The term ‘turnover’ refers to the annual sales volume of business after giving the effect of the discounts and the sales tax paid. A business whose total income exceeds Rs.20,00,000 in a financial year must be registered under the Goods and Services Tax.
This limit has been set Rs 10 lakhs for the North-East and the hill-states that are flagged as specialty states. And the definition of taxable turnover has been changed to aggregate income.
What is aggregate turnover?
‘Aggregate Turnover’ means the total value of all taxable supplies, exempt supplies, goods or services exported, or both and inter-state supplies of persons having the same permanent account number and must be calculated on an all-India basis. But the excludes various taxes, such as central tax, state tax, union territory tax, integrated tax, and cess.
Normal category states under GST
Let us consider a practical scenario to a better understanding of the aggregate turnover:
Mr. Satish is a farmer. His annual turnover is of INR 40,00,000 lakh. As this is agricultural income, the GST will be exempted from the sale. However, Mr. Satish is also supplied the cardboard boxes with his yield alone, and he charges them separately. He earns Rs 1,50,000 from the sale of cardboard boxes. This turnover INR 1,50,000 will be charged to GST. As defined by law, Mr. Satish must register under the GST because his aggregate turnover exceeds the limit of INR 20,00,000 lakh. However, even though his aggregate turnover is less than INR 1 crore, he can opt for a composition scheme and register himself as a composite dealer.
Special category States under GST
Below is the list of states with special status under Goods and Services Tax Law:
- Arunachal Pradesh
- Himachal Pradesh
- Jammu & Kashmir
The aggregate turnover limit for all the above states has been fixed at Rs 10 lakh. So the above example applies to this as well. But the aggregate turnover only varies.
What is the impact of aggregate turnover on the current situation?
Most of the industry professionals are expecting that GST will expand the taxpayer base in India. Small business owners who have been in the pre-GST manufacturing sector have been affected by the lowering of the GST registration exemption limit. Registration under the GST will certainly raise compliance costs for small businesses in the short run. And in the long run, the data collected by the government will help them to come up with better and more practical policies for small businesses in the future. So it will definitely be beneficial for them.