GST Compliance for Non-Resident Businesspersons, Diplomats, UN Personnel in India

Last year saw an overhaul of the indirect tax system in India with the implementation of the Goods and Services Tax (GST).

Here we discuss the filing of GST returns by non-resident persons doing business in India without a permanent establishment, as well as the tax compliance required by diplomats and embassies in India.

GSTR 5 – Non-Resident Taxable Persons in India

Non-resident taxable persons in India are foreign suppliers who have temporary business in India but no permanent establishment.

Such businesspersons are required to register themselves through the GSTN by submitting Form GST REG 09, at least five days before the commencement of business in India.

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Taxpayers falling in this category are also required to make an advance deposit of tax for the estimated amount of liability at the time of submission of the registration form. The form needs to be co-signed by a resident of India with a valid PAN.

The certificate of registration, which permits foreign businesspersons to become temporary taxpayers, is valid for 90 days from the date of registration or the number of days mentioned in the registration form, whichever is lesser.

There is no threshold for registration; all non-resident and foreign taxpayers falling in this category must register. The input credit mechanism or the composition scheme under GST are not available to them.

If such a person intends to extend their period of business in India, Form GST REG 11 needs to be furnished before the end of the original registration period.

All the details of sales are to be filed in the GSTR 5 form that will then be included in the GSTR 2 form of the purchaser.

The submission date of this form is the 20^th of the next month or within seven days of the registration period ending, whichever comes first.

Any refund on the original deposit for tax will be given after the verification of details furnished in this form.

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Late fees are charged at Rs 50 (US$0.77) per day or Rs 20 (US$0.31) in case of nil returns to a maximum of Rs 5,000 (US$76.70). However, an 18 percent annual interest on the tax is also charged in case of delayed filing.

The form GSTR 5A needs to be filed by non-residents even if they provide online services to a non-taxable recipient. This includes database access or data retrieval services and online information. The registration procedure remains the same.

The GST Council recently changed the late fees for GSTR 5A to Rs 200 (US$3.07) per day or Rs 100 (US$1.53) per day for nil returns with effect from March 7, 2018. For forms filed before this date, the late fees remain Rs 50 (US$0.77) per day or Rs 20 (US$0.31) in case of nil returns.

GSTR 11 – GST compliance for diplomatic missions, UN personnel

A Unique Identification Number (UIN) is provided to all foreign diplomatic missions and embassies that do not have to pay taxes in India. Any taxes, both direct and indirect, will be refunded to them.

The following organizations in India are provided with a UIN:

• A specialized agency of the United Nations Organization;
• A multilateral financial institution and organization notified under the United Nations (Privileges and Immunities) Act, 1947;
• Consulate or embassy of any foreign country; and,
• Any other person or class of persons as notified by an authorized tax commissioner.

The above-mentioned persons have to apply for a UIN through the GST portal by submitting the Form GST REG 13 on the e-portal.

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Once the paper work is processed, a UIN is assigned within three working days from the day of submission.

All UIN holders must file the GSTR 11 form by the 28^th of the succeeding month for which the refund is to be initiated.

The information in the form is auto-populated from the GSTR 1 form of the supplier of goods, and modifications cannot be made. It is only required to be filed if any refund is claimed.

If the filing of this form is delayed by more than six months, from the last day of the quarter in which the goods or services were received, the refund will be forfeit.

For instance, if the supply was received on March 15, 2018 and the last day of the quarter is March 31, 2018, the form must be furnished by September 30, 2018.  

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