Aggregate Turnover under GST
Definition of Aggregate Turnover under Revised Model GST Law
Section 2(6) define Aggregate Turnover under Revised Model GST Law as follow :-
“Aggregate turnover” means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be;
Explanation.- Aggregate turnover does not include the value of inward supplies on which tax is payable by a person on reverse charge basis under sub-section (3) of Section 8 and the value of inward supplies. [section 2(6)]
SCHEDULE V of Revised Model GST Law provides that Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds twenty lakh rupees:[ Rs 10 Lakh in case of Special Category States ]
Issues in Definition of Aggregate Turnover under GST
- Exempt Supply Included :- The aggregate turnover includes exempt supplies on all India basis. Since the threshold for GST registration is Rs. 20 lacs excluding NE states, clubbing of exempt supply will oblige most of the assessees to get registered which may prove as a challenge from the administrative control point of view. Also, the Income Tax Act clearly states that any income would be included in total income only if it is taxable as per the provisions of the Act. Moreover, exempt income shall not form part of the total income.
- Cascading effect :- GST intent to resolving the problem of cascading effect if any, exist in the current tax regime. But, only excluding taxes charged under CGST Act, SGST Act and the IGST Act will limit the scope to GST. What about cess or taxed which not sub summed in GST (such as Entertainment Tax, Octroi, Municipal taxes etc.) will still be covered. Imply emergence of cascading effect, hence defeating the very purpose of GST.
- Other Taxes and Reimbursement included:- As inferred from the phrase “and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act”, all other taxes and plain reimbursements are not excluded.This will create a genuine problem in the industry as any amounts received by the supplier towards statutory liabilities of the receiver for e.g. MCA fees etc. wherein there is no profit element or other taxes paid like municipal taxes etc. will form part of aggregate turnover.
- Nature of Transaction :-Proposed definition nowhere mentions about the nature of transaction whether it should be related to business or not.
Suggestion for Definition of Aggregate Turnover under GST
It is suggested that the definition of aggregate turnover be suitably amended so as to exclude the value of exempt supplies from aggregate turnover.
All taxes, cess, levies including taxes not covered under GST also be excluded from aggregate turnover.
All sorts of other taxes paid & plain reimbursements be explicitly excluded while calculating the value of aggregate turnover and not only CGST, SGST and IGST.
Definition proposed should be amended to the extent that it covers only business related transactions.
Related Post
GST #Issue1-GST Tax Credit of Capital Goods received on or after Appointed Date ?
GST #Issue2- Pay GST on leasing out farmland on rent
GST #Issue3 : Software is Goods or Service under GST ?
GST #Issue5 : Pay GST on Services by Overseas branch office to Head Office in India
GST #Issue6 ; When to Pay GST on Gift Vouchers
GST #issue7- Recipient has to ensure that Supplier pays tax to claim ITC
GST #Issue8 ; Check posts in India will continue under GST regime also ?