Goods and Services Tax or GST has been implemented in India from 1st July, 2017 and non-resident taxpayers are also required to obtain GST registration and file GST returns. According to the GST Act, “non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. All non-resident taxable persons are required to appoint an authorised person in India for the purpose of complying with GST regulations.
Non-resident taxpayers are required to obtain GST registration as a Non-Resident Foreign Taxpayer 5 days prior to the undertaking business in India. An application for GST registration for foreign non-resident taxable person must be made through an authorised agent in India. Once, an application for GST registration is filed, a transaction number would be generated. Using the transaction number, GST deposit must be made by the taxpayer to obtain GST registration in India.
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With the implementation of GST in India, the indirect taxes would be streamlined and standardized. Under GST regime, businesses would no longer have to obtain multiple VAT registration in different States or obtain a separate VAT and Service Tax registration. A single GST registration would be sufficient across India for selling or purchasing goods or providing services.
Currently in some states under the VAT regime, businesses are required to comply with VAT regulations once they cross an annual turnover of Rs.5 lakhs. Under GST regime, GST liability accrues only if an entity crosses an annual turnover of Rs.10 lakhs in northeast or hill states, whereas for rest of India, the threshold is set at Rs.20 lakhs.
GST is expected to increase the tax base in India significantly. Hence, the overall tax liability for businesses is expected to reduce overtime, as more and more businesses become compliant. Further, GST will use the latest in technology, including data from Aadhaar database, PAN database, etc., to make GST registration and GST return filing process, as seamless as possible.
Currently, many businesses like restaurants, computer sales and services businesses have to comply with both VAT and Service Tax regulations. This creates a compliance burden on the business, as they have to calculate taxes for the transaction based on different rates for different items. Under GST, the distinction between goods and services will be gone – making doing business easy.