Common mistakes about casual taxable person in GST corrected

Topics

Definition of casual taxable persons
Example 1
Example 2
Casual Taxable person vs IGST
Another Example
Procedure for registering as a casual taxable person
Conclusion

1. Definition of casual taxable persons

Casual taxable persons are those persons who do not have a fixed place of business from where they supply goods and services. They are occasional suppliers and there nature of supply is not their regular feature of business.

Now you may be wondering what such supplies are and who are making them. Do not be too much anxious as at the end of the article you will have a complete understanding of what casual taxable persons are all about. Let us start our discussion with an example.

2. Example 1

A garment manufacturer in Rajasthan participated in a garment exhibition in Bangalore. In this exhibition he may sell his garments too. So with an intention to get some business he took out his best collections for the event and reached Bangalore. The thought of how he would pay the Goods and Service Tax on his supply (sale of garments) kept him occupied. Can you guess the solution? Yes, he has to take registration for a casual taxable person in Bangalore as he has no permanent place of business there.

This is a simple example to acquaint you with the concept. However as this is the most confused and misinformed topic in the internet space we would take more examples to get clarity.

3. Example 2

An IT consultancy registered in Bangalore got a big assignment from a client in Hyderabad. He usually provides his IT consultancy service from Bangalore but now he has to provide consultancy in Hyderabad which is a different state. Does he require to get registered as a casual taxable person in Hyderabad to render his service? If you are thinking the answer is yes, then you must have a closer look at the scenario. Many people think this to be a yes. Don’t worry this is the most common misconception and we intend to correct it. The IT Company has already got its registration in Bangalore. It could simply provide his service in Hyderabad and pay taxes in IGST (Integrated Goods and Service Tax). For any inter-state supplies a person needs to pay IGST and should not get registered as casual taxable person. Here the service is qualified as inter-state. So registration as a casual taxable person is not required.

4. Casual Taxable person vs IGST

We have already dealt this topic in the previous example. There is a lot of confusion over when a person needs to pay IGST (Integrated Goods and Service Tax) and when he is required to get registered as a casual taxable person. Here the place from where the supply is made is important. If he makes supply from a place where he does not have a place of business but a temporary arrangement, he has to get registered as a casual taxable person. Whereas if he supplies is from a place where he is registered in the Goods and Service Tax Act, then he need not get another registration as casual taxable person. In this case where he is supplying to other state he can simply pay IGST (Integrated Goods and Service Tax) and render his supply.

5. Another Example

A mango seller sells mango in Maharashtra. However when he realized that the demand of mangoes has suddenly increased in Tamil Nadu, he decided to sell mangoes for that season from there. He took all the boxes of mangoes from Maharashtra to Tamil Nadu and start selling from a small tent shop. Now tax on supply made from such temporary place where he is not registered could be done as a casual taxable person.

Now, it should be clear to you the difference between paying IGST and paying tax as a casual taxable person.

6. Procedure for registering as a casual taxable person

A casual taxable person cannot opt for composition levy scheme. Further, the threshold limit of Rs. 20 lakhs is not applicable for him. He has to take compulsory registration in GST even his supply is below the threshold limit.

For registering as a casual taxable person the person has to apply for registration 5 days in advance of commencement of business. There is no separate form for casual taxable person and he has to apply in FORM GST REG-01. During registration he has to specify the time for which he requires registration. He may be granted registration for a period which is not more than 90 days. Application for extension of this period could be applied for by the taxable person. A further extension of not more than 90 days may be granted by the department.

At the time of registration a casual taxable person needs to self assess his expected liability of tax after the supply is over. Such assessed amount needs to be deposited with the department in advance at the time of registration. On applying for extension again such amount which he estimates to be his additional liability should be deposited with tax department.

After his supply is over he is eligible to deduct his actual tax liability and take refund of any excess amount he had deposited at the time of registration.

7. Conclusion

The concept of casual taxable person is widely misunderstood topic in this taxation. Lawbanyan.com has made effort to explain you this concept with practical examples. Carefully analyze whether you have to pay IGST or get registered as casual taxable person before paying taxes. The importance of the place from where the supply is made should be carefully observed. Besides the procedure described above must be complied with.

If still anything you feel needs to be added to the explanation feel free to comment below.