Non Resident Taxpayers under GST Law Explained


Non Resident taxpayers

A non resident taxpayer is defined as one residing outside India and making a taxable supply of some product or service in India. Read more to understand the taxability.

If you own a business that imports goods or services from outside India or you manage a business on behalf of a person who is outside India or if you are a non-resident and seeing our article from a place outside India and intend to do a trade here, then this article is relevant to you.

Who is a “Non Resident Taxpayer”?

The Goods and Service Tax Law has defined a “non resident taxpayer” as any person who occasionally carries out transactions concerning the supply of goods or services, or both, whether as principal or agent or in any other place, but who has no fixed place of business Residence in India.

  • Section 24 of the GST Act also stipulates the requirements for the registration for a non resident taxpayer.
  • It specifies certain businesses and entities which are mandatorily needed to register under Goods and Services Tax and are not governed by the least threshold limit of Rs. 20 lakh / 10 lakh.
  • Regardless of whether the company is involved in a one-time transaction or frequent taxable transactions, each non-resident person or company must be registered under the Goods and Services Tax.

Registration procedure for a Non Resident Taxpayer

Every person or business covered by the above definition must apply for registration at least five days before the start of business. An additional clarification has been made in the case of a high sea sale; the law states that every person who makes a supply from the territorial waters of India is to be registered in the coastal state or union territory where the nearest point of the corresponding baseline is placed.

High Sea Sale (HSS) is a trade carried out by the carrier paper consignee to another buyer during the goods are still being transported, or after shipment from the airport/port of origin and before their arrival at the airport/port of the destination.

Therefore, if any high-sea sale is sent out near the shore of Mumbai, Maharashtra, the GST registration has to be taken in the state of Maharashtra.

A non-resident taxpayer must electronically submit a duly signed letter along with a self-attested copy of his valid passport, for registration, utilizing the form GST REG-09, within five days before the commencement of the business on the Common Portal. An application must be duly signed or verified by EVC, a new type of electronic verification on the basis of aadhar.

The non-resident (if it is a company) has to submit his tax identification number of his original country (whatever is the equal of our PAN in that country).

A person applying for registration as a non-resident taxpayer will receive a temporary reference number electronically through the Common Portal for making an advance deposit of tax in his electronic cash ledger and acknowledgment will be issued thereafter.

Advance Payment of Tax by Non-Resident Taxpayers

  • A non-resident taxpayer is required to make an advance deposit of tax in an amount which corresponds to the estimated tax liability of that person for the period for which registration is sought.
  • In other words, the registration rules circulated by the GST Council have specified that every person registered as a non-resident taxpayer is required to deposit tax in advance on presumption basis.
  • This advance tax is credited to the Electronic Cash Ledger and will finally get adjusted against the original tax liability at the time of return filing.
  • These rules also specify that, in the case of a non-resident taxpayer wishing to extend the registration period indicated in the applicant registration, an application with form GST REG-11 must be submitted electronically via the Common Portal before the expiry of the validity of registration granted to him.

For Example

Let’s understand these rules with an example. Say the company John Inc., based in the USA, manufactures special class turbojet engines delivered to India for assembling. This is a one-time deal for Marc Inc., and thus they have appointed an agent, Mr Ajay, in India to make all compliance formalities. Mr. Ajay, in turn, is required to obtain the registration for John Inc. by providing his PAN number and paying advance taxes related to this transaction. Once the transaction is successful and the delivery is completed, John Inc. must submit its GST returns and complete all GST liability from the advance payment paid upon registration. Any tax paid in excess is refunded by electronic mode.


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Non Resident Taxpayers under GST Law Explained

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