Aggregate turnover under GST is a crucial concept. After all, it is what determines how GST applies to your business. By calculating it correctly and understanding what’s included, you may be able to use the total to reduce your taxes and save money.
What Is Aggregate Turnover?
Aggregate turnover is the total value of sales your company completes each year. According to the Central Board of Excise and Customs, this number includes:
- Sales of taxable products and services (This excludes value of inward supplies on which tax is payable by a person on reverse charge basis.)
- Sales of exempt products and services
- Any goods or service that you export
- Anything you sell to support your sales
- Any goods or service that you sell across state lines
- Any exports or interstate sales completed by someone with the same Permanent Account Number
It’s important to note that aggregate turnover also includes the value of goods that are exempt from GST. If you sell coconuts, you don’t need to pay GST on them. However, when you’re calculating your GST aggregate turnover, you still need to add in the value of your coconut sales.
What Is Not Included in Aggregate Turnover?
As you are adding up your sales for the year, there are a few things you should subtract. The government specifically says that aggregate turnover does not include:
- Purchases your company makes where you need to pay GST through the reverse charge mechanism
- Central tax
- State tax
- Union territory tax
- Integrated tax
Aggregate Turnover and GST Registration Limits
If you run an extremely small business, your aggregate turnover can exempt you from paying GST entirely. After all, your number is what the government uses to decide whether or not you need to register and pay. If your company’s aggregate turnover is less than Rs 40 lakhs in case of goods and Rs 20 Lakhs in case of services, you don’t need to register for GST. If you live in one of the following areas, this threshold is Rs 20 lakh:
- Arunachal Pradesh
- J and K
- Himachal Pradesh
(*Note: As per the 32nd GST Council Meeting, the Aggregate Turnover Threshold Limits mentioned above will be effective from April 1, 2019)
Even if you fall into this category, you are still allowed to register on a voluntary basis. Doing so gives you access to the GST benefits, including legal vendor status and the input tax credit.
Using the Composition Levy Scheme to Save Money
If your business is small, but not quite small enough to be GST-exempt, you may be able to use your company’s aggregate turnover to qualify for the composition levy scheme. This scheme is available if your aggregate turnover is less than Rs 1.5 crore in case of goods and Rs 50 Lakhs in case of services. According to the 32nd GST Council Meeting, the aggregate turnover threshold in case of suppliers of goods has been raised to Rs 1.5 crore. And in case of suppliers of services, a new composition scheme has been put into place. Accordingly, the aggregate turnover threshold for service providers has been set at Rs 50 Lakhs. These amendments will be effective from April 1, 2019.
When you register for the composition levy scheme, you get a variety of benefits. Instead of filing returns and paying taxes monthly, you can do so quarterly. If your schedule is full, this adds up to a valuable time saving throughout the year. Even better, the scheme allows you to pay taxes at a flat percentage of your annual turnover. Tax rates under the composition scheme are 1% for manufacturers, 5% for restaurants, 6% for service providers and 1% for all other businesses. This is a big deal — it means you can save money on taxes and avoid issuing complicated invoices. As a result, your limited cash flow isn’t tied to tax payments and credits.
(*Note: As per the 32nd GST Council Meeting, the 6% GST levied on service providers under Composition Scheme will be effective from April 1, 2019)
As a small business owner, your aggregate turnover is the key to the GST. When you have an accurate number, you can use the regime’s benefits to save both time and money.