The Goods and Services Act 2017 was introduced in July 2017 for remedying challenges and subsuming a total of 14 taxes such as (VAT, CST, and Service Tax, Luxury Tax, entertainment tax and CENVAT etc.) and offering benefits to businesses under the objectives under “Ease of Doing Business” among business entities in India including foreign businesses to set up business in India. (GST Registration for Foreigners) GST has not only remedied challenges posed by earlier laws but also has drastically reduced compliances and tax burdens for entities by providing an integrated tax system.
At present, India is a rapidly developing economy offering an attractive market for foreign businesses to make investments and undertake business activities manufacturing goods or offering services. Under GST provisions, any business entity holding a yearly turnover of Rupees 40Lakh or above, is required to obtain GST registration mandatorily. Not only this, every Non-Resident taxable person and casually taxable person requires to obtain registration under GST before commencing business operations in India.
But who is a Non-Resident Taxable Person? Under the provisions of the CGST Act 2017, a “Non-Resident Taxable Person” is a person located outside India and/or having incorporated outside India has no fixed place of business in India but intends to undertake transactions including either the supply of goods or services or both, either as a principal or agent or in any other capacity. However, if a Non-resident Taxable person intends to commence his business operations in India, such foreign person needs to obtain registration irrespective of the yearly turnover at least five days prior to the date of commencement of business operations in India.
For the above-mentioned purpose, such Non-resident person must appoint a nominee who must be a resident in India. On getting GST registration such nominee shall be required to comply with GST rules & regulations applicable under GST Act 2017 and such resident nominee shall be accountable for complying with the rules & regulations. On getting registered under GST, such nominee shall be required to submit GSTR-5 for the period of GST validity for carrying out business operations in India through GST Portal commonly known as GSP.
GST Registration for Foreigners with Legalmart
Legalmart is committed towards providing latest law amendments and knowledge regarding GST registration, providing end to end guidance and assistance for the process of registration to foreign person to undertake GST registration in a quick & efficient manner throughout.
Whether it’s a foreign business entity or a Non-Resident individual intending to undertake business registration in India, we offer to provide registration as well as assistance in fulfilling compliances such as return filling and others. The process of GST registration is completed in about 10-15 days of time -period subject to the satisfaction and approval process of the Government. For further information, please refer to Legalmart.in.
Benefits of GST Registration for Foreigners
Following are some benefits related to obtaining GST registration-
- Integrated system of Taxation: GST has been introduced with the objective to lessen the burden of compliances on businesses so as to attract foreign entities to make investments and set-up their businesses in India. Thus, GST is an integrated tax –system that has subsumed as many as 14 taxes such as Service Tax, VAT, CST, etc. All these indirect taxes have been reorganized under GST registration.
- Promotion of Ease of doing business: As provided before, GST has subsumed as many as 14 taxes such as Central Sales Tax, Additional Custom duty, purchase tax, luxury tax. etc. reducing the burden of compliances for businesses located in India. Thus, it has made it easier for businesses to operate efficiently with lesser rates of taxation, higher rate of applicability and payment through the GST portal.
- Lesser tax liability: In case of GST, there are benefits in terms of lesser rates of taxation, higher threshold limit for eligibility and increased tax base as a result of which the total liability of payment of taxation in case of GST is lesser than the tax liability in case or VAT or service tax for businesses, which has encouraged the practice of compliance and reduced cases of tax-evasion.
- Lesser Compliances: The Ministry of Finance has intentionally reduced compliance for businesses especially for foreign person to reduce unnecessary paperwork and hence lesser costs of production in the form of lesser form fillings & fee payments, lesser book of accounts and record-keeping and lesser tax audits, to allow businesses to grow at their best without making any legal default.
- Unique Features: on GST portal-GST portal is a dedicated portal for allowing businesses to apply for registration, submit returns and other forms. However, the Ministry of Finance has further introduced some unique features for promotion “ease of doing business” such as-
- Online Appeal Filing functionality: GST portal has recently launched the functionality to file appeals where required in case of an advanced ruling through an appellate authority or for the purpose of rectification of any mistake contained in any application authority.
- Update Bank Details Any Time After Registration: Further, the GST portal has recently made it optional for businesses to make declarations regarding the bank account details at the time of GST registration for applicants seeking normal registration, registration for OIDAR services & for non-resident taxable person, which means that it is not compulsory for businesses to provide bank details at the time of registration for the above-mentioned persons and bank details could be registered at any time after getting GST registration. This feature is of relevance for new businesses who can submit requests for GST approval without possessing a business bank account at the time of application.
- Auto-Populated GSTR-3B: With an objective to make GST portal more inclusive and user-friendly, the Goods & Service Tax Network (GSTN) has set up two new functionalities that will allow the users to auto-populate GSTR-3B monthly statements on the portal for submitting monthly return for taxpayers.
- Communication between Taxpayers: For the purpose of facilitation of peer to peer communication between users through a seamless network with enhanced security, the Ministry of Finance has allowed “Communication between users” functionality.
Disadvantages of GST Registration for Foreigners
- IT Infrastructure– GST tax structure has been launched under “Ease of doing business initiative “in India with most of the fillings related functionalities through online mode. However, for compliances businesses need to purchase another software which increases their costs of operations. Further, businesses having lesser understanding about GST filling systems need to seek assistance of professionals due to its complex structure which further ads up to their costs, which equally applies for Non –resident business entities and individuals.
- Requirement of separate registration for each state- Under GST regime, most of the businesses are required to obtain separate registration for each of their branches in each state of operations which requires registration, cost of increased fillings, maintaining separate records, fee payments, professional fee, GST invoices, GST audits etc. has led to even higher cost burden for business entities including excessive paperwork and compliance.
- Multiple Rates of Taxation– Before the introduction of GST, there were as many as 14 taxes, out of which some were applicable on state level while others were applicable on central level. Therefore, each state has their own issues and had different opinions about the rates of goods or services applicable on each commodity or services. Thus, four different rates were adopted for taxation under GST. While in the beginning some goods/services were taxed at the rate of 28% as the highest rate of taxation, now many of them have been reduced to 5% tax bracket making it confusing for businesses.
- Hurried Implementation of GST- GST was implemented in between of a financial year 2017, which created difficulty for the businesses to understand and have knowledge of the applicable compliances increasing confusion. Since its implementation, there have been a lot of new features being introduced from time to time for business entities through online mode, which is difficult to adapt for businesses working on a smaller level as they need to seek professional assistance from time to time for understanding and following compliances.
Eligibility criteria of GST Registration for Foreigners
Any individual who is resident outside India or any non-resident taxable entity that is incorporated outside India engaged in the supply of taxable goods or services is required to apply for GST registration in India and after obtaining registration is required to follow all applicable compliances.
Following is the eligibility criteria for obtaining GST Registration by foreigners-
- Any foreign individual or any other foreign person is eligible to set up his business and obtain GST registration in India either occasionally or a permanent basis subject to the fact that such person is not debarred from setting any business as per the laws of such foreign country.
- Such GST registration for foreign person is mandatory irrespective of the size of the business or the annual turnover of such person in the previous year.
- Such foreign person shall not be eligible to opt for composition scheme under GST and shall apply for normal registration only.
- Such person shall be further required to mandatorily appoint a nominee who shall be an Indian resident and on nomination shall be accountable for all GST compliances in relation to the business in India.
- Such foreign person shall mandatorily obtain registration at least five days prior to commencing business operations in India.
Documents required for GST Registration for Foreigners
Following is the list of documents required to acquire GST registration for foreigners-
- Proof of registered address where the principal address is located in India (where the premises is owned then, copy of sale deed/utility bill/latest tax property or copy of municipal Khata. In case the property is rented or leased, then copy of a valid lease deed or rent agreement supported by property tax receipt or copy of municipal khata copy or any utility law. Where the premises are such not covered above, then a copy of consent letter by the owner along with supported documents such as municipal khata or the electricity bill copy.
- Proof of Identification of such foreign individual or authorized officer through scanned copy of passport along with Visa details.
- Where such foreign business entity is incorporated outside India, then the applicant shall submit the tax identification number or the unique number of such entity which is recognized by the government of that country.
- In case PAN is available with such foreign person, then a copy of PAN should be submitted.
- Power of Authorization – Where the foreign business entity is in the nature of a company or an LLP, then a copy of authorization for the authorized signatory for registration purposes should be submitted.
- Copy of scanned certificate of incorporation of the business entity incorporated outside India.
- Scanned copy of the license/s issued by the government of the foreign country if available.
- Copy of any clearance certificate issued by the Government of India, wherever applicable.
- Proof of bank business account along with scanned copy of the first page of the bank passbook including details such as business account number, name of account holder , IFSC code etc.
- Digital Signature of the nominee authorized for GST compliance purposes.
GST Registration for Foreigners Online
Provided below is the step-by-step process of GST registration for foreigner/s in India-
STEP 1-APPOINT A NOMINEE
As a step towards registration, the foreign individual or entity is required to take consent from an individual to be appointed as a nominee for the such business entity in India and to undertake GST compliances and to become accountable for such compliances.
Such a nominee should be an ordinary resident of India holding a PAN card issued by the government of India. Such nominee shall be responsible for submitting application for GST registration in India by affixing his digital signature in the application form along with attachments.
STEP 2- AUTHORIZATION OF AUTHORIZED REPRESENTATIVE IN INDIA.
For undertaking nomination of such a person, the promoters of such foreign entities shall be required to submit a copy of resolution passed by the board of directors for authorizing the nominee along with a signed declaration by the promoters of the company authorizing appointment of nominee as the authorized signatory in India in prescribed formats.
STEP 3- FILE FORM & SUBMIT FOR APPROVAL
After authorization of nominee for registration purposes, the applicant shall be required to create a username and password on the GST portal and click “New Registration”.
Next, the applicant shall be required to fill his details such as his proof of identity & proof of address, and his contact details along with form GST REG 09 providing details of foreign person such as proposed principal of business, proof of identification of such authorized signatory, PAN card details, tax identification number of the foreign person, bank business account information etc. with related attachments. Finally, such application should be accompanied by affixing digital signature and should be uploaded for approval by GST authority after final verification.
On successful submission of the application, a reference number shall be generated for checking tracking the status of the application.
STEP 4- GET GST CERTIFICATE
Further such authorized signatory of the applicant has to remit GST deposit subject to the expected liability for the business operations. On submission of application, the application shall be thoroughly verified and after remittance of GST deposit, the GST certificate shall be issued subject to satisfaction of GST authority for a fixed period of validity.
Why you Choose Legalmart
Therefore, the process of GST registration for Non-resident taxable person is a simple process that takes around 10-12 days to get completed .However, it is always important to seek professional help from a reliable source like Legalmart which has years of experience and professional experts to undertake GST registration for foreign individuals and further efficiently completing GST compliances applicable for entities from time to time.
Further, our unique features include-
- Professionally & technically proficient team of experts including qualifications such as Chartered Accountants, Company secretaries, Legal professionals and many more.
- Efficient & timely assistance from expert guidance to preparation of documents form submissions on the portal and successfully getting GST certificate and further maintaining GST compliances from time to time.
- Complete transparency and at reasonable prices.
- 24*7 availability for answering your queries.