Turnover vs revenue vs profit: the difference, with Indian examples

Turnover is the total value of a company's sales in a financial year. The Companies Act, 2013 defines it, in section 2(91), as the aggregate value from selling or supplying goods or rendering services during the year. Small businesses, traders and tax officers use the word every day, so people searching for a company's turnover usually want its yearly sales.

It is a top-line figure. It says how much business was done, not whether any money was made. A shop can have a turnover of ₹10 crore and still lose money if its costs are higher.

Revenue is the word used in an annual report. Under Schedule III of the Companies Act, the statement of profit and loss starts with Revenue from operations, which covers sales of products and services, and then Other income, such as interest and gains. The two together are total income.

For most companies, turnover and revenue from operations are nearly the same thing. The difference is that revenue from operations may also include items like other operating revenue, while turnover in a narrow legal sense counts sales of goods and services. Revenue under accounting rules is also shown after removing taxes collected for the government. The guide on revenue from operations versus total income explains the split in detail.

• Turnover: sales of goods and services in the year.
• Revenue from operations: the main income line in the statement of profit and loss.
• Other income: interest, gains and one-off items.
• Total income: revenue from operations plus other income.

GST has its own definition. Under section 2(6) of the CGST Act, 2017, aggregate turnover adds up taxable supplies, exempt supplies, exports and supplies between states made by a person with the same PAN, computed across India. It leaves out GST itself and some items such as supplies on which the buyer pays tax under reverse charge.

This number decides whether a business must register for GST and which scheme it uses. It can differ from the turnover in the annual accounts, because it covers all the registrations under one PAN and counts some items the accounts treat differently. A company's GST turnover and its audited revenue should be read as two separate figures.

Profit is what remains after costs. Gross profit is sales minus the direct cost of making or buying the goods. Operating profit deducts running costs like salaries and marketing. Profit before tax subtracts interest and depreciation. Profit after tax, or PAT, is the final figure after tax and is what flows into equity.

In an annual report, profit or loss for the year is the bottom line. A startup can have rising turnover and a growing loss at the same time, which is common when it spends heavily to win customers.

People often type a company's turnover because that is the word they know. A startup's filings and news stories will say revenue from operations, or just revenue. For the answer, read the figure labelled revenue from operations for the right financial year, such as FY25, which means April 2024 to March 2025. If a story gives a single combined number, check whether it is operating revenue or total income, because the second is higher by the amount of other income.

Gross merchandise value, or GMV, is the total value of goods sold through a marketplace, and it is not the marketplace's turnover. The marketplace may keep only a commission, so its revenue is a small part of GMV. The guide on GMV versus revenue covers this. Similar care is needed with order value, annual recurring revenue and run rate, which are management measures rather than accounting revenue.

Think of the statement of profit and loss as a staircase that starts with sales and ends with what the owners keep. At the top is revenue from operations. Below it come the cost of goods or services, then employee costs, then marketing, rent and other running costs. After those comes depreciation and interest. Then tax. What is left is profit after tax.

Each step down removes money, so the figure at the bottom is almost always smaller than the figure at the top. For a startup in a growth phase the bottom figure is often negative, which means the company spent more than it earned in that year. Readers who look only at the top line miss this.

• Revenue from operations: the top of the statement.
• Total expenses: everything the business spent in the year.
• Profit before tax: income minus expenses.
• Profit after tax: what remains once tax is paid.

Turnover is also a threshold word in Indian law. Whether a business must get its accounts audited, whether it can use a simpler tax scheme, and whether it must register for GST can all depend on yearly turnover crossing a set limit. The limits are different for each rule and change from time to time, so the figure to use is the one in the current notification for that rule.

For startups, this is mostly a reason to keep clean records. A founder who treats turnover as a vague idea can cross a threshold without noticing. Anyone unsure which definition applies to their business should ask a chartered accountant, because the answer decides the paperwork.

Profit is an accounting result, and cash is money in the bank. A company can book sales and profit on paper while customers have not yet paid. It can also pay for equipment in cash while spreading the cost over several years in the accounts. The guide on free cash flow shows how to look at cash directly, and the guide on what profitable means for a startup explains how to read claims that a company is profitable.

Check three things. First, is the number turnover or revenue from operations, or does it include other income? Second, is it for the full year or part of it? Third, is it a profit or a loss? A loss can look small next to a large turnover. This page is not accounting or tax advice, so consult a professional for filings.