For GST Registration, concept of aggregate turnover & its impact

 

 

   1.    Introduction

With a few exceptions, the GST Law has established a prescribed threshold exemption in relation to aggregate turnover, and individuals who do not exceed it are neither required to register nor to pay GST. The main goal of a threshold exemption is to shield small ticket vendors from the strict GST compliance requirements. Since the introduction of the GST, the exemption limitations have changed, and some additional exemptions from the requirement to register have also been granted. We have described the present law regarding threshold exemption as well as the significance of aggregate turnover in below points:

 

2.    Requirement for GST registration is determined from threshold limit of aggregate turnover

According to Section 22(1) of the CGST Act, 2017, every supplier must register under this Act in the State or Union territory, other than special category States, from which he makes a taxable supply of goods or services or both, if his total turnover in a financial year exceeds a set level. Registration is therefore necessary "in" the State "from which" taxable supplies are made and is not necessary in the State "to which" they are made.

Depending on the State from which the supply is being made and the goods or services being supplied, different criteria have been established.

The following table includes legal citations as well as the threshold limit of aggregate turnover that is relevant in certain circumstances:

 

S. No	Supplier of:	State / UT from which supply is made	Exemption limit of aggregate turnover	Legal reference
1	Goods or services or both	Entire India, except Nagaland, Tripura, Manipur and Mizoram.	Rs 20 lakh	i)  Section 22(1) ii) Second proviso to Sec 22(1).
2	Goods or services or both	States of Nagaland, Tripura, Manipur and Mizoram.	Rs 10 lakh	i) Section 22(1) ii) first proviso to Sec 22(1).
3	Only supply of goods, except Ice Cream and other edible ice, whether or not containing cocoa Pan Masala All goods i.e. Tobacoo and manufactured tobacoo substitutes	Entire India, except in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand	Rs 40 lakh (to be computed excluding interest on deposits, loans and advances*).	i) Section 22(1) ii) Third proviso to Section 22(1) (inserted by FA, 2019, w.e.f. 1-1-2020 vide Notification No. 10/2019-Central Tax, dated 07.03.2019. iii)Explanation to Sec 22(1)

* No such reduction to be made while computing aggregate turnover of Rs 20 lakh / 10 Lakh).

 

3.    Aggregate Turnover is to be computed for a financial year

There is no requirement in Section 22(1) that the prior financial year's total turnover be computed. Thus, it may be deduced that even if the total turnover for the current year surpasses the permitted limit, the provider will still be required to apply for registration upon exceeding the permitted limit.

4.    Meaning of aggregate turnover

The term aggregate turnover is defined under Section 2(6) of CGST Act,2017 as follows:

“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 all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

The following analysis examines the extremely broad definition of aggregate turnover:

All supply of services to be included in Aggregate Turnover

The definition covers the following supplies within the ambit of ‘aggregate turnover’:

i) all taxable supplies i.e. supply of goods or services or both on which tax is levied under CGST Act.

ii) exempt supplies i.e. the supply of goods or services or both which attract NIL rate of tax or which are wholly exempted from levy of tax under section 11, or under section 6 of IGST Act and includes non-taxable supply. Non-taxable supply means supply of goods or services or both which is not leviable to tax under this Act or IGST Act. Examples of non taxable supply are supply of alcoholic liquor and the 5 petroleum products currently outside GST.

iii) exports of goods or services or both which are regarded as zero-rated supplies under GST law.

iv) inter-State supplies i.e. supply of goods or services or both where the location of the supplier and the place of supply are in two different States / Union territories or in a State and a Union territory. 

Surprisingly, it also covers the export and import of products, services, or both, which were previously covered individually in the definition. A SEZ Developer's or SEZ unit's additional supply of products or services, or both, shall also be counted against the total turnover as interstate supplies.