GST provisions applicable to Non-residents in India

Goods and services tax (GST) has come into effect on 01st July 2017 with significant indirect tax reform in the country. GST has subsumed many indirect taxes in the country and made indirect taxes simpler than ever before. Since the day the GST has taken place many drastic changes have been incorporated into the GST law. Central and state governments are putting their efforts to make the GST law simple and compliances easy. The Prime minister has been following the concept of minimum government and maximum governance. The concept has been introduced with the aim of less government officer interference in the business of the taxpayer.

In India, GST is applicable on taxable goods and services provided by residents and non-residents. There are exemptions to the resident supplier of goods and services, but non-residents are not exempted from GST registration. Let us now understand the applicability of GST provisions in detail applicable to non-residents and the related compliances applicable to them.

1. Who is Non-Resident under the GST

A non-resident is a person who undertakes transactions occasionally. Non-residents can supply goods or services or both either as a principal or as an agent. A person who does not undertake transactions occasionally would not be treated as a non-resident taxable person. The GST law does not define the term ‘occasionally’. It must be construed as a transaction which has a reasonable frequency of occurrence in India.  

Under the GST law, the Non-resident defines 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;

2. GST registration requirement for Non-resident:

To make a supply of taxable goods and services a person needs to take GST registration. However, the government has provided an exemption limit up to which a person need not take GST registration. The exemption limit is Rs.10/20/40 lakhs for the different categories of supply and persons.

Under the GST law, the exemption limit does not apply to non-residents, which means that non-residents must take GST registration compulsory. There is no exemption provided for non-resident under the GST law for GST registration.

A non-resident who intends to commence business should compulsorily take GST registration before the commencement of business, irrespective of the turnover of the business. The application for registration should be made at least 5 days prior to the commencement of business.

3. Input tax credit to Non-resident

Section 17(5) (Block input tax credit) restrict the input tax credit on the supply received by non-resident in India, however he is free to take input tax credit of goods imported from outside India.

4. Procedure to apply for GST registration by non-resident

A non-resident shall submit an applicable electronically for GST registration, along with the self-attested copy of a valid passport, in Form GST REG-09 at least five days prior to the commencement of business at the common portal.

Provided that in the case of a business entity incorporated or established outside India, the application for registration shall be submitted along with its tax identification number or unique number based on which the entity is identified by the Government of that country or its Permanent Account Number, if available

A non-resident applying for GST registration shall be given a temporary reference number and a non-resident shall deposit advance GST against such TRN. The electronic cash ledger shall be credited with the amount of advance deposit of GST.

The application for registration made by a non-resident taxable person shall be made by his authorised signatory who shall be a person resident in India having a valid Permanent Account Number.

5. Validity of GST registration

The certificate of GST registration issued to a non-resident is valid for the period a specified in the registration certificate or 90 days (ninety) whichever is earlier. A non-resident shall supply goods or services only after issue of such GST registration certificate.

6. Extension of validity of GST registration

A Non-resident who intends to extend the period of GST registration can make an application in Form GST REG-11 and such form shall be submitted electronically through the common portal before the end of the validity of registration granted to him.

7. GST returns by Non-resident

A non-resident is required to file Form GSTR-5 by 20th of the next month or within 7 days after the expiry of the registration, whichever is earlier.

8. GST refund by Non-resident

Any amount lying in the electronic credit ledger at the time of closure of business can be claimed as a refund by the non-resident. A person can claim the GST refund only after filing Form GSTR-5 and this return will be sufficient for him, which means he needs not file Form GSTR-1 and GSTR-3B.

FAQs

Q1. Can non-residents exercise the option to pay the GST under composition tax?

Ans. No, a non-resident cannot opt to pay GST under the composition scheme. Section 10 of the GST act prohibits the non-resident on exercise the option.

Q2. What is the time limit for taking GST registration under the GST law?

Ans. As per the GST law, a non-resident shall apply for GST registration at least 5 days prior to the commencement of business.

Q3. Mr. Virat is a non-resident in India and wants to take GST registration in Gurgaon. What does he have to do to take GST registration and what are all the compliances he has to fulfil in India after taking GST registration in Gurgaon?

Ans. Being a non-resident, Virat should apply for GST registration at least 5 days prior to the commencement of business. Virat can approach the GST consultant in Gurgaon seeking GST registration. He should have a valid copy of his passport that should be self-attested. He should deposit advance estimated liability of GST and can take GST refund when the period of registration is over and the balance is laying in the electronic cash ledger.

About the author: Nitin Bhatia is a qualified chartered accountant practising in Delhi, Gurgaon, Noida and Faridabad. He is the best CA in Gurgaon. During his professional journey, he has gained advanced experience in International Taxation, Transfer Pricing, Expatriate Taxation, Corporate Taxation, Domestic Taxation and litigation matters. International Taxation and Domestic taxation are his study topic, and he is deeply involved and updated with the recent judicial pronouncements. It helps him to give efficient and legitimate tax planning to his clients.

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