The Goods and Services Tax (GST) regime in India brought significant changes to the indirect taxation system. Among the various categories of taxpayers defined under GST, one notable category is the Non-Resident Taxable Person (NRTP). This article explores the concept of NRTP under GST, highlighting the registration requirements, compliance obligations, and other essential aspects.
Who is a Non-Resident Taxable Person (NRTP)?
A Non-Resident Taxable Person under GST is an individual or a business entity that occasionally engages in transactions involving the supply of goods or services, or both, but does not have a fixed place of business or residence in India. NRTPs are typically foreign entities or individuals who conduct business in India temporarily.
Key Features of an NRTP
- Occasional Supplier: NRTPs engage in the supply of goods or services intermittently and do not have a permanent establishment in India.
- No Fixed Place of Business: They do not maintain a fixed place of business within the country.
- Mandatory Registration: NRTPs must register for GST regardless of the threshold limit, unlike resident taxpayers who enjoy a threshold exemption.
Registration Requirements for NRTPs
NRTPs must adhere to specific registration requirements to comply with GST regulations in India:
- Pre-registration Application: NRTPs must apply for GST registration electronically at least five days before commencing any business activities in India.
- Temporary Registration: The registration granted to an NRTP is temporary, valid for a maximum period of 90 days, which can be extended by another 90 days upon request.
- Advance Tax Payment: At the time of registration, NRTPs must pay an advance tax amount estimated based on the supplies they intend to make during the registration period.
Documentation for Registration
To register as an NRTP, the following documents are generally required:
- Proof of Business Incorporation: Documents proving the incorporation of the business entity.
- Business Address Proof: Address proof of the business entity’s location outside India.
- Indian Authorized Representative: Details of an authorized representative in India who will handle the GST compliance on behalf of the NRTP.
- Passport (for Individuals): Copy of the passport if the NRTP is an individual.
Compliance Obligations for NRTPs
Once registered, NRTPs must fulfill several compliance requirements under the GST regime:
- GSTR-5 Return Filing: NRTPs must file a GSTR-5 return, which includes details of inward and outward supplies. This return must be filed monthly or before the expiry of the registration, whichever is earlier.
- Payment of GST: NRTPs must pay GST on all taxable supplies made during the registration period.
- Invoice Requirements: They must issue GST-compliant invoices for all supplies made within India.
Advance Tax Payment and Refunds
NRTPs are required to make an advance tax payment at the time of registration. This payment is an estimate of the GST liability for the period for which the registration is sought.
- Calculation of Advance Tax: The advance tax is calculated based on the expected turnover and the applicable GST rates.
- Refund of Excess Tax: Upon the expiry of the registration, NRTPs can claim a refund for any unutilized input tax credit (ITC) or excess tax paid after settling all tax liabilities.
No Threshold Exemption
Unlike resident taxpayers, NRTPs do not benefit from the threshold exemption for GST registration. They must register for GST irrespective of their turnover. This ensures that all supplies made by NRTPs in India are subject to GST, promoting tax compliance and revenue collection.
Challenges and Considerations for NRTPs
NRTPs face several challenges and considerations when complying with GST regulations in India:
- Understanding GST Laws: NRTPs must familiarize themselves with the intricate GST laws and compliance requirements to avoid legal complications.
- Currency Exchange Fluctuations: Managing tax liabilities in a foreign currency can be challenging due to exchange rate fluctuations.
- Logistical and Administrative Hurdles: Coordinating with Indian authorities and managing compliance from abroad can pose logistical and administrative challenges.
Conclusion
Non-Resident Taxable Persons play a crucial role in the Indian economy by facilitating cross-border trade and investment. Understanding the GST obligations and compliance requirements for NRTPs is essential to ensure smooth business operations in India. By adhering to the registration process, timely return filings, and tax payments, NRTPs can effectively manage their GST compliance and contribute to the robust taxation framework of the country.
Please Refer this link for More Information : GST NRTP Handbook.
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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
