How to Calculate Aggregate Turnover for GST Registration?

A business whose aggregate turnover in a financial year exceeds Rs.40 lakhs (or Rs.20 lakh for special category states, Puducherry, and Telangana) has to mandatorily register under Goods and Services Tax. For service providers, this limit is set at Rs.20 lakhs for normal category states and Rs.10 lakh for special category states.  

This article explains the meaning of annual aggregate turnover, turnover in state with examples.
 

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21st December 2021
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What is Annual Aggregate Turnover?

As per GST law, “aggregate turnover” refers to 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 an all-India basis but excludes Central tax, State tax, Union territory tax, Integrated tax and cess. 

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. In other words, it is the total turnover calculated at a PAN level (all GSTINs put together) being sum of the following:

• Taxable sales value
• Exempt sales value
• Export of goods and services
• Interstate supplies by the business to its sister concern under the same PAN or interstate stock transfer or supplies between distinct persons under the same PAN.

However, the above sum excludes the tax components such as the Central tax, State tax, Union territory tax, Integrated tax and Cess. Further, the taxable value excludes those purchases where the person is required to pay tax under reverse charge. Note that the sales that are subject to reverse charge must continue to form part of the taxable supplies in aggregate turnover.

Meaning of Turnover in State

Turnover in State is different from the aggregate turnover definition. It refers to the turnover of an entity effected within a particular state. The aggregate turnover at PAN level is required to calculate the threshold limit for GST registration as well as eligibility for the composition scheme. However, the composition levy would be calculated on the basis of turnover in state.

It includes the aggregate value of all taxable supplies (excluding inward supplies on which tax is payable under reverse charge mechanism), exempt supplies made within the state/Union Territory, exports of goods or services, and inter-state supplies of goods or services made from the state or Union Territory by the said taxable person. However, it excludes stock transfers and taxes such as CGST, SGST, UTGST, IGST, and cess.

Example for Normal Category States under GST

Here’s an example to help you understand the concept of aggregate turnover.

So Mr. A owns a tea estate with an annual turnover of Rs.1.60 crore by selling tea leaves. This activity is exempt from GST. However, Mr. A also supplies plastic bags along with his crop and charges separately for this. His turnover from the sale of plastic bags is Rs.5 lakhs and we know that this transaction (sale of plastic bags) is chargeable to GST. In simple words, his taxable turnover is only Rs.5 lakhs.

Going by the definition of aggregate turnover, Mr. A is required to register under GST because his aggregate turnover exceeds the threshold limit of Rs. 40 lakh. Further, Mr. A does not have the option to register as a composition dealer because this aggregate turnover exceeds the threshold limit of Rs.1.5 crore (Rs 75 lakhs for special category states).

Example for Special Category States Under GST

Below is the list of states/Union Territories which are assigned special status under Goods and Services Tax Law:

• Arunachal Pradesh
• Assam*
• Jammu & Kashmir*
• Ladakh*
• Manipur
• Meghalaya
• Mizoram
• Nagaland
• Sikkim
• Tripura
• Himachal Pradesh
• Uttarakhand

*Important note: Of the above special category states, the territories of Jammu & Kashmir, Ladakh, and Assam, follow the Rs.40 lakh threshold limit for GST registration (and not Rs.20 lakh).

The threshold limit of aggregate turnover for the rest of the special category states mentioned above is Rs.20 lakh. Further, the Union Territory of Puducherry also follows the threshold limit of Rs.20 lakh.

Let’s assume that the turnover of the farmer Mr. B living in Nagaland is Rs.25 lakh from agriculture. His taxable turnover from the sale of plastic bags is only Rs.50,000. Mr. B will still have to register under GST as his aggregate turnover exceeds the threshold limit of Rs.20 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 twenty lakh rupees to such level, not exceeding forty lakh rupees, and subject to such conditions and limitations, as may be prescribed in the CGST (Amendment) Act, 2018.

As a result, the threshold limit for the states of Jammu and Kashmir, Ladakh and Assam, was raised to Rs.40 lakhs as of 1st April 2019, while the states of Arunachal Pradesh, Manipur, Mizoram, Nagaland, Himachal Pradesh, Meghalaya, Sikkim, Uttarakhand and Tripura stand at Rs.20 lakh.

Reference of Aggregate Turnover across GST law

For further understanding, read a host of articles by ClearTax:

• Steps to register under GST
• How to file GSTR-1 on the GST portal
• Step-by-step process to file CMP-08 by composition taxable persons

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