Just imagine: you're running your company in the US or Germany, and you discover that attending a big trade fair in India can give your business a big boost. You immediately prepare, send your team to India, and sell your best stuff here for a month.
Now the question is, how will a foreign company or person, who does not have a fixed place of business in India, account for tax on this temporary business?
This is where a special provision of the Indian GST (Goods and Services Tax) law comes into play, which is called Non-Resident Taxable Person or NRTP.
It's not just legal terminology; It is a bridge that connects international trade to India's taxation system. If you or your company plan to temporarily make a taxable supply in India, understanding the rules of NRTP is not just a formality, but a solid foundation.
The definition of NRTP is given in Section 2(77) of the GST statute, but let's simplify it.
A Non-Resident Taxable Person is a person (or company) who:
Does not reside in India (i.e., he is a non-resident)
Supply of goods or services in India occasionally.
Most importantly, he does not have a fixed place of business or residence in India.
Think of it as a tourist who came and stayed in a hotel, but started selling business goods. Since it does not have a permanent office here, it gets an "NRTP" status so that the government can track the revenue from its temporary business.
The concept of NRTP was created so that foreign trade also contributes to the Indian market, but the security of the country's revenue is maintained. Its main identity is that it is temporary and has no threshold limit.
Often people think of NRTP and Casual Taxable Person (CTP) as the same, even though there is a world of difference between the two. Both work temporarily, but their original residence matters:
Features
Non-Resident Taxable Person (NRTP)
Casual Taxable Person (CTP)
Residency
Non-Resident Of India.
Resident Of India.
Business Place
There is no fixed business place in India.
No fixed business place in that specific state.
Registration Form
The special form uses GSTR REG-09.
The common form uses GSTR REG-01.
Input Tax Credit (ITC)
ITC can be taken only on imported goods in India.
As a general rule, one can take ITC on all eligible inward supplies.
Limitation On ITC: This is a big difference. If a foreign company acquires a service or buys goods in India (such as an event management service), it cannot take ITC of the GST paid on it. This rule is so that foreign companies cannot claim fake ITC for temporary business.
NRTPs have to follow certain procedures for GST compliance. Any delay can result in a fine before you even start trading!
1. Mandatory Registration
No Limits: NRTPs must compulsorily register before starting their business activity, no matter how low their turnover is. The rule of exemption of turnover does not apply to them.
Deadline: The application for registration has to be submitted at least 5 days before the date of commencement of business.
2. Application Form and Authorized Signatory
NRTP has to fill Form GSTR REG-09 on the GST portal. The role of an Indian resident is extremely important in this process.
Authorized Signatory: The NRTP must authorize a person who is a resident of India and possesses a valid PAN and Indian mobile number. This is necessary because most of the processes of the GST portal (such as OTP, EVC) are done on the Indian number itself.
Documents: Self-attested copy of passport, business incorporation certificate, and tax identification number of that country are required.
3. Advance Tax Deposit
This is the most special and unique condition of NRTP registration.
Payment: After submitting the application, the NRTP has to deposit the amount of advance tax payable on its estimated taxable supply.
Provisional GSTIN: Only after depositing this tax, they get a provisional GSTIN, and only then is the registration certificate issued.
Calculation: If you estimate that in 90 days you will sell goods worth ₹50 lakh and it will attract 18% GST, you will have to deposit ₹50,00,000 × 18% = ₹9,00,000 in advance.
4. Validity Period and Extension
The registration of NRTP is initially valid only for 90 days.
If the business operates for more than 90 days, they can extend the registration period by a maximum of 90 days by filling out Form GST REG-11, provided they have already paid the estimated additional tax.
After registration, the NRTP has to file a monthly return:
GSTR-5 Filing
NRTP has to file Form GSTR-5.
Refund Claim
If there is a balance left in the advance tax deposited to the NRTP, then he can claim for a refund. This refund will be made only if it has filed all the returns (GSTR-5) for the entire period of registration on time.
The process for NRTP is straightforward; however, even a minor error can result in significant penalties. Here are some professional tips to help you maintain precision while staying practical and grounded:
1. Who is a Non-Resident Taxable Person (NRTP)?
NRTP is a person or business entity that does not reside in India and does not have a fixed place of business here, but temporarily makes a taxable supply of goods or services in India.
2. When is GST registration mandatory for NRTP?
GST registration is mandatory for NRTPs, even if their turnover is zero. They have to apply in Form GSTR REG-09 at least 5 days before starting the business.
3. Which GST return does NRTP have to file?
NRTP has to file Form GSTR-5. This return is monthly, and it has to be filed by the 20th of that month or within 7 days after the end of the registration period, whichever is earlier.
4. Can NRTP claim Input Tax Credit (ITC)?
Yes, NRTP can claim ITC only on the import of goods that it has imported for supply in India. He cannot take ITC on local services taken or goods purchased in India.
5. How long is the GST registration of NRTP valid?
The registration of NRTP is initially valid for a maximum of 90 days, which can be extended for an additional 90 days provided the estimated tax is deposited in advance.
6. What is the main Difference Between Casual Taxable Person and Non Resident Taxable Person?
The main difference is residency. CTP is a resident of India while NRTP is a non-resident of India. This difference also affects their ITC rules under Casual Taxable Person and Non Resident Taxable Person.
7. Why is it necessary to submit advance tax for NRTP?
The deposit of advance tax is necessary so that the government can ensure revenue protection from foreign entities doing temporary business in India. This deposit is adjusted from the final tax liability.
Summary: India's Taxation Policy in the International Market
In conclusion, it is easy to understand that the Non-Resident Taxable Person (NRTP) framework is a well-thought-out step towards making India a global business hub. This allows foreign businesses to take advantage of the Indian market, while also ensuring that they adhere to the country's taxation rules. There may be complications, such as restrictions on ITC, but with the right planning, timely registration (GSTR REG-09), and proper compliance (GSTR-5), foreign companies can easily conduct their temporary business in India.
If you are a foreign entity looking for business opportunities in India, following the rules of NRTP is your first step to success.
What to do next?
Call-to-Action (CTA): If you're confused about the NRTP registration process or want to understand your Taxable Person Under GST compliance in India, contact an expert tax consultant immediately. The right start can save you from unnecessary fines and delays. Take your step forward to be a part of India's business expansion!
