Understanding Company Turnover Calculation Post-GST in India

Introduction to GST and its Impact on Company Turnover Calculation

Goods and Services Tax (GST) has significantly altered the corporate landscape in India, particularly in the way company turnover is calculated. This article explains the differences in calculating company turnover before and after the implementation of GST. We will also explore the implications of GST-related adjustments and important points to consider.

Pre-GST vs. Post-GST Turnover Calculation

Pre-GST Turnover Calculation

Total Sales excluding taxes Excise Duty, VAT, Service Tax etc. Returns, Discounts, and Allowances

Post-GST Turnover Calculation

Total Revenue from Sales inclusive of GST Other Income, Interest, Rent etc. Returns, Discounts, and Allowances Exclusion of GST paid on sales as it is a pass-through tax

GST-Related Adjustments

1. Input Tax Credit

Add GST paid on purchases as input tax credit

2. Output Tax Liability

Subtract GST paid on sales from output tax liability

Example of Turnover Calculation Post-GST

Consider a hypothetical scenario:

Sales: 1,0,00,000 inclusive of 18% GST (Rs. 1,80,000) GST paid on sales: 1,80,000 GST paid on purchases: 1,20,000

Following is the step-by-step method for calculating turnover:

Total Revenue: Rs. 1,0,00,000 Add other income: Rs. 50,000 Subtract returns, discounts: Rs. 20,000 Exclude GST paid on sales: -Rs. 1,80,000 Add GST paid on purchases: Rs. 1,20,000

Turnover: 9,50,000

Important Points

GST Registration Threshold: 40 lakhs, 20 lakhs for Special Category States Composition Scheme Threshold: 1.5 crores Turnover Inclusions: All taxable supplies, exempt supplies, and zero-rated supplies

Conclusion

Understanding the nuances of the GST system and its impact on the company turnover calculation is crucial for businesses operating in India. This detailed guide aims to provide clarity on the changes and adjustments required in post-GST calculations. For detailed and specific advice, businesses should consult with certified professionals or tax consultants.

Frequently Asked Questions

Q: What is GST?

Answer: GST is a value-added tax levied on goods and services at every stage of the supply chain, with credits of taxes paid at previous stages.

Q: How does GST impact company turnover?

Answer: GST alters the way turnover is calculated by including GST in sales and allowing for input tax credits and adjustments related to output taxes.

Q: What is the GST threshold for registration?

Answer: The threshold for GST registration is 40 lakhs in regular schemes and 20 lakhs in special category states. For composition schemes, the threshold is 1.5 crores.