Complete Guide to Non-Resident Taxable Persons (NRTP) Under GST: Registration, Compliance, and Reverse Charge Mechanism

What is a Non-Resident Taxable Person (NRTP)?

A Non-Resident Taxable Person (NRTP) is an individual or business entity that occasionally undertakes transactions involving the supply of goods or services in India but does not have a fixed place of business within the country. NRTPs are required to comply with GST regulations even if they do not have a permanent establishment in India.

Registration Requirement

Timeline for Registration:

1. A Non-Resident Taxable Person (NRTP) must apply for GST registration at least five days before they commence any business activity in India. This is crucial to ensure that they comply with the GST regulations from the start of their operations.

Temporary Registration:

1. The GST registration for an NRTP is temporary and initially valid for a period of up to 90 days. This temporary nature accommodates their short-term business activities in India.
2. If necessary, the registration can be extended for an additional period. The extension request must be made before the initial registration period expires.

Application Process:

1. NRTPs must fill out Form GST REG-09, which requires details such as the applicant’s name, address, contact details, and a list of goods and services they intend to supply.
2. Supporting documents like a passport and business incorporation certificate (if applicable) must be submitted along with the application.

Deposit of Advance Tax

Advance Tax Payment:

1. At the time of registration, NRTPs are required to make an advance tax deposit. This deposit should equal the estimated tax liability for the duration of their registration period.
2. The advance tax serves as a prepayment for the GST liability that will arise from their business activities during their stay in India.

Calculation of Liability:

1. The estimated tax liability is calculated based on the expected volume and value of transactions. It is important for NRTPs to accurately forecast their business activities to avoid over or underpayment.

Adjustments:

1. Any discrepancies between the advance tax paid and the actual tax liability incurred can be adjusted during the filing of the final return.

Registration Procedure for NRTP

Step 1: Preparation and Document Collection

Documents Required:

• Passport: For identification and proof of nationality.
• PAN Card: Not mandatory, but if available, it can be useful.
• Proof of Business Address: Address proof from the country of residence.
• Identity Proof: Passport or any other valid ID.
• Bank Account Statement: Bank account details in India or abroad.
• Photographs: Passport-sized photographs of the authorized signatory.

Step 2: Application for GST Registration

• Form GST REG-01: Application for GST registration. This form is filled out online on the GST Portal (https://www.gst.gov.in).

Steps:

• Login to GST Portal: Access the GST portal using credentials.
• Fill Out Form GST REG-01: Provide details including business name, address, and nature of business activities.
• Upload Documents: Attach all necessary documents as mentioned above.
• Advance Tax Payment: Pay an advance tax amount equivalent to the estimated tax liability for the period of registration.

Step 3: Application Acknowledgment

• Form GST REG-02: Acknowledgment of the application.

• Receipt of ARN (Application Reference Number): After submission of Form GST REG-01, an ARN will be generated.
• Track Application Status: Use ARN to track the status of the application on the GST portal.
• Immediate upon submission of Form GST REG-01

Step 4: Verification and Issuance

• Form GST REG-06: GST registration certificate.

• Verification by GST Officer: The application and documents are reviewed by a GST officer.
• Issuance of GSTIN: Upon successful verification, a GST Identification Number (GSTIN) and Form GST REG-06 will be issued.
• 7-10 days (From the date of successful verification)

Returns Filing

Form GSTR-5:

1. NRTPs are required to file Form GSTR-5, which is a summary return of all outward and inward supplies made during the period of registration.
2. This form captures details of sales, purchases, and tax paid during the period.

Filing Frequency:

1. Returns must be filed monthly. Alternatively, they can be filed within seven days of the expiry of the registration period if the registration is not extended.

Compliance:

1. Filing the GSTR-5 return ensures that NRTPs remain compliant with GST regulations and provides the authorities with a clear picture of their business activities in India.

Tax Invoice

Issuance of Invoice:

1. NRTPs are required to issue a tax invoice for every supply of goods or services made in India. The invoice serves as an official document for both the supplier and the recipient, evidencing the transaction.

Invoice Details:

1. A GST-compliant tax invoice must include:
   • Name, address, and GSTIN/UIN of the supplier and recipient
   • Invoice number and date
   • Description of goods or services
   • Quantity and value of goods/services
   • Rate and amount of GST charged (CGST, SGST/UTGST, and IGST)
   • Place of supply and delivery address, if different

Time of Supply:

1. NRTPs must issue the invoice at the time of supply, which is generally the earlier of the date of dispatch or delivery of goods or the date of receipt of payment.

Input Tax Credit

Ineligibility for Input Tax Credit:

1. NRTPs are not eligible to claim input tax credit on goods or services procured in India. This means they cannot offset the GST paid on their purchases against the GST collected on sales.

Reason for Ineligibility:

1. The inability to claim input tax credit is because NRTPs are typically involved in short-term or one-off transactions in India and do not maintain a permanent establishment.

Applicability of RCM to NRTPs

• NRTPs and RCM: As an NRTP, you may be liable to pay GST under RCM if you receive certain goods or services where the RCM provisions are applicable. This can occur if the supplier is located outside India or if the transaction falls under specific categories defined by GST laws.

Examples of RCM in Practice

• Example 1: Import of Services
• If An NRTP engages a foreign consultant for services provided from abroad. Then NRTP must pay GST under RCM on the value of the consultancy services received.

Example 2: Purchase of Goods from an Unregistered Supplier

• If An NRTP purchases goods from an unregistered supplier in India. Then NRTP is required to pay GST under RCM for the goods purchased from the unregistered supplier.