What is a Casual Taxable Person in GST?
Updated: May 29
A person who periodically transacts business without a fixed place of business inside the taxable region is designated as a Casual Taxable Person (CTP) under the GST framework. Businesses and individuals engaged in transient or seasonal commercial activity must comprehend the purpose of CTPs and the rules governing them. This article serves as a preamble to a thorough examination of what it means to be a CTP, how to register, why doing so is advantageous, and what duties come with it under the GST structure. You will have a thorough understanding of how business operations and GST compliance obligations may be affected by a Casual Taxable Person status by going through this comprehensive guide.
Table of content
Who is a Casual Taxable Person in GST?
A person who occasionally provides taxable goods or services in a taxable zone without having a fixed place of business is known as a Casual Taxable Person (CTP). The individual may supply goods or services to advance business in any position, including that of a principal or agent.
Individuals, Hindu Undivided Families, corporations, limited liability partnerships, associations of persons, bodies of individuals, cooperative societies, municipal governments, and corporations are all considered persons under this definition.
The location designated as the principal place of business in the certificate of registration is the principal place of business.
Examples of a Casual Taxable Person
Example 1: A Seasonal Handicrafts Vendor
A Gujarati handicraft vendor regularly engages in seasonal marketplaces throughout several states. The merchant was allowed to lawfully offer goods in other states without establishing a permanent base by registering as a CTP, which greatly increased sales volumes during high seasons. The case study highlights the significance of timely CTP registration before seasonal increases to ensure compliance and take advantage of strong market demand.
Example 2: An IT Contractor
In a state where they lacked a permanent office, an IT contractor took on a three-month assignment. By registering as a CTP, they were able to optimise their tax liabilities through input tax credits, manage the project efficiently, and adhere to local GST requirements. The contractor discovered how crucial it is to estimate taxes accurately and upfront to prevent financial surprises when the project is finished.
Example 3: An Event Management Company
Large-scale corporate events are frequently planned in several states by an event management business with its headquarters in Mumbai. The company was able to simplify its operations across state lines without having to deal with the burden of maintaining continuous GST compliance in every state by obtaining the CTP status. This story highlights the value of CTP status for companies who need operational flexibility between countries so they may concentrate on providing top-notch services without having to worry about red tape.
Casual Taxable Person Registration
When an individual is a supplier and their total revenue for the financial year exceeds the threshold of 20 lakh rupees, they become liable to register under GST. Regardless of their turnover, some suppliers fall under a specific category that must obtain mandatory registration. They are not subject to the 20 lakh rupee threshold limit. A Casual Taxable Person (CTP) is one example of such a provider. The Composition Scheme is not available to a person who is casually taxable. A temporary registration that is only good for ninety days is required of a CTP in the State from where he wishes to supply as a casual taxable person. To make the GST advance deposit, a CTP is needed.
CTP Registration Process
Before starting commercial operations, applications for Casual Taxable Person (CTP) registration must be received at least five days in advance. This gives enough time for processing and approval prior to the start of the business. The following are the steps of the registration process for Casual Taxable Persons.
Step 1: Applying online via the GST Common Portal
Go to the GST website (https://www.gst.gov.in/).
Access the 'Services' page and select 'Registration' > 'New Registration.'
Step 2: Form GST REG-01: Required Information
Part A:
Personal Data: This comprises particulars such as name, father's name, birthdate, etc.
PAN: Give the Income Tax Department's legitimate PAN number.
To facilitate communication, you must include a working email address and mobile number.
Part B:
Business Details: Provide details about your business, including its name, address, and trade name.
Estimated Turnover: Indicate how much your taxable supply is expected to be worth for the selected registration period.
Validity Period: Indicate how long you would like to keep your registration active (up to 90 days).
Part C: This part requires you to include any pertinent details not addressed elsewhere, and is optional.
Step 3: Upload requisite documents
Attach any required paperwork, such as your PAN card, proof of address (such as an electricity bill or rent agreement), and any other papers the authorities may ask for.
Step 4: Advance Tax Payment
For the selected registration period, CTPs are required to deposit an advance tax sum equal to their expected tax due.
The GST portal offers a number of approved online payment options for making this payment.
Step 5: Verification and Approval
Following the submission of the application, the GST authorities will check the data and supporting materials.
The applicant may be contacted as part of this verification procedure to request further details or explanations.
A temporary registration certificate will be provided following successful verification and approval.
Step 6: Provision of Temporary Registration Certificate
The CTP is able to start up business operations and start collecting and depositing GST in accordance with the relevant rules thanks to the temporary registration certificate.
This certificate can be extended upon request and is valid for a maximum of 90 days.
Prerequisites for CTP Registration
PAN: The Income Tax Department issues valid PANs to all Casual Taxable Persons (CTPs). During the registration procedure, this PAN will be used for identification and verification.
Email address and mobile number: To register, CTPS has to supply a working email address and mobile number. These will be used for correspondence, such as getting notices and updates from the GST authorities. Verify that the data is correct and easily obtainable for regular updates.
State/Union Territory for Registration: CTPs need to identify the State/Union Territory in which they intend to carry out the majority of their business activities. This information is essential since depending on the region selected, different tax rates and registration procedures apply. Give careful thought to the place where you intend to carry out the majority of your business operations.
Extra Information: All data entered during the registration process must be true and comprehensive. Make sure you have all the necessary paperwork ready before starting the registration procedure. Before enrolling, familiarise yourself with the applicable GST laws and regulations.
Validity of the Registration Period for a Casual Taxable Person
A Casual Taxable Person (CTP) registration has a finite validity period. A CTP registration is good for ninety days at most once it becomes effective. For the length of this agreement, the CTP is permitted to carry out taxable business activities and adhere to GST requirements. Before the current validity expires, CTPS may request an extension of their registration period if necessary. The GST Common Portal must be used to submit this extension request in Form GST REG-11. A CTP must re-register if the maximum extension period of 90 days is exceeded. To maintain seamless operations, apply for the extension well in advance if there's a chance your company may take longer than the allotted ninety days.
Returns to be Furnished by the Casual Taxable Person
Under GST, the Casual Taxable Person must provide the following return.
Form GSTR-1: Outward Supply Details
Form GSTR-3B: Summary of Goods and Services Tax Liabilities and Remittance.
The returns have to be submitted each month. However, quarterly filing of IFF in GST/GSTR-1 and GSTR-3B is necessary if the Casual Taxable Person has chosen the GST QRMP Scheme (Quarterly Return with Monthly Payment Scheme).
Conclusion
In summary, businesses executing short-term projects in many states can greatly benefit from the Casual Taxable Person status under GST, which provides flexibility in managing tax compliance. Companies should carefully assess if this registration fits with their plans by taking into account the length of their projects and the extent of their operations. By adjusting to this status, tax procedures for temporary business operations can be greatly streamlined, assuring compliance and optimising operational effectiveness.
FAQ
Q1. What is a Casual Taxable Person in GST?
A person who does not have a fixed place of business but occasionally engages in transactions involving the provision of goods or services in a territory where GST is applicable is known as a Casual Taxable Person (CTP) under GST. Understanding the rules and compliance requirements for Casual Taxable Person GST is essential.
Q2. What are the benefits of registering as a CTP?
By registering as a CTP, people or companies can conduct lawful short-term business operations without establishing a permanent basis in the area. The opportunity to participate in seasonal or transient markets without significant regulatory costs, eligibility for the input tax credit, and legal compliance are all advantages of casual taxable person registration.
Q3. What are the challenges faced by a CTP under GST?
Managing advance tax payments, making sure timely and accurate filings are made during the active business season, and comprehending the intricacies of the GST legislation without having a permanent base in the location are among the challenges. For informal traders, these difficulties highlight the significance of meticulous preparation and compliance management.
Q4. How can a person register as a Casual Taxable Person?
Before starting commercial operations, a person must apply through the GST site to become a Casual Taxable Person. To complete the process, a declaration form must be submitted together with a bank guarantee or deposit equal to the anticipated GST liability for the three-month registration term, which may be extended.
Q5. What does GST compliance include for a Casual Taxable Person?
Obtaining a temporary registration, filing tax reports for the active time, paying estimated taxes in advance, and maintaining proper records of all transactions are all part of GST compliance for Casual Taxable Persons. Adherence to regulations guarantees openness before tax authorities and mitigates the risk of financial anomalies.
Q6. What happens if a CTP fails to comply with GST regulations?
Penalties, the rejection of tax credits, and registration cancellation may result from failure to comply with GST laws. To prevent such problems, it is essential to be educated about GST Compliance for Casual Taxable Persons.
Q7. Can a Casual Taxable Person claim input tax credits?
Yes, the ability to claim input tax credits for products and services used exclusively for business operations is one of the major benefits of casual taxable person registration. This can greatly lower the total GST liability.
Q8. Is there any threshold for a CTP to register?
All casual taxable individuals are required to register under GST; there is no minimum requirement for registration. On the other hand, suppliers of specific handcraft items are only required to register if their yearly total revenue is above Rs. 20 lakhs, or Rs. 10 lakhs for states falling under special categories (Jammu & Kashmir excluded).
Q9. When can a casual taxable person begin making supplies?
Only once the advance deposit has been made and the certificate of registration has been granted may a casual taxable person begin producing taxable supply. This certificate is good for the duration specified in the registration application, or for ninety days, whichever comes first.
Q10. Does a CTP have to deposit any tax in advance?
Yes, in order to register, a casual taxable person must submit an advance tax deposit. The payment amount is the same as the individual's projected tax burden for the duration of the registration.
Q11. When is a CTP eligible for a refund?
A refund of the advance tax deposited for registration is available to casual taxable individuals. The individual cannot get a refund until all of their registration-related returns have been filed and their tax liability has been reduced. Form GSTR-3 section 14, contains information on the refund.
