Understanding Annual Aggregate Turnover (AATO) under GST and its Calculation

The Goods and Services Tax (GST) framework in India introduced the concept of Annual Aggregate Turnover (AATO). This represents a business's total annual turnover at the Permanent Account Number (PAN) level, subject to specific additions and subtractions. Businesses exceeding an aggregate turnover of Rs. 40 lakhs (or Rs. 20 lakhs for designated special category states, Puducherry, and Telangana) in a financial year are legally required to register for GST. For service providers, these limits are Rs. 20 lakhs for normal states and Rs. 10 lakhs for special category states.

This article explores the definition, purpose, constituent elements, and calculation methods for annual aggregate turnover, along with an explanation of 'turnover in state' under GST.

Defining Annual Aggregate Turnover (AATO) under GST

Annual aggregate turnover refers to the total turnover calculated over a complete financial year, spanning from April to March of the subsequent year.

According to GST legislation, “aggregate turnover” encompasses the total value of all taxable supplies (excluding the value of inward supplies where tax is paid under the Reverse Charge Mechanism), exempt supplies, exports of goods or services or both, and inter-state supplies made by entities sharing the same PAN, computed on an all-India basis.

The Importance of Calculating AATO

Calculating the annual aggregate turnover at the PAN level is crucial for determining:

• The threshold limit for GST registration.
• Eligibility for the composition scheme.

Components of Annual Aggregate Turnover (AATO)

AATO under GST represents the combined turnover of all Goods and Services Tax Identification Numbers (GSTINs) linked to a single PAN. Essentially, it includes the sum of:

• The value of taxable sales.
• The value of exempt sales.
• The value of exported goods and services.
• Interstate supplies made by a business to its related entities under the same PAN.
• Interstate stock transfers or supplies between distinct entities operating under the identical PAN.

Important considerations:

• The value of taxable sales should exclude purchases subject to the Reverse Charge Mechanism.
• Sales for which tax is payable under the Reverse Charge Mechanism must be included within taxable supplies.
• Tax components such as Central Tax, State Tax, Union Territory Tax, Integrated Tax, and Cess should not be considered in the calculation.

How to Compute Annual Aggregate Turnover (AATO)

To determine the annual aggregate turnover, sum the values of all the sales and stock transfers mentioned above.

Here are illustrative examples for AATO calculations:

Example 1: Annual Turnover for Normal Category States under GST

Consider Mr. A, who operates a tea estate. His annual turnover from selling tea leaves, which is GST-exempt, amounts to Rs. 1.60 crore. Additionally, Mr. A provides plastic bags with his produce, charging separately for them. The turnover from plastic bag sales, which are subject to GST, is Rs. 5 lakhs.

Annual Aggregate Turnover = Rs. 1.60 crore + Rs. 5 lakhs = Rs. 1.65 crore

Despite the taxable turnover being only Rs. 5 lakhs, Mr. A is mandated to register under GST because his aggregate turnover exceeds the Rs. 40 lakh threshold. Furthermore, Mr. A is ineligible for the composition scheme, as his aggregate turnover surpasses the Rs. 1.5 crore limit.

Example 2: Annual Turnover for Special Category States under GST

First, let's identify the special category states under GST:

Now, for the example: Mr. B, a farmer residing in Nagaland, sold crops valued at Rs. 25 lakhs in a year. He also sold plastic bags worth Rs. 50,000.

Annual Aggregate Turnover = Rs. 25 lakhs + Rs. 50,000 = Rs. 25.50 lakhs

Consequently, Mr. B must register under GST because his aggregate turnover exceeds the Rs. 20 lakh threshold applicable to special category states.

Differentiating Turnover in State under GST

Turnover in state differs from the aggregate turnover definition. It refers to the turnover generated by an entity exclusively within a specific state. While the composition levy is calculated based on turnover in the state, its components are:

• The aggregate value of all taxable supplies (excluding inward supplies taxable under Reverse Charge Mechanism (RCM)).
• Exempt supplies made within the specific state or union territory.
• Exports of goods or services.
• Inter-state supplies of goods or services originating from that state or union territory.

However, turnover in state does not include stock transfers or taxes such as CGST, SGST, UTGST, IGST, and cess.

Aggregate Turnover References in GST Law

The concept of aggregate turnover is referenced across various GST compliances:

For additional information, consider these articles:

• Steps to register under GST
• How to file GSTR-1 on the GST portal
• Step-by-step process to file CMP-08 by composition taxable persons