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Any tax is levied as a percentage of any amount which is either income or value or revenue or turnover. Presently,
excise duty is levied on MRP, Service Tax on value of taxable service and VAT on turnover of goods. In the proposed
GST regime, what will be relevant will be 'aggregate turnover'.
The 'aggregate turnover' will be relevant for the purpose of
i. registration of taxable person
The valuation of supply of goods and services shall be done in terms of section 15 of Model Law on GST read with
GST Valuation (Determination of the Value of Supply of Goods and Services) Rules, 2016 [both are at draft stage as
of now]. Accordingly, valuation may be done as per transaction value, by comparison, computed value method or
residual method.
Meaning of Aggregate Turnover
'Aggregate turnover' is defined in section 2(6) of the Model GST Law as follows
"Aggregate turnover means the aggregate value of all taxable and non-taxable supplies, exempt supplies and
exports of goods and/or services 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 supplies on which tax is levied on reverse
charge basis and the value of inward supplies."
According to the aforementioned definition, aggregate turnover shall be total of the following amounts or sums, i.e.
aggregate of the following
i. Value of all taxable supplies of goods and services
ii. Value of all non-taxable supplies of goods and services
For the purpose aggregate turnover, turnover shall be counted and aggregated for a person having the same
Permanent Account Number (PAN) of Income Tax, taken as a whole on an All India basis. For example, if a person is
having, say 10 branch offices in different parts of a country under a same PAN filing single income tax return, his
turnover for all such offices shall be aggregated.
'Aggregate turnover' shall, however, exclude the following sums
1. Taxes, if any charged under the CGST Act, SGST Act and IGST Act.
2. Value of supplies of goods and services on which tax is levied on reverse charge basis.
3. Value of inward supplies of goods and services.
Under the present tax law, aggregate turnover is not defined in the tax statutes but turnover is defined in VAT laws
and for the purpose of threshold exemption. In Service Tax, Notification No. 33/2012-ST dated 20.06.2012 defines
aggregate turnover as under-
"Aggregate value means the sum total of value of taxable services charged in the first consecutive invoices
issued during a financial year but does not include value charged in invoices issued towards such services
which are exempt from whole of service tax leviable thereon under section 66B of the said Finance Act under
any other notification."
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"Aggregate value means the sum total of value of taxable services charged in the first consecutive invoices
issued during a financial year but does not include value charged in invoices issued towards such services
which are exempt from whole of service tax leviable thereon under section 66B of the said Finance Act under
any other notification."
exempt supplies including exports. As such, its benefits may not be available to even many existing assessees who
enjoy the exemption.
It is necessary for the draftsmen to consider the scope of 'aggregate turnover' is its present from so as to exclude
non-taxable / exempt supply of goods and services as it would result in artificial distortion and discrimination in
providing threshold exemption to the suppliers. It will also create hardship to taxpayers who will be made liable to
register and pay more tax as illustrated by way of the following examples where it is assumed that rate of GST will be
20% and 10 lakh and above is the threshold limit for turnover, i.e. (exempt below 10 lakhs)
A
Taxable turnover
Non taxable / exempt turnover / export turnover
Aggregate turnover
Tax @ 20%
10,00,000
2,00,000
20%
Taxable turnover
Nil
10,00,000
Aggregate turnover
10,00,000
2,00,000
Taxable turnover
10,000
9,90, 000
Aggregate turnover
10,00,000
Tax @ 20%
Nil
Tax @ 20%
10,00,000
2,00,000
2000 %
Taxable turnover
5,00,000
5,00,000
Aggregate turnover
Tax @ 20%
10,00,000
2,00,000
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Tax @ 20%
Effective tax rate
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2,00,000
40%
end up in tax inefficient and retrogatory measure. The present limit of exemption in Service Tax is only 10 lakhs
whereas on Central Excise, it is 1.50 crore. With the tax base being large, it is expected that cost of tax collection
should also be kept in mind and threshold of aggregate turnover be pegged at atleast 25 lakh. This segment would
otherwise be contributing to 5-7 percent of tax only.
11-09-2016 05:15