Casual Taxable Persons and Non-Resident Taxable Persons – Section 27 of GST

The GST framework in India has specific provisions for different categories of taxpayers. One such provision is Section 27 of the CGST Act, which lays down the registration rules and tax compliance requirements for casual taxable persons (CTP) and non-resident taxable persons (NRTP). Understanding this section is crucial for businesses that do not have a fixed place of business in India but engage in taxable transactions.

Who is Casual Taxable Person (CTP)

A casual taxable person is someone who occasionally supplies goods or services in a taxable territory where they do not have a fixed place of business. For instance, a business participating in an exhibition or a trade fair would be classified as a CTP.

Who is Non-Resident Taxable Person (NRTP)

A non-resident taxable person is an individual or entity that occasionally supplies goods or services in India but does not have a residence or place of business in the country. NRTPs include foreign businesses providing taxable supplies in India.

Key Provisions of Section 27 of the CGST Act

1. Validity of Registration

• The registration certificate issued to a CTP or NRTP is valid for either:

  • The period specified in the registration application, or

  • 90 days from the effective date of registration, whichever is earlier.

• Taxable supplies can only be made after obtaining the certificate of registration.

• Extension of registration: The proper officer may extend the 90-day validity for a further period not exceeding 90 days if the taxpayer provides sufficient justification.

2. Advance Deposit of Estimated Tax Liability

• At the time of applying for registration, both CTPs and NRTPs must deposit an amount equivalent to their estimated tax liability for the period of registration.

• If an extension of registration is sought, an additional deposit must be made to cover the extended period.

3. Utilization of the Advance Tax Deposit

• The advance tax deposit is credited to the electronic cash ledger of the taxpayer.

• This amount is used for tax payments as per Section 49 of the CGST Act.

Compliance Requirements for CTPs and NRTPs

1. Mandatory Registration: Unlike regular taxpayers, CTPs and NRTPs must register under GST, irrespective of their turnover.

2. Tax Payment Before Supply: Since an advance tax deposit is required, businesses need to estimate their tax liability beforehand.

3. Limited Registration Period: These taxpayers cannot opt for a normal registration and must renew their registration if needed.

4. No Composition Scheme: Casual taxable persons and non-resident taxable persons cannot opt for the Composition Scheme under GST.

5. Returns Filing:

   • CTP must file GSTR-1 (details of outward supplies) and GSTR-3B (summary return with tax payment).

   • NRTP must file GSTR 5 on GST Portal. It will contain all business detail including Sales & Purchases. Form GSTR 5 is a monthly return, due every 20th of the next month.

   • Any excess balance in the electronic cash ledger can be claimed as a refund after fulfilling compliance obligations.

Implications for Businesses

• Event-Based Transactions: Businesses participating in exhibitions, fairs, or short-term projects must account for these GST requirements.

• Foreign Suppliers: NRTPs supplying services like consulting, software, or digital goods in India need to comply with GST rules.

• Advance Tax Considerations: Since tax liability must be prepaid, proper tax estimation is crucial for financial planning.

Conclusion

Section 27 of the CGST Act plays a crucial role in ensuring GST compliance for businesses operating in India on a temporary basis. Both casual taxable persons (CTPs) and non-resident taxable persons (NRTPs) must adhere to these regulations, including mandatory registration, advance tax deposit, and timely return filing. Staying compliant with these provisions helps businesses avoid penalties and ensures smooth operations within the GST framework.