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Calculating Aggregate Turnover For GST Registration for Your Business

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The turnover is an accounting concept that calculates the total volume of a business. It is used to understand how quickly a business collects cash from accounts receivable or how fast businesses sell its inventory. In a business, the “aggregate turnover” is considered as the aggregate value of all taxable supplies. Here, we will discuss the aggregate turnover and how to calculate it for GST registration for your business.

# What is Aggregate Turnover?

According to GST law, the “aggregate turnover” is defined as the aggregate value of all supplies that are taxable excluding the value of inward supplies on which tax is payable by a person on the basis of reverse charge, exempt supplies, goods and services export, and inter-state supplies of individuals having the same Permanent Account Number (PAN), to be calculated on all India basis, but excludes central tax, State tax, Union territory tax, integrated tax, and cess.

The aggregate turnover is a key parameter for determining the eligibility of a business to get the benefit of exemption threshold of INR 20 lakhs, and INR 10 lakhs in the case of special category state. It is also crucial for deciding the threshold limit for composition levy.

The aggregate turnover is calculated for the whole financial year between April to March of next year, and it is called annual aggregate turnover. Putting it in simple words, it is the total turnover calculated at a PAN level, and is the sum of taxable sales value, exempt sales value, export of goods or services, and other interstate supplies. If you have a business whose aggregate turnover is more than 20 lakhs annually, you have to mandatorily register under the Goods and Services Tax.

# How to Calculate Aggregate Turnover in Normal Category State?

We will try to understand the concept of aggregate turnover for a normal state with the help of a simple example.

Let’s suppose that person ‘A’ is a farmer with an annual turnover of INR 55 lakhs. Since the income is generated through agriculture, the turnover is exempted from GST as per GST laws. However, let’s assume that person ‘A’ also sells plastic bags along with his crops, and has a turnover of INR 2 lakh separately. Now, this turnover is chargeable to GST according to GST law. In other words, his taxable income is only INR 2 lakh.

The person ‘A’ has to register under GST as per laws because his aggregate turnover is more than the upper limit of INR 20 lakhs. Also, he can not register as a composition dealer as his aggregate turnover exceeds the maximum limit of INR 50 lakhs.

# How to Calculate Aggregate Turnover in Special Category States?

The GST Council has classified some states under a special category. These states include Arunachal Pradesh, Assam, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand. In these states, the maximum upper limit of aggregate turnover is INR 10 lakhs. Again, we will understand the aggregate turnover with the help of the following example.

Suppose person ‘B’ is a farmer living in Manipur who has a turnover of 15 lakhs from agriculture. He also sells plastic bags with an annual turnover of INR 1 lakh. The aggregate income of Person ‘B’ is more than the threshold limit of INR 10 lakhs for special category states, and he will still have to register under GST.

The central government may increase the aggregate turnover at the request of a special category state or on the recommendations of the GST Council from 10 lakh rupees to recommended level, not exceeding 20 lakh rupees. It is subjected to the conditions and limitations as prescribed in the Central Goods and Services Tax (CGST) Amendment Act, 2018. In fact, some of the states like J&K, Himachal, Uttarakhand, Meghalaya, Sikkim have increased their threshold limit to 20 lakh rupees.

# How Does Aggregate Turnover Affect the Businesses?

The taxpayer base has increased in India with the rolling out of GST. The idea of aggregate turnover will attract the businesses which otherwise may not be interested in registering under the GST law. It is necessary to know that just by registering under GST, the exempt businesses won’t have to pay any taxes. Instead, it means that you have to file compulsory GST returns and follow all other compliances.

Till now, as a small business owner, you were not in the radar of tax authorities, but the GST laws gives authorities the power to enquire and compel the eligible businesses to register under GST. It will surely increase the cost of compliance for you as a small business in the short term, but it will benefit you as well as the nation in the long term. Also, the government will be able to make better policies for small businesses with the help of collected data through GST returns.


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