- The applicant (Mr Anil Kumar Agarwal) is an unregistered person and in receipt of various types of incomes/revenues mentioned as under:-
- Partner’s salary as partner from his partnership firm.
- Salary as director from private limited company.
- Interest income on partners fixed and variable capital accounts.
- Interest received on loan given, advance given, accumulated interest along with deposit/ fixed deposit, interest on debentures, interest on post office deposits; interest on national saving certificates (NSCL interest income on PPF, accumulated interest received on the closure of PF account, interest income on national pension scheme (NPS).
- Receipt of maturity proceeds of life insurance policies.
- Dividend on shares.
- Rent on commercial property and residential rent.
- Capital gain/loss on shares.
Issue before the AAR
- Out of the given sources of income/revenue which all revenue income shall be considered for aggregate turnover for registration under GST?
- Out of given nature of income/revenue, when the supply even if exempted need, to be considered?
Discussion and Finding of AAR
- In these regards, we invite reference to the definition of “Aggregate Turnover”, in terms of Secon 2(6) of the CGST Act, 2017 which reads as under:
- “aggregate turnover” means the aggregate value of taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both under interstate supplies of persons having the same PAN, to be computed on all India basis but excludes CGST, SGST/UGST, IGST and cess
- It could be seen from above that the aggregate turnover is sum of different supplies. Therefore any income included in aggregate turnover need to amount to Supply in terms of Secon 7(1)(a) of CGST Act, 2017.
- Secon 7(1)(a) of CGST Act’ 2017 stipulates any transaction must consists of the following three components to get quality of ‘supply’
- The transaction must involve a supply, of goods- or services or bath, such as sale, barter, exchange, license, rental, lease or disposal made or agreed to be made.
- The transaction must be for a consideration by a person.
- The transaction must be in the course or furtherance of business.
In view of the above, income received from each source has to be examined whether it is in relation to transaction that amounts to supply or not, Therefore we consider different types of sources of income, one at me.
Chapter heading/Sub heading/TariffItem
Descripon of Goods
Interest Income received from different sources
All interest incomes are out of deposits/loan extended by the applicant which are exempted under Entry No, 27(i) of the Notofication No. 12/2017 Central Tax (Rate) dated 28.05-2017.
These amounts nothing but exempted services and are to be included in the aggregate turnover for registration
Partner's salary received as partner from applicants partnership firm
The applicant has not furnished any documents relevant to the issue, such as copy of agreement, appointment orders etc. so it is difficult to decide whether the applicant is an employee of the partnership firm or not. Then also the said income is not in purview of GST as the “share of Profit” nothing but application of money and hence not required to be included in the aggregate turnover.
Salary received as Director from a Private Limited Company
The applicant has not furnished any documentary evidence such as copy of agreement between the applicant and the said private company, copy of appointment order etc. so it is difficult to decide whether the applicant is in receipt of salary as an employee or as an independent director.
Further if the applicant receives the remuneraon as a Non-Executives Director, such remuneration is liable to tax under RCM under Section 9(3) of the CGST Act 2017 In hands of company under Entry No. 6.of Notification No, 13/2017-Central Tax(Rate) dated 28.06.2017.
Hence not required to be includedin the aggregate turnover.
Dividend on shares and capital Gain/ Loss on shares
Dividend on shares, capital gain losses on sale of shares are relevant to securities and income earned is nothing but application of money. Therefore they are not relevant for aggregate turnover and hence not required to be added to aggregate turnover for registration.
Receipt of Maturity Proceed of Life Insurance Policy
Amount received on maturity of the insurance policy are not relevant and not required to be addedin the aggregate turnover for registraon.
Ruling by AAR
- The income received towards (i) Salary/remuneration as a non-executive director of a private limited company, (ii) renting of commercial property and residential property, (iii) The values of an amount extended as deposits/loans/advances out of which interest is being received are to be included in the aggregate turnover, for registration.
- The income received from renting of residential property is included in the aggregate turnover though it is an exempted supply