The Goods and Services Tax (GST) system in India has introduced uniformity and transparency in indirect taxation. For businesses registered under the GST, one of the most important terms they often come across is Annual Aggregate Turnover (AATO). It not only defines their compliance requirements but also determines eligibility for various schemes, exemptions, and return filing procedures, as well as other elements.
In this blog, we will discuss in detail what AATO means, its components, exclusions, how it is calculated, and why it matters for businesses.
Understanding the Concept of AATO
In simple terms, AATO refers to the gross turnover of a business in a financial year across India, excluding GST amounts. It serves as a benchmark for several GST provisions, including registration thresholds, opting for composition schemes, and filing requirements.
Legal Definition of Aggregate Turnover
As per Section 2(6) of the CGST Act, 2017:
“Aggregate turnover means the total aggregate value of all the various taxable supplies, excluding the supplies, exports of the goods or services or both and inter-State supplies of persons having the same Permanent Account Number, it is to be computed on an all-India basis, but it excludes the central tax, state tax, union territory tax, integrated tax and the cess.”
Key Components of AATO
1. Inclusions in AATO:
- Taxable Supplies: Value of goods and services supplied on which GST is levied. (excluding GST itself).
- Exempt Supplies: Supplies that are not taxable under the GST regime, such as fresh fruits, vegetables and certain services and goods.
- Exports of Goods or Services: Supplies made outside India.
- Inter-State Supplies: Supplies made from one state to another.
- Supplies on behalf of all branches under the same PAN: If a business has multiple GSTINs across different states, turnover is combined to compute AATO.
2. Exclusions from AATO:
- GST Taxes and Cess: CGST, SGST, UTGST, IGST and Compensation Cess are not part of AATO.
- Inward Supplies under Reverse Charge: Purchases where the required recipient pays GST under reverse charge are not included in that.
- Non-GST Supplies: Supplies like alcohol for human consumption and petroleum products are excluded since the GST is not applicable to them…!
How is AATO Calculated?
Let’s take an example for clarity.
Suppose a business (having GST registration in Maharashtra and Gujarat) reports the following transactions in a financial year:
- Taxable Supplies (Maharashtra): ₹50 lakh
- Exempt Supplies (Maharashtra): ₹5 lakh
- Exports: ₹10 lakh
- Inter-State Supply to Gujarat: ₹15 lakh
- Taxable Supplies (Gujarat): ₹20 lakh
- GST (CGST, SGST, IGST) collected: ₹12 lakh
Calculation of AATO:
- Taxable Supplies (₹50 lakh + ₹20 lakh) = ₹70 lakh
- Exempt Supplies = ₹5 lakh
- Exports = ₹10 lakh
- Inter-State Supply = ₹15 lakh
- Total AATO = ₹1 crore
- GST taxes collected (₹12 lakh) are not included.
So, the business’s Annual Aggregate Turnover = ₹1 crore.
Why is AATO Important under GST?
Annual Aggregate Turnover plays a crucial role in GST compliance. Here are some key areas where AATO is relevant:
1. GST Registration Threshold
If AATO exceeds the prescribed threshold, registration under GST is mandatory.
Thresholds:
- ₹40 lakh for goods suppliers (normal category states).
- ₹20 lakh for service providers.
- ₹10 lakh for special category states.
2. Composition Scheme Eligibility
Small taxpayers can opt for the Composition Scheme if their AATO does not exceed:
- ₹1.5 crore (for normal states).
- ₹75 lakh (for special category states).
- For service providers: ₹50 lakh.
3. Filing of GST Returns
AATO determines the type and frequency of GST returns:
- Businesses with AATO up to ₹5 crore can opt for the QRMP (Quarterly Return Monthly Payment) scheme.
- Businesses with higher AATO must file monthly GSTR-3B and GSTR-1.
4. E-Invoicing Applicability
- E-invoicing under GST is mandatory if AATO exceeds a notified threshold.
- Currently, businesses with an AATO of ₹5 crore or more in any financial year from 2017-18 onwards must comply.
5. GST Audit Requirement
- Earlier, businesses with AATO above ₹2 crore had to undergo a GST audit.
- However, this requirement has been relaxed since 2021.
6. Other Provisions
- Refund eligibility, input tax credit restrictions, and other compliance obligations may depend on AATO.
Difference Between Aggregate Turnover and Turnover in a State
It’s important not to confuse Aggregate Turnover with Turnover in a State/UT.
- Aggregate Turnover (AATO): Total turnover across India for all GST registrations under the same PAN.
- Turnover in a State: Turnover of supplies made within a particular state under a specific GSTIN.
For example, if a company has branches in Delhi and Karnataka, the total turnover across both states is considered for AATO, but turnover in each state is reported separately in returns.
How to Check AATO on the GST Portal?
The GST portal provides an auto-calculated value of AATO based on returns filed. Businesses can check it by:
- Login to the GST Portal.
- Navigate to Dashboard > Services > Returns > Annual Aggregate Turnover (AATO).
- Reviewing system-computed AATO.
If there’s any mismatch, taxpayers can request a correction through the portal
Common Mistakes in AATO Calculation
Many businesses make errors while computing AATO, leading to compliance issues. Some common mistakes include:
- Including GST taxes in turnover.
- Excluding exempt or export supplies.
- Considering turnover branch-wise instead of PAN-based.
- Ignoring inter-state branch transfers.
To avoid penalties, businesses should carefully review transactions before finalising AATO.
Recent Updates Related to AATO
- E-invoicing turnover limit reduced: Initially applicable to businesses with AATO above ₹500 crore (2020), later reduced in stages, and now applicable to businesses with a turnover of ₹5 crore or more.
- System-computed AATO on GST portal: To reduce disputes, the government auto-populates AATO data for registered businesses.
Conclusion
Annual Aggregate Turnover (AATO) is more than just a number; it is the rooted foundation of GST compliance in India. From deciding whether you need the registration to determining your required eligibility for composition schemes, e-invoicing or QRMP, AATO has a direct impact on every stage of your GST journey.
Businesses must ensure they do clear calculations and regular monitoring and supervision of the AATO to stay compliant and to avoid penalties. With the availability of system-computed AATO on the GST official portal, compliance has become easier and smoother; however, taxpayers still need to verify and correct any required discrepancies.
