Understanding Non-Resident Taxable Persons under Indian GST Law

This article is essential for businesses that import goods or services into India, manage operations for foreign residents, or are non-residents planning to conduct business within the country.

Defining a Non-Resident Taxable Person

Under the Goods and Services Tax (GST) framework, a 'non-resident taxable person' is an individual or entity that occasionally engages in transactions involving the provision of goods or services, or both. This definition applies regardless of whether they act as a principal, agent, or in any other role, provided they lack a permanent business establishment or residence in India.

Simply put, businesses providing goods, services, or data retrieval services from foreign databases are included in this definition and are subject to GST regulations.

Section 24 of the GST law details the mandatory registration requirements for non-resident taxable persons. It specifies that certain businesses and entities must register under GST, irrespective of the standard Rs. 20 lakh or Rs. 10 lakh turnover threshold. Therefore, all non-resident individuals or companies must secure GST registration, regardless of whether their taxable transactions are infrequent or continuous.

Non-Resident Taxable Person Registration Process

Entities meeting the non-resident taxable person criteria must submit a registration application a minimum of five days before initiating business operations. For "High Sea Sales" (HSS), where goods are sold while in transit within India's territorial waters, registration is required in the coastal state or Union Territory closest to the sale's baseline point. For instance, an HSS near Mumbai's coastline necessitates GST registration in Maharashtra. An HSS involves a sale from the initial consignee to another buyer during transit, either after dispatch from the origin port/airport or before arrival at the destination port/airport.

A non-resident taxable person must electronically submit a properly signed application on Form GST REG-09 via the Common Portal, at least five days before starting business. This application requires a self-attested copy of a valid passport and must be signed or verified using EVC, which is an Aadhaar-based electronic verification method. If the applicant is a company, it must provide its tax identification number from its home country, equivalent to India's PAN. Upon successful application, the Common Portal issues a temporary reference number for depositing an advance tax amount into the electronic cash ledger, followed by an acknowledgment.

Advance Tax Deposit for Non-Resident Taxable Persons

Non-resident taxable persons are mandated to make an advance tax payment equal to their projected tax liability for the duration of their requested registration period.

Essentially, GST Council registration rules stipulate that all registered non-resident taxable persons must proactively deposit tax based on estimates. This advance payment is credited to their Electronic Cash Ledger and later offset against their actual tax obligations when filing returns.

Additionally, if a non-resident taxable person wishes to extend their registration period beyond what was initially requested, they must electronically submit an application using Form GST REG-11 via the Common Portal prior to their current registration's expiration.

Illustrative Scenario

Consider Marc Inc., a U.S.-based company, manufacturing specialized turbojet engines for a one-time supply to India for assembly. Marc Inc. appoints Mr. Vinod as an agent in India to manage all compliance procedures. Mr. Vinod must secure GST registration for Marc Inc. using his own PAN and remit advance taxes for this transaction. Following the successful completion of the supply, Marc Inc. will file its GST returns, settling its GST liabilities using the advance tax paid during registration. Any overpayment of tax will be electronically refunded.