GST is a new evolving law applicable to all types of business - trade manufacture or service. It could also apply to those who are not in money making activities. The normal understanding of turnover or understanding under VAT/ CST would not be correct. The definition of “Aggregate Turnover” under GST needs to be understood.
Analysis of ATO
The definition of ATO. Sec. 2 (6) – means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on a reverse charge basis), exempt supplies, exports of goods or services or both and interstate supplies of person having the same permanent account number, to be completed on all India basis but excludes central tax, Union territory tax, integrated tax and cess.
The definition of exempt supply. Sec 2(47) - means a supply of any goods or services or both which attract nil rate of tax or which may be wholly exemption from tax under section 11 or under section 6 of the Integrated Goods and service tax Act, and includes non-taxable supply.
ATO would, therefore, include the following:
- All taxable supplies other than reverse charge.
- All supplies with distinct entities including interstate- Same PAN different GST registrations (in different States or separate business vertical).
- Supplies of agents/ job worker on behalf of the principal.
- Goods supplied/received back to/ from job worker on principal to principal basis.
- Exempt supply: exempt under notification, non taxable supplies (Specified Petroleum Products like Diesel, Petrol, Liquor etc.)
- Export or zero rated supplies.
- Taxes other than those under GST
ATO would exclude the following:
- Inward supplies (including those under reverse charge)
- Taxes and cesses under GST
- Goods sent for or received back under job work u/s 143
- Intra state supplies
- Interstate supply of services
- Transactions which are neither supply of services or goods: employee to employer, services by court or tribunal, MP, MLAs, posts as per Constitution of India, land or completed building and actionable claims other than betting, gambling or lottery.
- Supplies provided and received outside India ( Global business)
The aggregate turnover in GST find a place in many different provisions and notification making them liable to GST as well as some providing relief for smaller assessees. The applicability with brief comments is provided as under:
- Threshold Limit of Rs. 10/20 Lakhs of aggregate turnover (ATO): Important to claim exemption considering that one is not eligible for input tax credit( ITC) if not registered,
- Exemption from registration even if interstate services involved for threshold limit less than Rs 10/ 20 Lakhs: It maybe noted that if one has interstate supply of goods they do not enjoy any exemption from registration.
- Exemption from Reverse charge for services by Government, the arbitral tribunal, advocate fees if the previous year ATO was less than Rs. 10/20 Lakhs: Procedures of RCM not required to be followed.
- Opting for Composition upto 1 Crore. Previous Year ATO is less than Rs.75 Lakhs: Who can opt and when one is out of Composition scheme,
- GST Audit u/s 35(5) read with 44(2) only for those having ATO of PAN over Rs. 2 Crores: When mandatory audit applicable,
- Aggregate Turnover in State – Sec 2 (112): Sec. 35(5)- audit in State if ATO of PAN exceeds.
- Relief from paying GST on advances post 13.10.17 for entities having ATO less than Rs. 1.5 Crores.
- Distribution of credit of the Input Service Distributor (ISD) is based on ATO of each registration.
- Time extension for assessees having ATO of less than 150 Lakhs.
The need to have a reasonable measure of the turnover is highlighted by the areas of impact in levy, exemption and compliance of procedures. Some difficulty is being faced by small, unorganized or lesser educated assessees due to making the definition very wide.
Note: The turnover for ITC reversal of common credit under Section 17(2) is different from the above and include reverse charge, the transaction in securities (may be amended), sale of land in the total turnover. The ratio of taxable/total is applicable for the purpose of arriving at the multiplication/ dividing factor when dealing with common credits.
- Small Bar & Restaurant in a Town in Maharashtra: Value of Liquor (excluded from GST)- Rs.25 Lakhs, Value of Food & beverages- Rs.9 Lakhs. Liable for registration when aggregate turnover reaches Rs.20 lakhs. Tax payable from date of registration on Food & beverages.
- Petrol pump on Highway in North Karnataka: Sale of petrol and diesel ( excluded from GST)- Rs.32 lakhs, Sale of lubricants and other minor cleaning services – Rs.16 Lakhs. Tax payable on lubricants.
- Agriculturist in Ooty: Selling exempt goods – Rs.16 Lakhs Taxable goods – Rs 2 Lakhs and providing 2 room as homestay- earning 3 lakhs per year. Tax payable on Taxable Goods & Home stay.
- Investor has interest on securities of Rs15 lakhs and rest of Rs. 7 lakhs. Would be liable beyond total of Rs.20 lakhs.
The objective of this article was to explain the collated information on an aggregate turnover to avoid demands of GST, interest and penalty at a later date. It is also to ensure that assesses who can avail the credit especially those in Business to Business (B2B) transactions where the customer/ client can avail the credit.
The representations by trade industry and professional bodies may be considered in the 21st July meeting of the GST Council to further ease business complexities.
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