Casual Taxable Person Under GST: Complete Guide

Introduction

Not all businesses are based in the same state or location. A business can regularly supply goods or services in one state but sometimes in another state and the supply is taxable in that state. Under these circumstances, the concept of casual taxable person will be relevant in GST.

For instance, a business is registered in Delhi can take part in a trade exhibition in Haryana and sell goods at the exhibition. The business has no fixed place of business in Haryana, so it might require registration under GST as a Casual Taxable Person. The law of GST sets out specific requirements for registration, payment, validity and returns for these taxpayers.

The Concept of a Casual Taxable Person under GST

A Casual Taxable Person (CTP) is an individual who occasionally makes supply of goods or services in a state or Union Territory where he/she does not have a fixed place of business.

It is especially apropos to companies that are taking part in exhibitions, fairs, seasonal markets, promotional events or temporary commercial activities beyond the state they are usually in.

Casual Taxable Person example

Assume that ABC Traders is registered in Rajasthan and is engaged in regular business activities there. It also takes part in a three-week trade fair at Gujarat and sells taxable goods from a temporary stall.

ABC Traders does not have any fixed business in Gujarat, but plans to make taxable supplies in the State, so it may require registration as Casual Taxable Person in Gujarat.

Who need casual GST registration?

A person can be registered as a casual GST registrant if they:

Occasionally makes supplies that are taxable in another state or UT.
Does not have a fixed place of business in that state or UT
Carries out temporary work events, for example exhibitions, fairs, etc.
Must make taxable supplies within a specific time-frame.

A casual taxable person is required to be registered prior to making taxable supplies. In addition, the GST system also mandates that advance tax deposit based on the estimated tax liability.

Also Read: GSTR-9 Annual Return: Due Date, Eligibility, Turnover Limit, Rules & Late Fee

Casual Taxable Person vs Regular Taxpayer

There are some significant differences highlighted in the following table:

Particulars	Casual Taxable Person	Regular Taxpayer
Business activity	Temporary or occasional	Regular business activity
Fixed place of business	Generally absent in the state	Present
Registration	Temporary registration	Regular GST registration
Advance tax deposit	Required	Generally not required
Registration validity	Up to 90 days initially	Continues subject to GST law
Extension	Up to another 90 days	Not applicable in the same manner
Returns	Applicable returns must be filed	Regular GST returns apply

How to register as Casual Taxable Person for GST?

If a person wants to become a Casual Taxable Person, he/she must be registered on the GST portal. The whole process involves:

Choose the Casual Taxable Person option while registering for GST
Fill in the necessary business and identity information
State and temporary place for business
Estimate the taxable turnover and tax liability
Create GST challan
Prepay the estimated income taxes
Fill in the registration application and return it.
Get the GST Registration Certificate prior to making taxable supplies.

GST rules have provided for a temporary reference number to enable the advance deposit. Registration application is processed once the deposit is received.

Also Read: Casual Taxable Person in GST: Everything You Should Know

Advance Tax Payment for Casual Taxable Person

One of the biggest necessities is to pay GST in advance.

A casual taxable person is required to pay an amount equal to the estimated tax liability for the period for which he/she is registering. There is no prescribed advance-tax amount as this will depend on the estimated taxable supplies.

What is important to note is that CBIC has confirmed that the advance tax should be worked out taking into account eligible Input Tax Credit, which the taxpayer may be able to claim. The estimated net tax liability, therefore, is the basis for the deposit, and not the basis for calculating the gross output tax.

Example

Assuming an estimated output GST of ₹1,00,000, and an eligible ITC of ₹30,000, the estimated net tax liability would typically be ₹70,000.

The taxpayer would then take the net estimated liability into account in making the advance deposit, within the scope of the provisions of the GST.

Validity of Casual GST Registration

In general, a registration certificate issued to a casual taxable person will have a validity period of 90 days from the date of registration or as indicated in the application for registration whichever is earlier.

The proper officer may extend the registration for another term of not more 90 days, if the extension is requested prior to the expiration of the term of registration. An extra advance tax deposit is necessary for the extension period.

Hence, it is important for businesses to carefully allocate the registration period with regard to the anticipated length of their temporary business.

Common Mistakes to Avoid

The following are some common mistakes that businesses can avoid:

Making supply before being registered
Underreporting the anticipated tax burden.A failure to report the anticipated tax burden.
Lack of prepayment to the income tax authorities.
After the registration deadline, applying for an extension.
Failing to file relevant GST returns.
Not keeping accurate invoices and records
Failure to claim input tax credit where applicable despite it being eligible

Conclusion

Under the GST mechanism, casual taxable person refers to a business/entity engaging in making supplies of goods and/or services for a limited duration or on an irregular basis in a State or Union Territory where the business/entity does not have a fixed place of business. The key areas to focus on are Registration, Advance tax payment, filing of returns, ITC compliance, and the validity of registration.

When considering the implications of taxable activity for businesses, it is important to consider their obligations with regard to GST before they commence any activity that will result in sales. Please check with a qualified tax consultant or check the current requirements on the GST portal before filing because there is a possibility of the mandatory procedure or notification changing.

FAQs

What is a casual taxable person under GST?

A casual taxable person is a person making occasional taxable supplies in a state or union territory, for which he does not have.

Is advance tax compulsory for casual GST registration?

Yes. A casual taxable person will be required to make an advance deposit depending on the estimated net tax liability when applying for registration.

How long is the duration of validity of casual GST registration?

The registration usually will be valid for the term specified in the application or for ninety (90) days from the date of effectiveness, whichever is shorter. May be extended up to an additional 90 days with applicable requirements.