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How to Calculate Aggregate Turnover for GST Registration?

A business whose aggregate turnover in a financial year exceeds Rs 20 lakhs has to mandatorily register under Goods and Services Tax. This limit is set at Rs 10 lakhs for North Eastern and hilly states flagged as special category states. Also, the definition of taxable turnover has been changed to aggregate turnover.



What is Aggregate Turnover?

The law says that “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 an all-India basis but excludes Central tax, State tax, Union territory tax, Integrated tax and cess.


Normal Category States under GST

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

So Mr. A is a farmer with an annual turnover of Rs. 55 lakh. Since this income is agriculture-related, the turnover 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. 1 lakh and we know that this transaction (sale of plastic bags) is chargeable to GST. In simple words, his taxable turnover is only Rs. 1 lakh.

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. 20 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 50 lakh.


Special Category States Under GST

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

  1. Arunachal Pradesh

  2. Assam

  3. Jammu & Kashmir

  4. Manipur

  5. Meghalaya

  6. Mizoram

  7. Nagaland

  8. Sikkim

  9. Tripura

  10. Himachal Pradesh

  11. Uttarakhand

The threshold limit of aggregate turnover for all the above states has been kept at Rs. 10 lakh. So the same example will apply here too, but the numbers will get modified.

Let’s assume that the turnover of the farmer Mr. B living in Nagaland is Rs. 15 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. 10 lakh for special category states.


How Does Aggregate Turnover Affect the Status Quo?

It’s been highly anticipated that GST is going to expand the taxpayer base in India. The concept of aggregate turnover may also attract businesses which otherwise may not be genuinely required to register. This has been a concern for a while, however, the government is reluctant to make any change in existing provisions. It is important to note that just by registering, the exempt businesses will not have to pay taxes. But registering will mean that they will have to file mandatory returns and follow all other compliances.

As a business you may not have attracted the interest of tax authorities up till now, but the GST Law gives authorities the power to inspect and compel small businesses to register under GST. This will definitely increase the cost of compliance for small business in the short term. In the long run, though this could prove to be a good thing. The data thus collected may help the government come up with better policies for small businesses in the future.

If you are still doubtful about whether you should register for GST based on your business’ turnover threshold, our experts can provide you with the right guidance. Also, we have a host of informative articles on GST procedure and processes which you will find helpful.

Article published at

GST Billing & Return Filing at ClearTax GST - India's Easiest GST Software


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