Navigating GST for Temporary Business Operations: CTP & NRTP Demystified

Whether you’re a business owner running a temporary stall at an exhibition in another state or a foreign company making occasional sale in India, you may be unsure about your GST registration requirements. How can you comply with tax rules when you don't have a permanent business presence?

This is where the concepts of Casual Taxable Person (CTP) and Non-Resident Taxable Person (NRTP) come into play. Both categories are designed for businesses that operate on a temporary basis but are still required to adhere to GST regulations. Understanding the registration process, tax obligations, and compliance requirements for these temporary setups is essential for smooth business operations.

Understanding Casual Taxable Persons (CTP) and Non-Resident Taxable Persons (NRTP)

According to Section 2(20) of the CGST Act, 2017, a “Casual Taxable Person (CTP”) refers to a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.

Key aspects of this definition include:

➢ The supply of goods or services must be occasional and related to business activities.

➢ A person can act as a principal, agent, or in any other capacity while making such supplies. This means even an agent operating on behalf of a principal can qualify as a CTP.

➢ The crucial condition is that the supply must take place in a State or Union Territory where the supplier does not have a fixed place of business.

Since GST applies only to activities conducted in the course or furtherance of business, supplies made by a CTP must also align with this principle. The absence of a fixed business location in the State where the supply occurs is a decisive factor in determining whether a person qualifies as a CTP. While the GST Act does not specifically define a “fixed place of business,” it does define a “fixed establishment,” which typically refers to a location with a certain degree of permanence. In general terms, a fixed place of business would imply a physical location, such as a permanent office or shop.

In addition to CTP, GST also defines a “Non-Resident Taxable Person (NRTP”), which is defined under Section 2(77) of the CGST Act, 2017, as any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.

The primary difference between the two categories is:

✔ A CTP may have a fixed place of business in India, but not in the specific State where they make occasional taxable supplies.

✔ An NRTP has no fixed place of business or residence anywhere in India but still engages in taxable supplies occasionally.

In essence, a CTP has a business presence in India but not in the State where they make occasional supplies, whereas an NRTP has no fixed place of business or residence anywhere in India.

Registration Requirements for CTP & NRTP: What You Need to Know

Under Section 24 of the CGST Act, 2017, if you're a Casual Taxable Person (CTP) or a Non-Resident Taxable Person (NRTP), you're required to register for GST-no exceptions! That means you're not eligible for the standard exemption threshold of Rs.20 lakhs/Rs.10 lakhs. Both CTPs and NRTPs must register regardless of their turnover. Also, forget the Composition Scheme-it’s not available to you!

When Do You Need to Get Registered?

A quick heads-up: According to First Proviso to Section 25(1), CTPs and NRTPs need to apply for GST registration at least 5 days before starting their business activities. Don’t wait till the last minute!

How Long Does Your Registration Last?

A CTP's and NRTP's registration is valid for a limited period as per Section 27 of the CGST Act, 2017:

• The time frame you mentioned in your registration application, or
• 90 days from the effective date of registration, whichever comes first.

But no worries! If you need more time, you can apply for an extension of another 90 days. Just remember, the extension can only happen once. To apply, you'll need to file an electronic application in FORM GST REG-11.Therefore the total validity period is 180 days (90 days original+ 90 days extended).

Paying Up Front: Advance Tax Deposit

According to Sub-section (2) of Section 27 of the CGST Act, a CTP and NRTP are required to make an advance tax deposit equal to their estimated tax liability for the registration period at the time of submitting the registration application. As clarified in Circular No. 71/45/2018-GST, dated 26.10.2018, the ‘net estimated tax liability’ should be considered, not the gross tax liability. Therefore, it is calculated after accounting for the eligible Input Tax Credit (ITC). The formula for this is:

✔ Advance Tax Deposit = Estimated Tax Liability for Registration Period - Eligible ITC

If an extension is requested, additional advance tax must be paid for the extended period. After settling the tax liabilities, CTPs and NRTPs are eligible for a refund of any remaining balance from the advance deposit:

✔ Refund of Surplus = Advance Tax Deposit Paid - Tax Liabilities Settled

Now, let’s talk about e-paperwork. If you're a CTP or NRTP, here’s what you need to know:

CTP Return Filing - Section 37 & 39 of the CGST Act

NRTP Return Filing - Section 39(5) of the CGST Act read& Rule 63 of the CGST Rules

No Need for Annual Returns

Here’s a relief: CTPs and NRTPs don’t need to file Annual Returns. Less paperwork, more time for your business!

NRTP Registration Procedure (Section 25 of the CGST Act read with Rule 13 of the CGST Rules, 2017)

CTP Registration Procedure (Section 25 of the CGST Act read with Rule 8 to 10 of the CGST Rules, 2017)

When Should You Register as a Normal Taxable Person Instead of a CTP?

According to Circular No. 71/45/2018-GST dated 26.10.2018, here’s when you should register as a normal taxable person rather than as a Casual Taxable Person (CTP):

1. Long-Term Exhibitions: If you’re involved in long-running exhibitions lasting more than 180 days, you cannot be treated as a CTP.

2. Register as a Normal Taxable Person: In such cases, you must obtain GST registration as a normal taxable person instead of a CTP.

3. Proof of Business Premises: When applying for normal GST registration, you’ll need to upload a copy of the allotment letter granting you permission to use the premises for the exhibition. This serves as proof of your principal place of business.

4. No Advance Tax Deposit: Unlike CTPs, you won’t need to deposit advance tax in this scenario.

5. Post-Exhibition: Once the exhibition is over, you may surrender the registration.

Refund for CTPs & NRTPs

Both CTPs and NRTPs are eligible to claim a refund for any amount deposited in excess of the tax liability. The refund process follows these steps:

✔ Eligibility: If you've deposited more than your tax liability, you can claim the excess amount once all necessary returns for the registration period have been filed.

✔ Application: To apply for the refund, file Form GST RFD-01 under the category "Refund of excess balance in the electronic cash ledger."

✔ Relevant Date: The relevant date for claiming the refund is the date of payment of tax (which should align with your last return).

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.