The introduction of GST is a milestone in the history of the indirect tax system in India. GST replaced the complicated web of Central and State taxes with a unified single tax that made compliance easier thereby reducing tax evasion and the cascading effect of taxes on the consumers.
The growth of Indian economy in the past decade has been tremendous, quickly turning the country into a leading player in global economy, attracting more non-resident Indians (NRI’s) to launch their businesses in India. This has resulted in more and more NRI’s engaging in supplying goods and services to our country, for which GST registration is mandatory. Such businesses are considered as non-taxable entities that come under the purview of the Goods and Services Act. The business should assign a nominee in India to carry out the GST compliance needs on behalf of the firm. Here we discuss in detail the GST rules and the returns for foreign non-resident taxpayers who supply goods and services to residents in India.
Who is a Foreign Non-Resident Taxpayer?
According to the GST Act, section 2 (77), a ‘Non-Resident Taxable Person’ is a person who supplies goods and services or both occasionally, whether as principal or agent, or in any other capacity, but who has no permanent place of business or residence in India. The non-resident foreign taxpayer may not own a business in India but makes supplies to the country for a short period of time and is liable to pay tax under GST Law. As per section 24 of the CGST Act, the foreign non-resident taxpayer is required to register at least 5 days before commencement of business in India. It is mandatory for persons registered under the Non-Resident Taxable Person category to file GSTR-5. Let us discuss in detail the importance and purpose of filing GSTR-5.
What is GSTR-5?
As per Rule 63 of CGST Act, the Non-Resident Taxable Person (NRTP) should file a return in form GSTR-5 electronically through the GST portal. In other words, it is a return that every NRTP, registered under GST and who carries out business in India has to file. It consists of details of all outward supplies and inward supplies made and received by the taxpayer. Further he should pay the tax, interest, penalty, late fees or any other amount payable under the act within the due date as specified in the act.
Who has to File Form GSTR-5
- A non-resident taxable person who does business in India occasionally and does not have a permanent place of business or residence in India.
- A GST registered non-resident taxpayer who incurred OIDAR (Online Information Database Access and Retrieval) supply before the non-taxable individual in India.
When to file GSTR-5?
NRTPs have to file form GSTR-5 for the period for which they have obtained registration within 7 days after the date of expiry of registration, If the registration is for a period less than 30 days.
The due date for submission of GSTR-5 is the 20th of every subsequent month when their registration extends for several months. For example, the return of January 2023 will be due on 20th February 2023., of then the return has to be filed within a week following the expiry of their GST registration.
Consequences of Late Filing and Non-Filing GSTR-5
In case of late filing the non-resident taxable Person is liable to pay interest at the rate of 18% per annum, in addition to late fees of Rs.50/-per day and Rs.20/- per day for Nil return, subject to a maximum of Rs.5000/-. Interest is calculated on the amount of outstanding tax and it is applicable from the next day of filing.
If GSTR-5 is not filed, then the return of the next month cannot be filed, apart from the late fees and interest.
Prerequisites for Filing GSTR-5
- Taxpayer should be registered as Non-Resident Taxable Person during the period for which the return pertains to with a valid GSTIN.
- Taxpayer should have a valid user id and password.
- Taxpayer should have a valid digital signature which has not expired or been revoked for authentication purposes.
Input Tax Credit Provisions for Non-Resident Taxpayers
Non-Resident Taxpayers can avail Input Tax Credit on goods and services or both received by a non-resident taxpayer except on goods imported by them. The taxes paid by the non-resident taxpayer is available as credit to the respective recipient in their GSTR-2A.
Changes in Invoices after Submission of GSTR-5
NRTPs are not allowed to make any changes in the invoices after the form GSTR-5 has been submitted. However, the details of filed invoices can be amended in the subsequent form GSTR-5 of the taxpayer.
Frequently Asked Questions
- Can a Non-Resident Taxable Person opt for the composition scheme?
Answer: No, Non-Resident Taxable Persons cannot opt for the composition scheme.
- Is electronic cash ledger/tax liability register available for non-resident taxpayers?
Answer: Yes, the electronic cash ledger/tax liability register available for non-resident taxpayers.
There is an influx of Non-resident taxpayers interesting in doing business in India, as the economy of our country soars. They usually do not have a permanent place of business in India and visit the country whenever the business is conducted. NRTPs who wish to supply goods and services or both occasionally are required to register under GST of our country. It is mandatory for such registered taxpayers to file GSTR-5 in the GST portal whenever the transactions are made in the country. Non-filing and late filing can lead to heavy penalties. So non-resident taxpayers should be aware of the rules pertaining to registering and conducting business in India. They must also aware of the procedure for filing the return so that they can file the returns in time and stay tax-complaint.