Introduction to GST
GST, or Goods and Services Tax, is a unified tax on goods and services in India, introduced to simplify the tax system. Before GST, there were multiple taxes like VAT, excise duty, and service tax, making compliance complex for businesses. GST aims to streamline this by consolidating these taxes into a single tax, reducing the burden on businesses. It helps businesses by making tax calculations simpler and reducing the number of taxes they need to pay, thus improving ease of doing business. You have now understood the basics of GST so, now in this blog we will discuss the definition of a casual taxable person under GST, the eligibility criteria, rights and responsibility, filling procedures and many more. Let’s get started!
Defining a Casual Taxable Person
A Casual Taxable Person is someone who sells things or provides services, but they don’t have a fixed place where they do their business from. They’re not like regular businesses with a permanent setup. Instead, they do transactions occasionally. There many many businesses in India who are considered as a Casual Taxable Person that means they don’t have a fixed place of business.
These people might be Temporary Sellers, Event Organizers, Seasonal Sellers or a One-time Sellers. These peoples are considered as a casual taxable person.Casual Taxable Persons were introduced under the GST system to make sure that even those who do business occasionally or temporarily are included in the tax framework. This ensures fairness, as all types of businesses contribute to tax revenue, prevents tax evasion, and encourages compliance with tax laws. It also helps in expanding the tax base for better revenue collection, which in turn supports various development projects and public services.
Eligibility and Registration Process
Eligibility criteria such as:
- Non-Resident: The person must not be a resident of India.
- No Fixed Place of Business: They should not have a fixed place of business or a residence in India.
- Occasional Supply of Goods or Services: The individual must be involved in the supply of goods or services occasionally. This means they are not engaged in regular or continuous business activities.
- No Threshold Limit: The turnover threshold of 20 lakh rupees, which is applicable to regular taxpayers for GST registration, does not apply to CTPs. Even if their turnover is below this threshold, they are still required to register.
- Compulsory Registration: CTPs are required to register under GST irrespective of their turnover. This means that even if their turnover is below the threshold, they must still go through the registration process.
Registration process:
Here’s the step by step process:
- Form GST REG-01: The CTP needs to fill out and submit Form GST REG-01 on the GST Portal. This form is specifically for registering as a CTP.
- Required Information: The form requires the following information:
- Name, address, and PAN (Permanent Account Number) of the person.
- Details of the business, including the type of goods or services supplied.
- Period for which registration is sought (maximum of 90 days).
- Application Submission: Once the form is filled with all required details, it is submitted through the GST Portal.
- Verification: The tax authorities review the application. If everything is in order, they approve the registration and issue a Certificate of Registration as a Casual Taxable Person.
- Validity Period: The registration as a CTP is usually valid for a maximum period of 90 days. If the CTP needs to continue business beyond this period, they must apply for an extension of the registration.
- GSTIN: After approval, the CTP receives a GSTIN (Goods and Services Tax Identification Number) as a Casual Taxable Person.
Rights and Responsibilities of a Casual Taxable Person
Rights:
- Collecting Tax: A CTP has the right to collect tax from their customers on the supplies of goods or services made by them.
- Input Tax Credit: They can claim input tax credit on the taxes paid on their purchases of goods or services used for their business activities.
- Legal Protection: They are entitled to legal protection under the GST law, ensuring their rights are upheld in case of disputes or legal matters.
- Claiming Refunds: CTPs have the right to claim refunds of excess tax paid, subject to the conditions and procedures specified under GST laws.
- Appeal and Grievance Redressal: They have the right to appeal against any decision of the tax authorities that they believe is unjust or incorrect. They can also seek redressal for any grievances related to their GST compliance.
- Input Tax Credit Reversal: In case of goods or services being returned or deemed unsuitable for business use, CTPs have the right to reverse input tax credit claimed earlier.
Responsibilities:
- Compliance: A CTP must comply with all GST laws, rules, and regulations applicable to them. This includes timely filing of returns and payment of taxes.
- Maintaining Records: They are responsible for maintaining accurate records of their transactions, including invoices, receipts, and other documents required under GST.
- Filing Returns: CTPs must file their GST returns on time, providing details of their transactions during the specified period.
- Payment of Taxes: They are responsible for calculating and paying the correct amount of GST on their supplies within the due dates.
- Display of Registration Certificate: A CTP must prominently display their GST registration certificate at their place of business.
- Cooperation with Authorities: They should cooperate with tax authorities during inspections, audits, or investigations related to their GST compliance.
Taxation and Filing Procedures
Taxation Procedures:
- Calculating GST: A CTP must calculate the GST (CGST, SGST/UTGST, or IGST) applicable on their supplies of goods or services. This calculation is based on the applicable GST rates for their products or services.
- Collecting Tax: Upon making supplies to customers, the CTP collects GST from them. The collected tax amount is segregated into CGST, SGST/UTGST, or IGST, depending on the nature of the supply.
- Input Tax Credit: CTPs can claim Input Tax Credit (ITC) for the GST paid on their purchases of goods or services used for business purposes. This reduces the amount of GST they need to pay on their supplies.
- Payment of GST: The CTP is required to pay the net GST amount (GST collected minus Input Tax Credit) to the government within the specified due dates.
Filing Procedures:
- GSTR-1: A CTP needs to file GSTR-1, which is the return containing details of outward supplies made during the relevant period. This includes invoices issued and the corresponding tax amounts.
- GSTR-2A: CTPs can view GSTR-2A, which is an auto-generated form containing details of inward supplies (purchases) as reported by their suppliers.
- GSTR-3B: This is a summary return where a CTP needs to report the summary of outward supplies, input tax credit availed, and the amount of GST payable. They also need to pay the tax due through this return.
- GSTR-4A: If a CTP is opting for the Composition Scheme (not applicable for CTPs), they would file GSTR-4A, a quarterly return.
- GSTR-9: At the end of the financial year, a CTP must file GSTR-9, which is the annual return. This consolidates all the monthly and quarterly returns filed during the year.
- GSTR-9A: CTPs opting for the Composition Scheme would file GSTR-9A, the annual return specific to Composition Scheme taxpayers.
- GSTR-9C: In certain cases, a CTP might need to get their annual accounts audited and file GSTR-9C, which is a reconciliation statement.
Implications and Impact on Business Operations
Implications:
Compliance Requirements: CTPs need to follow GST regulations, including filing returns and making tax payments, adding to their administrative workload.
- Registration Process: Obtaining temporary registration involves paperwork and coordination with tax authorities, creating an administrative burden.
- Advance Deposit: CTPs must make an advance deposit of GST, tying up working capital until they file returns and claim credits.
- Limited Validity: The 90-day temporary registration means CTPs must monitor their business activities closely and apply for an extension if needed.
- Ineligibility for Composition Scheme: CTPs cannot opt for the Composition Scheme, affecting their tax liability calculations.
Impact on Business Operations:
- Cash Flow Management: Advance deposits and periodic GST payments can impact cash flow for CTPs, especially with irregular transactions.
- Increased Compliance Costs: Meeting GST compliance requirements can lead to higher administrative costs for CTPs.
- Interactions with Suppliers and Customers: CTPs may need to educate stakeholders about their status, potentially affecting business relationships.
- Tax Planning: CTPs must carefully plan business activities and tax payments to avoid penalties and ensure accurate reporting.
Comparative Analysis: CTP vs. Regular Taxpayers
| Aspect | Casual Taxable Person (CTP) | Regular Taxpayer |
| Registration Process | Requires temporary registration for up to 90 days | Registers for GST based on turnover |
| Threshold Limit | No threshold limit, must register irrespective of turnover | Threshold limit of 20 lakh rupees for registration |
| Composition Scheme Eligibility | Not eligible for Composition Scheme | Eligible for Composition Scheme (if turnover is below specified limit) |
| Tax Collection | Collects GST from customers on supplies | Collects and pays GST on supplies |
| Input Tax Credit | Can claim Input Tax Credit on purchases | Can claim Input Tax Credit on purchases |
| Tax Filing | Files GST returns based on temporary registration | Files regular GST returns based on turnover |
| Compliance Requirements | Follows GST regulations for CTPs | Follows GST regulations for regular taxpayers |
| Business Operations Impact | – Cash flow may be affected due to advance GST deposit. Limited validity of registration. Cannot opt for Composition Scheme | – Cash flow management depends on GST payment schedule. Can opt for Composition Scheme if eligible. Regular, longer-term registration allows for stable operations |
Compliance Challenges and Solutions
| Compliance Challenges | Solutions |
| Understanding GST Regulations | – Regularly update knowledge on GST rules and laws <br> – Attend GST workshops or training programs |
| Filing Returns on Time | – Set reminders for due dates <br> – Use GST software for easier filing |
| Maintaining Accurate Records | – Use digital tools for record-keeping <br> – Organize documents systematically |
| Calculating and Paying Correct Taxes | – Use GST software for accurate calculations <br> – Engage tax professionals for guidance |
| Monitoring 90-day Registration Period | – Set alerts for approaching expiry <br> – Apply for extension in advance if needed |
| Communication with Suppliers & Customers | – Educate stakeholders about CTP status and requirements <br> – Provide clear information on invoices |
| Availability of IT Infrastructure | – Ensure reliable internet and computer systems <br> – Use GSTN portal efficiently |
| Complex Transactions | – Seek professional advice for complex transactions <br> – Use GST software for accurate reporting |
| GST Audits and Inspections | – Maintain meticulous records for audit readiness <br> – Cooperate with authorities during inspections |
| Cash Flow Management | – Plan cash flow considering advance GST deposits <br> – Optimize working capital management |
Conclusion
In summary, understanding the role of a Casual Taxable Person (CTP) under the GST (Goods and Services Tax) system is vital for businesses in India. CTPs, despite their occasional business activities, have significant responsibilities, including temporary registration and timely tax filings. They face challenges like advance GST deposits and limited validity periods. However, with knowledge of GST rules and tools like digital platforms, these challenges can be managed. The comparison with regular taxpayers shows the unique features of being a CTP, such as ineligibility for the Composition Scheme. Despite these, CTPs have rights like claiming input tax credit. Staying informed and compliant is crucial for CTPs in India’s evolving GST landscape.
FAQ’S
-
What is GST?
- Answer: GST (Goods and Services Tax) is a unified tax system in India that replaced multiple indirect taxes.
2. Who is a Casual Taxable Person (CTP)?
- Answer: A CTP is someone who occasionally supplies goods or services without a fixed place of business.
3. How can I register as a CTP?
- Answer: Fill Form GST REG-01 on the GST Portal and obtain temporary registration.
4. Are there any eligibility criteria for CTPs?
- Answer: Yes, CTPs must be non-residents, have no fixed place of business in India, and occasionally supply goods or services.
5. What are the rights of a CTP?
- Answer: CTPs have rights to collect tax, claim input tax credit, and legal protection under GST laws.
6. What are the responsibilities of a CTP?
- Answer: Responsibilities include timely tax filings, maintaining records, and paying GST on supplies.
7. How does taxation work for CTPs?
- Answer: CTPs calculate GST on their supplies, collect tax from customers, and pay net GST amount to the government.
8. Can CTPs opt for the Composition Scheme?
- Answer: No, CTPs are not eligible for the Composition Scheme under GST.
9. What are the compliance challenges for CTPs?
- Answer: Challenges include understanding GST rules, timely filings, and advance GST deposits.
10. How does being a CTP impact business operations?
- Answer: It affects cash flow, compliance costs, and interactions with suppliers and customers.
