Non Registered person under GST

Meaning of term Non Registered person under GST

 

The details about Non Registered person are explained here. 

Non Registered person

Under the model GST law, a ‘taxable person’ is a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as taxable person.

‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/BOI, any corporation or Government Company, body corporate incorporated under laws of foreign country, co-operative society, local authority, government, trust, and artificial juridical person.

 

Under the model GST law, a ‘taxable person’ is a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as taxable person.

‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/BOI, any corporation or Government Company, body corporate incorporated under laws of foreign country, co-operative society, local authority, government, trust, and artificial juridical person.

GST registration is mandatory for-

  • Any business whose turnover in a financial year exceeds Rs 20 lakhs Rs 10 lakhs for North Eastern and hill states).

[Note: If your turnover is supply of only exempted goods/services which are exempt under GST, this clause does not apply.]

  • Every person who is registered under an earlier law (i.e., Excise, VAT, Service Tax etc.)  Needs to register under GST, too.
  • When a business which is registered has been transferred to someone/demerged, the transferee shall take registration with effect from date of transfer.
  • Anyone who drives inter-state supply of goods
  • Casual taxable person (see below)
  • Non-Resident taxable person (see below)
  • Agents of a supplier
  • Those paying tax under the reverse charge mechanism
  • Input service distributor (see below)
  • E-commerce operator or aggregator
  • Person who supplies via e-commerce aggregator
  • Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person

Who is a Casual Taxable Person?

A person who occasionally supplies goods and/or services in a territory where GST is applicable but he does not have a fixed place of business. Such a person will be treated as a casual taxable person as per GST.

Who is a Non-Resident Taxable person?

When a non-resident occasionally supplies goods/services in a territory where GST applies, but he does not have a fixed place of business in India. As per GST he will be treated as a non-resident taxable person. It is similar to above except the non-resident has no place of business in India.

Example: A person who has place of business in Bangalore supplies taxable consulting services in Pune where he has no place of business would be treated as casual taxable person in Pune.

GST Registration by Type of Taxable Person

  • Every person has to apply for registration in every State in which he is liable, within thirty days from the date on which he becomes liable to registration.
  • Casual/ non-residents should apply at-least five days before their commencement of business.
  • Registration number in GST will be PAN based and hence, having PAN would be a prerequisite for obtaining registration.
  • The assesse must obtain separate registration for each State, as registration under GST will be State-wise,
  • The assesse has an option to obtain separate registration for each of the ‘business vertical’ in the same State.

Special registration for casual taxable person and non-resident taxable person (section 24)

A casual taxable person or a non-resident taxable person shall apply for registration at least five days prior to the commencement of business. Section 24 provides for special provisions relating to casual taxable person and nonresident under GST.

Casual/non-resident taxable person may obtain a temporary registration for a period of 90 days (extendable for additional 90 days).

A person who obtains registration u/s 24, will be required to make advance deposit of GST (based on his estimated tax liability).

Collecting GST

Only a registered taxable person can collect GST. The taxable person must prominently indicate the GST amount on tax invoices.

Returns

A normal taxpayer will be required to furnish three returns monthly and one annual return. There are separate returns for a taxpayer registered under the composition scheme, Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS).

Under the GST Bill cleared by Lok Sabha, a provision on payment of GST under reverse charge by registered person upon procurement from un-registered person has baffled India Inc.

Section 9(4) of the GST Bill provides that if a supplier (say, a stationery store) is not registered, and there is a sale to a registered entity (say, a company), then the buyer shall bear the GST on such sale under what is technically referred to as a reverse charge mechanism.

Recommended Read: Why GST Bills were tabled as ‘Money Bill’?  Arun Jaitley answers

“Not everyone who is unregistered is a GST defaulter. A seller may be unregistered because his entire output (product being sold) is exempt or because he falls below the threshold limit set for application of GST. The reverse charge mechanism will impact working capital. Continuing with this illustration, the company will have to bear this tax and then seek a credit (for input tax) against its own tax liability,” says Badri Narayanan, partner, Lakshmikumaran & Sridharan, a law firm.

The mess just doesn’t stop here. Section 31(3) (f) makes this even more challenging. The buyer has to ‘self-invoice’ — in other words, he has to issue an invoice for the purchase made by him from the unregistered seller. This invoice is to be uploaded in the GST system.

Recommended Read: You can now check status of your registration migration to GST

Invoicing to self-entail HSN (classification) challenges. In a reverse charge mechanism, government does not earn anything as tax payer gets credit of tax paid. Thus, in effect, it is a revenue neutral exercise.

Further, taxing un-registered procurement under reverse charge fails the concept of threshold limit under GST.

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