Reverse tax on services of foreigners staying India over 6 months

[Debtosh Dey]

Notification 10/2017-IT(R) imposes reverse tax on services taken in India from abroad (other than by way of e-services). It is not clear if foreigners staying in India over 6 months for rendering performance based services (surgery, playing, technical supervision, etc) will have to take GST registration as casual persons u/s 25 of CGST Act and pay taxes on services (since exceeding ₹ 20 lacs in aggregate). Their location as defined u/s 2(15)(d) refers to 'usual' location. It may be argued that since many of them stay in India over 6 months and have obtained PAN, their usual location during the service tenure should be the establishments in India. Therefore, they are responsible for GST and the recipient. Can anyone enlighten me on this ?

[Rajagopalan Ranganathan]

Sir,

According to rule 13 of CGST rules 2017-

13 (1)A non-resident taxable person shall electronically submit an application, along with a self-attested copy of his valid passport, for registration, duly signed or verified through electronic verification code, in FORM GST REG-09, at least five days prior to the commencement of business at the common portal either directly or through a Facilitation Centre notified by the Commissioner:

Provided that in the case of a business entity incorporated or established outside India, the application for registration shall be submitted along with its tax identification number or unique number on the basis of which the entity is identified by the Government of that country or its Permanent Account Number, if available.

(2) A person applying for registration as a non-resident taxable person shall be given a temporary reference number by the common portal for making an advance deposit of tax in accordance with the provisions of section 27 and the acknowledgement under sub-rule (5) of rule 8 shall be issued electronically only after the said deposit in his electronic cash ledger.

The advance deposit of tax is an amount equivalent to the estimated tax liability for such person for the period for which the registration is sought.

[Debtosh Dey]

Thanks Mr Ranganathan. My question was whether such foreigners providing service in India over 6 months are liable to GST and not the recipient. Supplier's location as defined in section 2(15)(d) does not clearly say that Indian residence will be treated as their usual location.

[Shilpi Jain]

Such foreigner who does not have any establishment in India will have to register as a non-resident taxable person and discharge his GST liabiliity.

[Debtosh Dey]

Thanks Ms. Jain. It appears from the replies posted that even foreigners rendering service in India are supposed to take temporary registration u/s 25 and discharge GST liability. Though my question was little different since such foreigners were staying in India for over 6 months and holding PAN, but now it appears they have to discharge GST all the more. By the way, does 'usual' place of residence mean Indian residence of such foreigners? Another point that comes up from the replies is : If such foreigners do not have any place of residence in India, would recipient be liable for reverse tax as per the notification?

[Debtosh Dey]

Corrigendum : registration U/s 13 of CGST Act as pointed out by Mr. Ranganathan.

AI Summary

Reverse charge on foreign service providers: non-resident suppliers must register and pay GST; recipient pays if supplier lacks Indian establishment.
Services supplied in India by foreign individuals without an Indian establishment must be treated under the reverse charge framework: such persons are required to obtain temporary registration as non-resident taxable persons, submit identity (passport or foreign tax ID or PAN if available), make an advance deposit of estimated tax, and discharge GST liabilities; if the foreign supplier lacks any place of residence or establishment in India, the recipient may be liable to pay tax under reverse charge.