GST

Non-Resident Taxable Person under GST: Legal Definition

In this article, we will discuss the non-resident taxable person. Any layman can figure out, this term means they are not residents of India and are taxable under the Indian laws. But let’s leave the speculations aside, and try to understand the concept of the same from the legal point of view, and discuss the provisions relating to them.

Legal Definition of Non-Resident Taxable Person

The Central Goods and Service Tax Act, 2017 provides the definition of Non-Resident Taxable Person under Sub-Section (77) of Section 2, which states ‘“non-resident taxable person” means any person who occasionally undertakes transactions involving the supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.

Let’s break this definition further and try to understand it in detail. The first part of the definition states “any person who occasionally undertakes transactions”. This means that regular dealers are not covered under the definition. They are occasional traders, which makes it very hard for the government to keep track of their transactions. This difficulty in keeping track results in the requirement of special provisions relating to them.

The next feature is that they supply goods and services, or both to Indian recipients. As the final place of consumption is inside India, such supplies are taxable under Indian laws thus making these suppliers tax liable. Another important point to be kept in mind is that every supplier, either made by principle suppliers, through an agent or in any other capacity, is to be included.

The last point of consideration is that such a taxable person should not have a fixed place of business inside India.

Is GST Registration a mandatory requirement?

We have covered the basic definition of the non-resident taxable person. Now let’s discuss the registration requirements under GST for them. As we have earlier discussed, they are occasional traders, thus hard to keep track of. This calls for compulsory GST registration of them. The question remains as to when to register as they are not regular traders. The solution for the same is provided in the Act which provides that occasional traders like them and a casual taxable person should apply for registration 5 days prior to the commencement of business.

Advance Payment of Tax

Another major difference between occasional suppliers and other taxpayers is that they make an advance payment of taxes. This doesn’t mean that they file their tax returns before availing registration. Sub-section (2) of Section 27 of the Act specifies that non-resident taxable person has to make an advance deposit of tax at the time of application for registration. The value of such advance deposit shall be equal to their tax liability they will incur on their business transactions. This clause was introduced to discourage tax evasion.

Registration Procedure

Any non-resident taxable person should apply for registration in Form GST REG-09. Such an application is to be duly signed or verified through the Electronic Verification Code (EVC). As we have discussed earlier, this application is to be made at least 5 days before the commencement of business with the following documents specified under the registration rules^[1].

If the supplier is an individual, a self-attested copy of his/her valid passport is required.

If the supplier is a business identity established/incorporated outside India, a copy of his or her tax identification number or any other unique number issued by government or PAN, if available.

The supplier making an application under the above-stated procedure shall be issued a temporary reference number by the common portal after the submission of the advance deposit of taxes.

Any application made under this provision is given the same treatment as any other ordinary application made under Section 25 of the Act. And after due verification of the same, the Certificate of Registration is issued to the applicant.

Such an application is valid for the duration of the business or 90 days, whichever ends earlier.

Extension of Application

After the expiry of the specified 90 days period, they can apply for an extension of GST registration online on Form GST REG-11, and make the payment of the advance deposit for the same accordingly.

Conclusion

Section 24 of the CGST Act prescribes mandatory registration of non-resident taxable person making taxable supplies ignoring the threshold limits.

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