GST Registration for Casual Taxable Persons in India

India's Goods and Services Tax (GST) regime is designed to ensure a seamless flow of tax across the supply chain. While most businesses in India are required to register for GST based on turnover thresholds, there is a special provision for Casual Taxable Persons (CTPs) under the GST law. This provision ensures that businesses or individuals who are temporarily in India and make taxable supplies are still required to comply with GST, even if they don’t have a permanent establishment.

In this blog post, we will explore the concept of Casual Taxable Persons (CTPs) under GST, their registration process, and the key compliance requirements for such persons.

Who is a Casual Taxable Person (CTP)?

A Casual Taxable Person is defined under Section 2(20) of the Central Goods and Services Tax (CGST) Act, 2017, as a person who:

• Occasionally undertakes the supply of goods or services in India,
• Does not have a fixed place of business in India, and
• Is not a resident of India.

A Casual Taxable Person is typically someone who does business in India on a temporary basis, such as businesses attending exhibitions, traders involved in one-off contracts, or foreign companies entering India for a short period to provide services.

GST Registration for Casual Taxable Persons (CTPs)

Unlike regular taxpayers who are required to register for GST based on their turnover, a Casual Taxable Person is required to register under GST irrespective of the turnover threshold. Even if their supply of goods or services is temporary or sporadic, registration is mandatory.

Here’s a breakdown of the key points related to GST registration for Casual Taxable Persons:

1. Compulsory Registration

Any Casual Taxable Person who intends to supply goods or services in India, whether intermittently or temporarily, must obtain GST registration. This is irrespective of the turnover, meaning there is no threshold limit for registration.

For example:

• A foreign company coming to India to provide consulting services on a temporary basis would need to register under GST as a Casual Taxable Person.
• A business involved in a one-time event like a trade show or exhibition would also need to register as a CTP under GST.

2. Temporary Registration

Unlike regular GST registration, the registration granted to a Casual Taxable Person is temporary. Here are the key details:

• Validity: The registration is valid only for a short period, generally for the duration of the event or activity in India. It is usually given for a period of 90 days, but it can be extended in certain cases.

• Application Process: A Casual Taxable Person needs to apply for GST registration using Form GST REG-01. The application must include relevant information about the temporary nature of the business and the activity to be carried out in India.

3. Advance Payment of Tax

One important feature of registration for Casual Taxable Persons is the requirement to make an advance payment of tax:

• Advance Tax: Casual Taxable Persons are required to pay advance tax at the time of registration. This payment is based on the estimated tax liability for the period the person intends to conduct business in India.
• Cash Ledger: The advance tax is deposited into the Electronic Cash Ledger on the GST portal. This amount will then be utilized for the payment of tax during the registration period.

The advance tax ensures that the government receives its due share of taxes for the temporary period in which the Casual Taxable Person operates in India.

4. No Input Tax Credit (ITC)

Unlike regular GST-registered businesses, Casual Taxable Persons cannot claim Input Tax Credit (ITC) on their purchases. This means that the tax paid on their purchases cannot be offset against their output tax liability.

For example:

• If a Casual Taxable Person purchases goods or services to conduct business in India, they will not be able to claim the input tax paid on those goods or services.

This is an important aspect of GST compliance for CTPs, as they must bear the full tax cost on their purchases.

5. Compliance Requirements

Once registered under GST, Casual Taxable Persons are required to follow certain compliance steps to stay in line with GST regulations:

• GST Returns: Casual Taxable Persons are required to file GSTR-1 (for outward supplies) and GSTR-3B (for tax payment) during the period they are registered under GST. The returns must be filed on time to avoid penalties.

• Payment of Tax: Tax must be paid on the supply of goods or services made by the Casual Taxable Person during their temporary stay in India.

• Records Maintenance: Proper records and documentation of the goods or services supplied, along with invoices and tax payment receipts, must be maintained for GST compliance.

6. Cancellation of Registration

Once the Casual Taxable Person has completed the activity for which they registered, the GST registration will automatically be canceled. However, if they wish to extend the registration for a longer period, they must apply for an extension before the expiration of the original registration period.

Who Should Register as a Casual Taxable Person?

Here are some examples of who might need to register as a Casual Taxable Person under GST:

1. Foreign Companies or Individuals: Foreign entities conducting business in India temporarily (for example, providing services for a project or conducting a seminar).

2. Event Organizers: A person or business organizing trade exhibitions, fairs, or conferences in India for a short duration.

3. Importers for Temporary Supplies: Businesses or individuals who are importing goods temporarily for events like trade shows.

4. Consultants and Contractors: Non-resident individuals or entities who come to India for a limited time to offer consulting services or perform contractual work.

Key Takeaways

• Mandatory Registration: Casual Taxable Persons must register under GST irrespective of turnover and are not exempt from GST compliance due to their temporary presence in India.
• Advance Payment: They must pay an advance tax at the time of registration, based on the estimated liability for the period of activity in India.
• Limited Duration: Their registration is temporary and valid for a maximum of 90 days, with the possibility of extension.
• No ITC: Casual Taxable Persons are not eligible to claim Input Tax Credit (ITC).
• Compliance Obligations: Casual Taxable Persons are required to file GST returns, maintain records, and ensure timely tax payments during their business operations in India.

Conclusion

The Casual Taxable Person (CTP) provisions under the GST law ensure that businesses or individuals temporarily engaging in taxable supplies in India comply with tax regulations. Whether you are a foreign consultant, event organizer, or temporary supplier, understanding the GST registration requirements for CTPs is crucial to ensuring compliance and avoiding penalties.

If you plan to conduct business in India on a temporary basis, it is advisable to seek professional guidance from GST consultants to navigate the registration process, meet compliance requirements, and manage your GST obligations effectively.