in India.
Applicability
The aggregate turnover is a crucial parameter for deciding the eligibility of a supplier to avail the benefit of exemption threshold of Rs. 20 Lakhs [Rs. 10 Lakhs in case of special category States except J & K] and for determining the threshold limit for composition levy. 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.
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. The value of exported goods/services, exempted goods/ services, inter-state supplies between distinct persons having same PAN would be added to ‘aggregate turnover’. The turnover is to be calculated by taking together the value in respect of the activities carried out on all-India basis.
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.
Composition levy
Section 10(1) of the Act provides that a registered person, whose aggregate turnover in the preceding financial year did not exceed Rs.50 lakhs, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding-
- 1% of the turnover in State or turnover in Union territory in case of a manufacturer;
- 2.5% of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and
- 0.5% of the turnover in State or turnover in Union territory in case of other suppliers,
subject to such conditions and restrictions as may be prescribed. The Government may, by notification, increase the said limit of Rs.50 lakhks to such higher amount, not exceeding one Rs.1.50 crores (before 01.02.2019 this limit was Rs.1 crore) as may be recommended by the Council.
A registered person, not eligible to opt to pay tax under sub-section (1) and sub-section (2), whose aggregate turnover in the preceding financial year did not exceed Rs.50 lakhs may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding 3% of the turnover in State or turnover in Union territory.
For the purposes of computing aggregate turnover of a person for determining his eligibility to pay tax under this section, the expression “aggregate turnover” shall include the value of supplies made by such person from the 1st day of April of a financial year up to the date when he becomes liable for registration under this Act, but shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.
Distribution of credit by Input Service Distributor
Section 20 provides that the Input Service Distributor may distribute the credit subject to-
- the credit of tax paid on input services attributable to more than one recipient of credit shall be distributed amongst such recipients to whom the input service is attributable and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period;
- the credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period.
Registration
Section 22 of the Act provides that-
- Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs.20 lakhs.
- Where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds Rs.10 lakhs.
- The Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover from Rs.10 lakhs to such amount, not exceeding Rs.20 lakhs and subject to such conditions and limitations, as may be so notified.
- The Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from Rs.20 lakhs to such amount not exceeding Rs.40 lakhs in case of supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified.
The expression ‘aggregate turnover’ shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals.
The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the principal, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.
To be included and not to be included
A doubt may be raised as to what are to be included in the aggregate turnover or not. The following advance ruling show some light on this point:
IN RE: M/S. ANIL KUMAR AGRAWAL - 2020 (5) TMI 221 - AUTHORITY FOR ADVANCE RULING, KARNATAKA, the applicant is an unregistered person and is in receipt of various types of income/revenue, mentioned as under-
- Partner’s salary as partner from my partnership firm;
- Salary as director from Private Limited company;
- Interest income on partners fixed capital credited to partner’s capital account;
- Interest income on partners variable capital credited to partner’s capital account;
- Interest received on loan given;
- Interest received on advance given;
- Interest accumulated along with deposit/fixed deposit;
- Interest income received on deposit/fixed deposit;
- Interest received on Debentures;
- Interest accumulated on debentures;
- Interest on Post office deposits;
- Interest income on National Savings certificate (NSCs);
- Interest income credited on PF account;
- Accumulated Interest (along with principal) received on closure of PF account;
- Interest income on PPF;
- Interest income on National Pension Scheme (NPS);
- Receipt of maturity proceeds of life insurance policies;
- Dividend on shares;
- Rent on Commercial Property;
- Residential Rent;
- Capital gain /loss on sale of shares.
The applicant sought for advance rulings on the following questions-
- Out of the given sources of Income/Revenue which all revenue income shall be considered for aggregate turnover for registration?
- Out of given nature of income/revenue, when the supply, even if exempted, need to be considered?
The Authority for Advance Ruling ruled that-
- Interest income received from different sources - The interest earned by the applicant, out of the deposits/loans/advances extended, amounts to consideration and is exempted. Therefore in the instant case extending the deposits/loans/advances by the applicant is nothing but exempted service and the actual amounts of deposits/loans/advances become the value of the service. Thus these amounts are to be included in the aggregate turnover for registration, under the provisions of GST Act.
- Partner’s salary - In case, if the applicant is a working partner and is getting salary then the said salary is neither supply of goods nor supply of service in terms of clause 1 of Schedule III of CGST Act 2017. Further, in case if the applicant is in receipt of the amount towards his share of profit from the said partnership firm, then also the said income is not under the purview of GST as the share of profit is nothing but application of money and hence the said salary is not required to be included in the aggregate turnover for registration under the provisions of GST Act.
- Salary received by a Director - The remuneration received by the applicant as Executive Director is not includable in the aggregate turnover, as it is the value of the services supplied by the applicant being an employee. Further if the applicant receives the remuneration as a Non-Executive Director, such remuneration is liable to tax under reverse charge mechanism under section 9 (3) of the CGST Act 2017, in the hands of the company, under entry no. 6 of Notification No.13/2017-Central Tax (Rate) dated 28.06.2017. Thus the value of the said services of the applicant being a Non-Executive Director are includable in the aggregate turnover, as it is the value of the taxable services supplied by the applicant, though the tax is discharged by the private limited company, under reverse charge mechanism.
- Rental income on Commercial Property – The applicant receives periodical income towards the impugned supply of service, the same is in the course or furtherance of business and hence the said transaction amounts to supply in terms of Section 7(1) (a) of the CGST Act 2017. Thus it is a taxable supply of service having SAC 997212 and therefore the value of such supply is to be included in the aggregate turnover, for registration.
- Rental income on Residential Property - ‘Services by way of renting of residential dwelling for use as residence, classified under SAC 997211’ are exempted from the tax in terms of entry number 12 of the Notification No. 12/2017 dated 28.06.2017. Thus the impugned supply of service of renting of residential property becomes an exempted supply. Aggregate Turnover includes the value of the exempted supplies also. Therefore the income received by the applicant towards rent of residential property is to be included in the aggregate turnover.
- Income from life insurance policies, dividends on shares, capital gain/loss on sale of shares - In the instant case the dividend on shares, capital gains/losses on sale of shares are relevant to the shares (securities) and the income earned in this relation is nothing but application of money. Therefore this income earned out of shares, which are excluded from the definition of goods or services, also gets excluded from the said definition old goods / 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.
- Income from matured proceeds of LIC policy - The insurance premium of policies is taxable under GST, being the consideration for the services provided by the insurance companies. Therefore on completion of the said contract/ maturity of the policy, there would not be any service involved between the policy holder and the insurance company. Therefore the amounts received on maturity of the insurance policies 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.
Interest income
IN RE: SHREE SAWAI MANOHARLAL RATHI - 2020 (6) TMI 449 - AUTHORITY FOR ADVANCE RULING, GUJARAT , the applicant is an individual having not engaged in any business. His receipts are only from savings, personal loans and advances and deposits, which are reflected in the Income Tax Returns.
The Authority for Advance Ruling ruled that-
- The Interest received in form of PPF should be considered for the purpose of calculating the threshold limit of Rs. 20.00 lakh for registration under GST Law.
- Interest received on Personal Loans and Advanced to family/friends should be considered for the purpose of calculating the threshold limit of Rs.20.00 lakh for registration under GST Law.
- Interest received on Saving Bank Account should be considered for the purpose of calculating the threshold limit of Rs. 20.00 lakh for registration under GST Law.
E-Invoicing
The aggregate turnover for E-invoicing has been fixed by the Central Government now and then-
Filing return under QRMP Scheme
The QRMP scheme can be availed only by those taxpayers who are liable to file Form GSTR-1 and Form GSTR-3B returns and can be opted by:
- Registered taxpayer (Normal taxpayer, SEZ Developer, SEZ unit)
- Taxpayers who have opted out of composition scheme
- Persons applying for a fresh registration as Normal taxpayer
All taxpayers whose aggregate annual turnover (PAN based) is up to Rs. 5 Crore in the current financial year and the preceding financial year (if applicable) and have already filed their last due Form GSTR-3B return, are eligible for the QRMP scheme.
Mandatory HSN Code reporting
Vide Notification No. 78/2020-Central Tax, dated 15.10.2020 the Central Government made it mandatory for the registered person to indicate HSN code in the invoice as detailed below-
- Aggregate turnover in the preceding financial year – up to Rs.5 crores – Number of digits of HSN Code is 4.
- Aggregate turnover in the preceding financial year is more than Rs.5 crores – number of digits of HSN Code is 6.
