top of page

File Your ITR now

FILING ITR Image.png

Annual Aggregate Turnover (AATO) Under GST: Definition, Purpose, and Calculation

Updated: May 20


Annual Aggregate Turnover (AATO) Under GST: Definition, Purpose, and Calculation

The term Annual Aggregate Turnover (AATO) is a key concept under the Goods and Services Tax (GST) law in India. It represents the total annual turnover of a business at the Permanent Account Number (PAN) level, encompassing several specific inclusions and exclusions. Understanding AATO is crucial for businesses to determine their GST registration requirements and eligibility for various GST schemes.

 

Table of Contents:

 

What is Annual Aggregate Turnover (AATO)?

AATO refers to the total turnover of a business for an entire financial year, calculated from April 1st to March 31st. According to GST law, "aggregate turnover" includes:


  1. The value of all taxable supplies (excluding inward supplies on which tax is paid under the Reverse Charge Mechanism (RCM))

  2. Exempt supplies

  3. Exports of goods or services or both

  4. Inter-state supplies within the same PAN


It's important to note that AATO is computed on an all-India basis, combining the turnover of all GSTINs under a single PAN.


Purpose of Calculating AATO

Calculating AATO at the PAN level serves multiple purposes, including:


1. Determining the Threshold for GST Registration: Businesses with an aggregate turnover exceeding specific limits must register for GST.

2. Eligibility for the Composition Scheme: AATO helps assess whether a business can opt for the composition scheme, which offers a simplified tax structure for small businesses.


Components of AATO

AATO comprises the following elements:


  • Taxable Sales Value: The total value of sales subject to GST, excluding purchases under RCM.

  • Exempt Sales Value: The value of sales exempt from GST.

  • Export of Goods and Services: The total value of exports.

  • Interstate Supplies: Supplies made to sister concerns or between distinct persons under the same PAN, including interstate stock transfers.


How to Calculate AATO

To calculate AATO, add up the values of all the components mentioned above. Here are two examples to illustrate the calculation:


Example 1: Normal Category States

Mr. A owns a tea estate and has an annual turnover of Rs. 1.60 crore from selling tea leaves (exempt from GST). Additionally, he sells plastic bags worth Rs. 5 lakhs (subject to GST).


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


Although the taxable turnover is only Rs. 5 lakhs, Mr. A must register under GST because his aggregate turnover exceeds the Rs. 40 lakh threshold. Furthermore, Mr. A is not eligible for the composition scheme as his aggregate turnover exceeds Rs. 1.5 crore.


Example 2: Special Category States

The special category states under GST:

The special category states under GST

Mr. B, a farmer in Nagaland, sells crops worth Rs. 25 lakhs and plastic bags worth Rs. 50,000 in a year.


Annual Aggregate Turnover = 25 lakhs + 50,000 = 25.5 lakhs


Mr. B must register under GST since his aggregate turnover exceeds the Rs. 20 lakh threshold for special category states.


Turnover in State under GST

"Turnover in state" differs from aggregate turnover as it refers to the turnover within a specific state. It includes:


- The value of all taxable supplies (excluding inward supplies under RCM)

- Exempt supplies within the state

- Exports from the state

- Inter-state supplies from the state


It excludes stock transfers and tax components such as CGST, SGST, UTGST, IGST, and cess


Common Mistakes to Avoid When Calculating Annual Aggregate Turnover (AATO) Under GST

Calculating Annual Aggregate Turnover (AATO) under GST can be straightforward if done correctly, but there are some common mistakes people make. Here are some of these mistakes to watch out for:


1. Incorrect Inclusions or Exclusions:

Including non-GST supplies: AATO should only include supplies that are taxable, exempt, or zero-rated under GST. Non-GST supplies should not be included.

Excluding intra-state supplies: All supplies, whether intra-state or inter-state, should be included in AATO calculation.


2. Failure to Aggregate Turnover Across GSTINs:

 AATO is computed at the PAN level, meaning all GSTINs (Goods and Services Tax Identification Numbers) under the same PAN must be combined to calculate the turnover. Some businesses may fail to aggregate turnover from all GSTINs, which could lead to underestimating the AATO.


3. Mistakes in Exempt Supplies Calculation:

 Exempt supplies such as certain agricultural products, healthcare services, and educational services should be carefully accounted for in the AATO calculation. Errors in categorizing supplies as exempt or taxable can lead to incorrect AATO figures.


4. Incorrect Treatment of Export and Interstate Supplies:

 Export of goods or services and interstate supplies should be included in AATO. Businesses may sometimes overlook these components, especially when calculating turnover at the state level instead of PAN level.


5. Incorrect Treatment of Reverse Charge Mechanism (RCM):

 Supplies subject to RCM (where the recipient is liable to pay GST instead of the supplier) should be included in AATO. Sometimes businesses exclude these supplies, which leads to underestimation of the turnover.


6. Confusion with Tax Components:

 AATO should be calculated based on the aggregate value of supplies without considering tax components such as CGST, SGST, IGST, UTGST, and cess. Including these tax components directly in AATO calculation can result in errors.


7. Failure to Consider Inter-State Stock Transfers:

 Stock transfers between branches or units of the same business under the same PAN but located in different states should be included in AATO. Failure to account for these transfers can lead to underestimation of the turnover.


8. Errors in Calculation Methodology:

 Incorrect addition of turnover figures from different sources or errors in the methodology used to calculate the AATO can lead to inaccurate results.


9. Misinterpretation of Threshold Limits:

 Misunderstanding the applicable threshold limits for GST registration can result in businesses either registering for GST when not required or failing to register when required.


10. Not Considering Exemption Limits for Composition Scheme:

  Businesses eligible for the composition scheme have a different turnover threshold. Failing to understand and apply the correct threshold can lead to incorrect decisions regarding scheme eligibility.


To avoid these mistakes, businesses should ensure they have a clear understanding of the components of AATO and follow the guidelines provided under GST law. It's also beneficial to consult with tax professionals or use GST compliance software to accurately calculate and report AATO.


How is AATO different from Turnover in State under GST?

AATO is the aggregate turnover of a business at the PAN level, covering all supplies made across India. It includes taxable supplies, exempt supplies, exports, and inter-state supplies under the same PAN. In contrast, turnover in state refers to the turnover of a business within a specific state or union territory, excluding certain supplies like stock transfers. Turnover in state is relevant for determining eligibility for the composition scheme and calculating intra-state supplies for tax purposes.


What is the turnover threshold for mandatory GST registration based on AATO?

The turnover threshold for mandatory GST registration based on AATO varies based on the nature of the business:

  • For businesses involved in the supply of goods: Rs. 40 lakhs (Rs. 20 lakhs for special category states)

  • For businesses involved in the supply of services: Rs. 20 lakhs (Rs. 10 lakhs for special category states)

Businesses that exceed these thresholds must register under GST and comply with all related regulations.


FAQ

1. What is Annual Aggregate Turnover (AATO) under GST?

Annual Aggregate Turnover (AATO) under GST refers to the total turnover of a business at the PAN (Permanent Account Number) level for a financial year. It encompasses the aggregate value of all taxable supplies (excluding supplies on which tax is payable by the recipient under the Reverse Charge Mechanism or RCM), exempt supplies, exports of goods or services, and inter-state supplies made by persons having the same PAN, computed on an all-India basis.


2. Why is AATO important under GST?

AATO plays a crucial role in GST compliance for businesses. Firstly, it determines whether a business needs to register under GST based on the prescribed turnover thresholds. For businesses involved in the supply of goods, registration is mandatory if the AATO exceeds Rs. 40 lakhs (Rs. 20 lakhs for special category states). For service providers, registration is mandatory if the AATO exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states).


171 views0 comments

Comments