Section 27 of CGST Act: GST Rules for Casual and Non-Resident Taxable Persons Explained

Section 27 of the CGST Act, 2017 outlines special provisions for Casual Taxable Persons (CTPs) and Non-Resident Taxable Persons (NRTPs), mandating that their registration is valid for the period specified in the application or up to 90 days, whichever is earlier, with a one-time possible extension of another 90 days.

It requires such persons to make an advance deposit of tax based on estimated liability for the registration period, and this amount is credited to their electronic cash ledger for use against their GST dues. These rules ensure that short-term or foreign suppliers comply with GST requirements before making taxable supplies in India.

GST Section 27: Special Provisions for Casual Taxable Persons and Non-Resident Taxable Persons

When it comes to GST compliance, Section 27 of the CGST Act, 2017 lays down special rules for Casual Taxable Persons (CTP) and Non-Resident Taxable Persons (NRTP). This section is essential for businesses or individuals who do not have a fixed place of business in India but intend to engage in taxable supplies.

Let us break it down for better understanding and compliance. At AUBSP, we strive to simplify complex GST provisions so that you are always one step ahead in managing your tax obligations.

Understanding Casual Taxable Person (CTP)

A Casual Taxable Person refers to someone who occasionally undertakes taxable transactions in a state or union territory where they do not have a fixed place of business. This is common in exhibitions, trade fairs, or temporary stalls.

Example:

A jewelry dealer from Delhi setting up a 5-day exhibition in Mumbai must register as a CTP in Maharashtra.

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

A Non-Resident Taxable Person is someone residing outside India but supplying goods or services in India, occasionally. Unlike domestic taxpayers, NRTPs do not have a permanent establishment in India.

Example: An Australian event company organizing a business seminar in India would need to register as an NRTP.

Section 27(1): Registration Validity

As per this clause:

• The certificate of registration issued to a CTP or NRTP is valid for the duration mentioned in the application or 90 days from the date of registration, whichever comes first.
• These taxpayers can only start supplying goods/services after getting their certificate of registration.

Extension Clause:

The proper officer may allow a one-time extension of up to 90 additional days, provided sufficient cause is shown.

Section 27(2): Advance Tax Deposit Requirement

Here, the Act mandates:

At the time of registration (under Section 25(1)), the CTP or NRTP must deposit tax in advance, based on estimated tax liability for the period they plan to operate.

In case of extension: An additional advance deposit is required equal to the estimated tax for the extended period.

Example: If the estimated liability for 30 days is ₹1 lakh, a person registering as a CTP must deposit ₹1 lakh in advance at the time of application.

Section 27(3): Utilisation of Advance Tax

The amount deposited under sub-section (2):

• Shall be credited to the electronic cash ledger.
• Can be utilised for discharging tax liability as per Section 49 of the CGST Act.

This ensures a prepaid mechanism for temporary suppliers, helping the government secure tax dues in advance.

Important Dates for GST Section 27

Summary of Key Compliance Points

At AUBSP, we always advise taxpayers to keep the following in mind:

• Timely Registration: Apply for CTP or NRTP registration before commencing any taxable supply.
• Advance Tax Payment: Always calculate and pay the estimated tax liability accurately to avoid shortfall.
• Monitor Expiry: Keep track of the 90-day period and apply for an extension well in time, if required.
• Post-Supply Filings: Comply with return filing obligations during and after the period of registration.

Conclusion

Section 27 of the CGST Act, 2017 acts as a safeguard for revenue collection from non-regular taxpayers who enter Indian markets for short durations. By enforcing registration validity, upfront tax payments, and time-bound operations, it ensures seamless tax compliance.

Whether you’re a domestic trader stepping into a new state or a foreign entity offering services in India, understanding these provisions is crucial. AUBSP is here to guide you at every step with authentic, simplified GST updates and explanations.

FAQs on NRTP and CTP under GST

What is a Casual Taxable Person (CTP) under GST?
A Casual Taxable Person is someone who occasionally supplies goods or services in a state where they do not have a fixed place of business.

Who qualifies as a Non-Resident Taxable Person (NRTP)?
A Non-Resident Taxable Person is an individual or entity not based in India who supplies taxable goods or services in India on a temporary basis without a fixed business establishment here.

How long is the GST registration valid for a CTP or NRTP?
The registration is valid for the period specified in the application or 90 days from the effective date of registration, whichever is earlier.

Can the validity of the registration be extended?
Yes, the proper officer may extend the registration validity by up to an additional 90 days upon sufficient cause being shown.

Is it mandatory to deposit tax in advance for CTPs and NRTPs?
Yes, an advance deposit equal to the estimated tax liability for the registration period must be made at the time of registration.

What happens if the registration period is extended?
An additional advance deposit equal to the estimated tax liability for the extension period must be paid.

Where is the advance tax deposited by CTPs and NRTPs credited?
The advance tax is credited to the electronic cash ledger of the person and can be utilized to pay GST dues.

When did Section 27 of the CGST Act come into effect?
Section 27 came into force on 22nd June 2017 as per Notification No. 1/2017-Central Tax dated 19th June 2017.

Can a CTP or NRTP make taxable supplies before getting the registration certificate?
No, taxable supplies can only be made after the issuance of the certificate of registration.

Is the advance tax deposit refundable if not fully utilized?
Yes, any unutilized balance in the electronic cash ledger can be refunded as per GST refund procedures.

Does Section 27 apply to regular taxpayers with fixed business premises?
No, Section 27 specifically applies only to Casual Taxable Persons and Non-Resident Taxable Persons.

How is the estimated tax liability calculated for advance deposit?
It is based on the taxable supplies expected to be made during the registration or extension period multiplied by the applicable GST rate.

Is the advance deposit payment separate from GST returns filing?
Yes, the advance deposit is a prerequisite for registration, while GST returns must be filed regularly to report actual supplies and tax liability.

What is the role of the proper officer in extending the registration period?
The proper officer reviews the request and may grant a one-time extension of up to 90 days on valid grounds.

Are there any penalties for non-compliance with Section 27 provisions?
Non-compliance may attract penalties under GST law, including interest on delayed tax payments and cancellation of registration.

Can a CTP or NRTP operate beyond the extended registration period without fresh registration?
No, they must apply for fresh registration if they intend to operate beyond the extended validity period.

How does Section 27 protect government revenue?
By requiring advance tax deposits and time-bound registrations, it ensures tax dues are secured before taxable supplies are made by temporary or foreign persons.

Is electronic cash ledger usage governed under any other GST provision?
Yes, the utilization of deposited amounts is governed under Section 49 of the CGST Act.

Can the advance deposit be adjusted against other states’ GST liabilities?
No, the deposit is specific to the registration and supplies in the state or union territory for which the registration is granted.

How should a CTP or NRTP apply for registration?
They must apply online through the GST portal using the prescribed form under Section 25(1) of the CGST Act.