Understanding Annual Turnover under GST: A Comprehensive Guide

Under the Goods and Services Tax (GST) regime, the concept of annual turnover plays a crucial role in determining a business's eligibility for GST registration. This article provides an in-depth explanation of how annual turnover has been defined under GST and the implications for different business scenarios.

What Is Aggregate Turnover Under GST?

The term aggregate turnover is defined under the GST Act (Section 2) as the aggregate value of all taxable supplies, including exempt supplies, exports of goods and services, inter-state supplies, and intra-state supplies. This definition excludes taxes such as Central Excise Duty, State VAT, and Cesses. The aggregate turnover must be computed on an all-India basis to provide a comprehensive view of the business's financial activities.

Classification Based on Turnover

To ensure that businesses are appropriately registered under GST, the following classification is used:

For North Eastern States: A dealer is required to get registered if their aggregate turnover exceeds 10 lakh Rupees. For Rest of India: Dealers need to register if their aggregate turnover exceeds 20 lakh Rupees. Under Composition Scheme: Businesses with an annual turnover up to 75 lakh Rupees can opt for registration provided they do not engage in inter-state transactions.

Revised GST Draft Law and Definitions

The revised GST Draft Law under Section 26 defines aggregate turnover as including all taxable supplies, exempt supplies, exports of goods and services, and inter-state supplies of a person having the same Permanent Account Number (PAN). The turnover is to be computed on an all-India basis, excluding taxes under the Central Goods and Services Tax (CGST) Act, State Goods and Services Tax (SGST) Act, and Integrated Goods and Services Tax (IGST) Act.

Furthermore, the law explains that payments made under the reverse charge mechanism shall not be included in the computation of the aggregate turnover.

Key Points to Consider

When computing the aggregate turnover, it is essential to consider the following:

Exclusion of Certain Activities: The computation excludes taxes, making sure that the value of supplies is the primary focus. Inter-state Transactions: Inter-state supplies are included in the aggregate turnover, reflecting the broader context of inter-state sales. Inward and Outward Supplies: Inward supplies on which tax is payable under the reverse charge basis are also excluded, ensuring a more accurate representation of the business's financial activities.

Implications for Businesses

Understanding the definition of aggregate turnover under GST is crucial for businesses to determine their eligibility for registration. Businesses need to include all their taxable and non-taxable supplies, net of Central and State taxes, when computing their eligibility.

The revised GST Draft Law aims to simplify the process and ensure transparency in the computation of aggregate turnover, making it easier for businesses to comply with the new regime.

Conclusion

The concept of annual turnover under GST is pivotal in determining a business's compliance and registration status. By understanding the changes and implications, businesses can navigate the GST regime more effectively. For detailed assistance and solutions, businesses can turn to technology-driven organizations like GST Edge.

If you have any further queries, please reach out to GST Edge or ask us on Quora at 91 9870245700.