Taxing ‘Non Resident Taxable Persons’ Under GST : Ambiguities Galore

July 19,2017
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Sundeep Gupta, Partner, ASA & Associates LLP

Introduction

The concept of non-resident taxable person (‘NRTP’) introduced under the GST laws has led to raised eyebrows by the foreign companies doing, or intending to do, business with India. The concept applies equally to suppliers of goods, as well as services, based outside India and having customers/clients in India. Section 2(77) of the Central Goods and Services Act, 2017 (‘CGST Act’) defines NRTP as:

“non-resident  taxable  person”  means   any person who   occasionally  undertakes   transactions involving 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.”

The CGST Act further lays down the compliance requirement for registration, payment of taxes and related compliances under Section 24 covering NRTP under the mandatory requirement for obtaining registration, irrespective of the exemption for turnover threshold of INR 2 million (INR 1 million for specified States). Further, a person registered as NRTP is required to estimate the taxes and pay to the Government in advance. Further, NRTP is entitled to registration for a limited period of 90 days, further extendable by a period not exceeding another 90 days.

Issue

This, then, makes it imperative to determine whether any person situated outside India would fall under the definition of NRTP, and if so, comply with the necessary provisions of the CGST Act.

On a simple reading of the definition of NRTP, it appears that every transaction of import, of either goods or services or both, by an overseas supplier would fall under the mischief of the definition.

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Comments

Dear sir

In case of imports supplier of goods / service supplier is not located in taxable territory while in case of NRTP supplier is located in taxable territory.So NRTP will be able to take credit of IGST paid on imports as per section 17(5)(f) and while in case of services no reverse charge as location of supplier(NRTP) is in India.

Even the issue of a casual taxable person needs to be analyzed. Why will a casual taxable person have to get registered even if he is below the taxable limit of 20,00,000/-. It is an absurd provision.

Deals with all issues involved in NRTP effectively