Section 27 of the Central Goods and Services Tax Act, 2017 contains special provisions for casual taxable persons and non-resident taxable persons. These taxpayers are subject to a different GST registration and tax-deposit mechanism because their business activities are generally temporary or occasional rather than being carried out from a regular fixed place of business in the relevant jurisdiction.
Unlike an ordinary registered taxpayer, a casual taxable person or non-resident taxable person receives registration for a limited period. They are also required to make an advance deposit of tax equivalent to their estimated tax liability for the period for which registration is sought.
Section 27 also provides a mechanism for extending the registration period and explains how the advance tax deposited by these taxpayers is credited to their electronic cash ledger and used for payment of GST.
The detailed application procedure is prescribed through the CGST Rules. CBIC’s current registration rules provide specific procedures for casual taxable persons and non-resident taxable persons, including advance tax deposit and extension of registration.
What is Section 27 of the CGST Act?
Section 27 is titled “Special provisions relating to casual taxable person and non-resident taxable person.”
The provision contains three main sub-sections:
- Section 27(1) deals with the validity period of registration.
- Section 27(2) deals with advance deposit of estimated tax liability.
- Section 27(3) deals with credit and utilisation of the advance deposit in the electronic cash ledger.
The current statutory text provides that registration issued to a casual taxable person or non-resident taxable person is valid for the period specified in the application or 90 days from the effective date of registration, whichever is earlier. The proper officer can extend the 90-day period by a further period of up to 90 days when sufficient cause is shown.
Who is a Casual Taxable Person?
The term “casual taxable person” is defined in Section 2(20) of the CGST Act.
It refers to a person who occasionally undertakes transactions involving the supply of goods or services or both in the course or furtherance of business, whether as a principal, agent or in another capacity, in a State or Union territory where the person has no fixed place of business.
In simple terms, a casual taxable person is generally someone who temporarily carries out taxable business activities in a State or Union territory where the person does not have a fixed place of business.
Example of a Casual Taxable Person
Suppose a company normally operates from Maharashtra but participates in a trade exhibition in Delhi and makes taxable supplies there without having a fixed place of business in Delhi.
Depending on the facts and the statutory definition, the company may qualify as a casual taxable person for its taxable activities in Delhi.
The special registration provisions under Sections 25 and 27 then become relevant.
Who is a Non-Resident Taxable Person?
Section 2(77) defines a non-resident taxable person as a person who occasionally undertakes transactions involving the supply of goods or services or both, whether as principal, agent or in any other capacity, but has no fixed place of business or residence in India.
This category is particularly relevant to foreign businesses that occasionally make taxable supplies in India. CBIC’s GST FAQ also explains the statutory meaning of casual taxable person and non-resident taxable person.
Example of a Non-Resident Taxable Person
Suppose a foreign company without a fixed place of business or residence in India comes to India to make taxable supplies at a temporary commercial event.
The company may fall within the definition of a non-resident taxable person and will need to comply with the special registration provisions applicable to that category.
Why Does GST Have Special Rules for These Taxpayers?
Ordinary businesses generally have a fixed place of business and continue their activities on an ongoing basis.
A casual taxable person and a non-resident taxable person are different because their taxable activities may be:
- Temporary
- Occasional
- Conducted without a fixed place of business in the relevant State or Union territory
- Limited to a particular event or period
Because these taxpayers may not maintain a permanent establishment in the jurisdiction, GST law provides a special registration mechanism.
One of the most important safeguards is the requirement to deposit the estimated tax liability in advance.
Section 27(1) – Validity of Registration
Section 27(1) provides that the certificate of registration issued to a casual taxable person or non-resident taxable person is valid for:
The period specified in the application for registration, or 90 days from the effective date of registration, whichever is earlier.
This means that 90 days is not automatically added to whatever period the applicant requests.
The shorter of the two applicable periods determines the initial validity.
Example
Suppose a casual taxable person applies for registration for 45 days.
The registration would generally be valid for the period specified in the application rather than automatically continuing for 90 days.
Now suppose the person seeks registration for 120 days.
The initial statutory validity under Section 27(1) is limited to 90 days, subject to the extension mechanism discussed below.
Can the 90-Day Registration Period Be Extended?
Yes.
The proviso to Section 27(1) allows the proper officer to extend the 90-day period by a further period not exceeding 90 days, provided sufficient cause is shown by the casual taxable person or non-resident taxable person.
Therefore, the initial period and the extension should be understood separately.
Initial Period
Up to 90 days, subject to the period specified in the application.
Extension
A further period of up to 90 days may be granted by the proper officer when sufficient cause is shown.
Thus, the law can permit registration to continue beyond the initial 90-day period, but the extension is not automatic.
Example of Extension
Suppose a non-resident taxable person receives GST registration for 90 days.
The business activity unexpectedly continues beyond the initial registration period.
The person may apply for an extension before the registration expires.
If sufficient cause is shown and the proper officer grants the extension, the registration can continue for the additional period allowed under Section 27.
The CGST Rules prescribe the application procedure for extending the registration period. Under Rule 12, the registered casual taxable person or non-resident taxable person is required to apply electronically in FORM GST REG-10 before the existing registration expires.
Taxable Supplies Can Be Made Only After Registration
Section 27(1) contains another important requirement.
A casual taxable person or non-resident taxable person shall make taxable supplies only after the issuance of the certificate of registration.
This is important because these taxpayers cannot simply start making taxable supplies while waiting for their GST registration certificate.
Practical Example
Suppose a foreign business plans to make taxable supplies at an event beginning on 1 November.
The business should complete the special registration process and obtain the required registration before making taxable supplies.
The fact that the application has been submitted does not by itself mean that the person can start making taxable supplies before registration is issued.
Section 27(2) – Advance Deposit of Tax
One of the most important features of Section 27 is the advance tax deposit.
Section 27(2) provides that a casual taxable person or non-resident taxable person must, at the time of submitting the registration application under Section 25(1), make an advance deposit of tax equivalent to the person’s estimated tax liability for the period for which registration is sought.
This is different from the normal registration process for an ordinary taxpayer.
Why Is Advance Tax Required?
The special registration system exists partly because casual and non-resident taxable persons may have no established fixed place of business in the jurisdiction.
The advance deposit provides a mechanism through which the estimated GST liability is deposited before the taxable activity begins.
The taxpayer can subsequently use the amount in accordance with the GST payment provisions.
How is Estimated Tax Liability Calculated?
The law refers to the estimated tax liability for the period for which registration is sought.
The taxpayer therefore needs to estimate:
- Expected taxable supplies
- Applicable GST rates
- Expected taxable value
- Estimated output tax liability
- Relevant tax payable during the registration period
The estimate should be prepared carefully because the advance deposit is linked to the expected tax liability.
It is not simply a fixed registration fee.
Example of Advance Tax Deposit
Suppose a casual taxable person expects to make taxable supplies worth ₹10 lakh during the registration period.
Assume the applicable GST rate results in an estimated GST liability of ₹1.80 lakh.
The person would need to make an advance deposit equivalent to the estimated tax liability in accordance with Section 27 and the applicable registration procedure.
The actual tax liability can subsequently be discharged using the amount available in the electronic cash ledger, subject to the normal GST payment provisions.
The example is only for understanding the mechanism; the actual tax calculation depends on the nature and classification of the supplies.
Advance Deposit Is Not the Same as an Additional Tax
The advance deposit under Section 27 should not be understood as an additional GST charge.
It is an advance payment towards the person’s estimated tax liability.
Section 27(3) specifically provides that the amount deposited is credited to the person’s electronic cash ledger and is utilised in accordance with Section 49.
Therefore:
Advance deposit → Electronic cash ledger → Used for payment of GST and other permitted liabilities under the applicable provisions.
Section 27(3) – Electronic Cash Ledger
Section 27(3) states that the amount deposited under Section 27(2) is credited to the person’s electronic cash ledger and utilised in the manner provided under Section 49.
This means the advance amount is not simply locked permanently.
Once credited to the electronic cash ledger, it becomes available for utilisation according to the GST payment mechanism.
What Happens When the Estimated Liability Increases?
Suppose the taxpayer initially estimated GST liability at ₹2 lakh and deposited that amount.
Later, the taxpayer seeks an extension and expects additional taxable supplies.
Section 27(2) specifically provides that where an extension is sought, the taxpayer must deposit an additional amount of tax equivalent to the estimated tax liability for the extension period.
Therefore, the taxpayer must consider the expected liability for the additional period separately.
Advance Deposit for Extension
The extension mechanism can be understood as follows:
Initial registration period → Advance deposit based on estimated liability
Extension period → Additional advance deposit based on estimated liability for extension period
The registration rules also provide that an extension application is acknowledged only after payment of the amount specified under Section 27(2).
Registration Procedure for a Casual Taxable Person
Section 27 should be read together with Section 25 and the CGST Rules.
A casual taxable person seeking registration generally follows these broad steps:
Step 1 – Determine Whether the Person Is a Casual Taxable Person
The person should first determine whether the facts satisfy the definition under Section 2(20).
Step 2 – Apply Before Commencement of Business
Section 25 contains a special rule requiring a casual taxable person to apply for registration at least five days before commencement of business.
Step 3 – Obtain Temporary Reference Number
The GST registration system provides a temporary reference number for making the advance tax deposit.
Step 4 – Make Advance Tax Deposit
The taxpayer deposits an amount equivalent to the estimated tax liability for the registration period.
Step 5 – Complete Registration Application
The applicant completes the prescribed registration application and submits the required information and documents.
Step 6 – Receive Registration Certificate
Taxable supplies can be made only after the registration certificate is issued.
CBIC’s registration rules specifically provide the temporary-reference-number and advance-deposit mechanism for casual taxable persons.
Registration Procedure for a Non-Resident Taxable Person
A non-resident taxable person also follows a special procedure.
Under the CGST Rules, a non-resident taxable person must electronically submit an application in FORM GST REG-09, along with a valid passport, at least five days before commencement of business.
The applicant is given a temporary reference number for making the advance tax deposit.
The advance deposit is based on the estimated tax liability for the period for which registration is sought.
The application procedure also contains specific requirements concerning the authorised signatory.
FORM GST REG-09 for Non-Resident Taxable Persons
FORM GST REG-09 is the prescribed registration application for a non-resident taxable person.
The CGST Rules provide that the application should be submitted electronically along with the prescribed documents.
The rules also provide that the application should be signed by an authorised signatory who is a person resident in India and has a valid PAN.
This is one of the important procedural differences between ordinary taxpayers and non-resident taxable persons.
Can a Non-Resident Taxable Person Use PAN?
Section 25(7) provides a special rule under which a non-resident taxable person may be granted registration on the basis of such other documents as may be prescribed, notwithstanding the general PAN requirement under Section 25(6).
The detailed registration rules prescribe the documents and procedure applicable to the non-resident taxable person.
Therefore, the registration process for a foreign business should not simply be treated as identical to the ordinary domestic registration process.
Difference Between Casual Taxable Person and Non-Resident Taxable Person
Although both categories are subject to Section 27, they are not the same.
| Basis | Casual Taxable Person | Non-Resident Taxable Person |
|---|---|---|
| Basic concept | Occasionally makes taxable supplies in a State/UT where there is no fixed place of business | Occasionally makes taxable supplies without a fixed place of business or residence in India |
| Location | May ordinarily be based in India but lacks a fixed place in the relevant State/UT | Has no fixed place of business or residence in India |
| Typical example | Business participating in a temporary event in another State | Foreign business making temporary taxable supplies in India |
| Special registration | Yes | Yes |
| Advance tax deposit | Required | Required |
| Initial validity | Up to 90 days, subject to application period | Up to 90 days, subject to application period |
| Extension | Up to a further 90 days on sufficient cause | Up to a further 90 days on sufficient cause |
| Key registration form | Ordinary registration procedure with special advance-deposit mechanism | FORM GST REG-09 |
| Taxable supplies before certificate | Not permitted | Not permitted |
The definitions and registration procedures are provided under the CGST Act and Rules.
Casual Taxable Person – Practical Example
Consider a company that normally operates in Maharashtra.
The company receives an opportunity to sell products at a temporary exhibition in Delhi.
It has no fixed place of business in Delhi.
The company may fall within the definition of a casual taxable person if the statutory conditions are satisfied.
Before making taxable supplies, it must follow the applicable registration procedure, including the advance deposit requirement.
The registration will have limited validity under Section 27.
Non-Resident Taxable Person – Practical Example
Suppose a company based outside India has no fixed place of business or residence in India.
It comes to India for a temporary commercial activity involving taxable supplies.
The company may fall within the definition of a non-resident taxable person.
It must follow the special registration procedure and make the required advance deposit based on its estimated tax liability.
It cannot make taxable supplies before receiving the registration certificate.
What Happens to the Advance Tax After the Business Ends?
The advance amount is credited to the electronic cash ledger.
The taxpayer uses it for payment of tax and other permitted liabilities according to Section 49.
If an amount remains in the electronic cash ledger after the taxpayer has completed the required compliance, the applicable refund mechanism can be used for the eligible balance.
The GST refund rules specifically recognise refund of the balance remaining from the advance tax deposited under Section 27 after adjustment of tax payable. The refund is linked to the taxpayer’s final return and the applicable procedural requirements.
Therefore, the advance deposit is not necessarily equal to the taxpayer’s final tax liability.
What if Actual Tax Liability Is Higher Than the Advance Deposit?
The advance deposit is based on estimated tax liability.
The final tax liability can be different from the estimate.
If the actual liability is higher than the amount deposited, the taxpayer must pay the additional amount through the applicable GST payment mechanism.
For example:
- Advance deposit: ₹2 lakh
- Final GST liability: ₹2.50 lakh
The taxpayer would need to discharge the additional ₹50,000, subject to the applicable provisions.
The purpose of the advance deposit is therefore not to permanently fix the taxpayer’s final GST liability.
What if Actual Tax Liability Is Lower Than the Advance Deposit?
Suppose:
- Advance deposit: ₹2 lakh
- Final GST liability: ₹1.50 lakh
The amount remaining after adjustment may remain in the electronic cash ledger and can be dealt with under the applicable GST refund and payment provisions.
The refund rules specifically provide for refund of the balance in the electronic cash ledger arising from advance tax deposited under Section 27, subject to the prescribed conditions and procedure.
Extension of Registration – FORM GST REG-10
Where a registered casual taxable person or non-resident taxable person wants to extend the period of registration mentioned in the original application, the CGST Rules provide for an application in FORM GST REG-10.
The application must be submitted electronically before the existing registration expires.
The application is acknowledged only after payment of the additional amount specified under Section 27(2).
This makes the timing of an extension application important.
A taxpayer should not wait until after the registration has already expired.
Can Registration Be Extended Automatically?
No.
The extension is not automatic.
Section 27(1) allows the proper officer to extend the 90-day period by a further period not exceeding 90 days where sufficient cause is shown.
The taxpayer must follow the prescribed application process and make the required additional deposit.
Section 27 and Section 25
Sections 25 and 27 should be read together.
Section 25
Section 25 provides the broader procedure for GST registration, including special timing for casual taxable persons and non-resident taxable persons.
Section 27
Section 27 adds special conditions for these two categories, particularly:
- Limited registration validity
- Advance tax deposit
- Additional deposit for extension
- Utilisation of deposited amount through the electronic cash ledger
Therefore, Section 27 supplements the general registration procedure contained in Section 25.
Section 27 and Section 24
Section 24 identifies certain categories requiring compulsory registration.
Casual taxable persons and non-resident taxable persons making taxable supplies are specifically covered under Section 24.
Once such registration liability arises, Section 25 provides the application framework and Section 27 provides the special conditions applicable to their registration.
This creates a sequence:
Section 24 → Registration liability
Section 25 → Registration procedure
Section 27 → Special rules for casual and non-resident taxable persons
Section 27 and GST Returns
Registration under Section 27 does not remove the taxpayer’s other GST compliance responsibilities.
A casual taxable person or non-resident taxable person must comply with the applicable return-filing and tax-payment requirements during the period of registration.
After the temporary business activity is completed, the taxpayer should also complete the applicable final compliance and deal with any remaining balance in accordance with the GST law.
The exact return forms and filing requirements depend on the taxpayer’s category and the applicable rules.
Section 27 and Input Tax Credit
Section 27 itself primarily deals with registration validity and advance tax deposit.
It does not create a separate standalone input tax credit mechanism.
A casual taxable person or non-resident taxable person must examine the normal ITC provisions and applicable restrictions to determine whether input tax credit can be claimed.
The fact that tax has been deposited in advance under Section 27 does not automatically determine the taxpayer’s eligibility for input tax credit.
Important Compliance Points for Casual Taxable Persons
A casual taxable person should pay attention to the following:
- Determine whether the activity qualifies as a casual taxable activity.
- Apply for registration at least five days before commencement of business.
- Estimate the tax liability for the registration period.
- Deposit the estimated tax liability in advance.
- Do not make taxable supplies before the registration certificate is issued.
- Monitor the validity period of registration.
- Apply for extension before expiry where required.
- Deposit the additional estimated tax liability for the extension period.
- File applicable GST returns.
- Pay any additional tax liability arising from actual supplies.
- Deal with any remaining electronic cash ledger balance according to the applicable rules.
The advance-deposit and extension requirements are specifically reflected in the CGST registration rules.
Important Compliance Points for Non-Resident Taxable Persons
A non-resident taxable person should additionally consider:
- Whether the person falls within the statutory definition.
- Whether taxable supplies are proposed to be made in India.
- Registration before commencement of taxable supplies.
- Application through the prescribed procedure.
- FORM GST REG-09.
- Valid passport and prescribed documentation.
- Authorised signatory requirements.
- Advance deposit of estimated tax liability.
- Registration validity period.
- Extension, if necessary.
- Filing of applicable GST returns.
- Payment of additional tax where actual liability exceeds the advance deposit.
- Refund procedure for eligible remaining amounts.
CBIC’s registration rules specifically prescribe the special application and advance-deposit procedure for non-resident taxable persons.
Common Mistakes Under Section 27
Mistake 1 – Starting Taxable Supplies Before Registration
Section 27 expressly states that taxable supplies can be made only after the registration certificate has been issued.
Mistake 2 – Treating 90 Days as an Automatic Extension
The initial registration is valid for the period specified in the application or 90 days, whichever is earlier.
An additional period requires the proper officer’s extension and cannot exceed a further 90 days.
Mistake 3 – Forgetting the Advance Tax Deposit
Casual taxable persons and non-resident taxable persons must make an advance deposit equivalent to the estimated tax liability for the period for which registration is sought.
Mistake 4 – Depositing Too Little Without Reviewing the Estimate
The advance deposit should be based on a reasonable estimate of the tax liability.
If the final liability exceeds the amount available, the additional liability still has to be discharged.
Mistake 5 – Applying for Extension After Registration Has Expired
The CGST Rules require the extension application to be submitted before the existing registration expires.
Mistake 6 – Treating the Advance Deposit as a Registration Fee
The amount deposited under Section 27 is an advance towards tax liability and is credited to the electronic cash ledger.
Mistake 7 – Assuming a Foreign Business Follows the Ordinary Registration Procedure
Non-resident taxable persons have a special registration procedure, including FORM GST REG-09 and the advance-deposit requirement.
Section 27 – Key Takeaways
The major points of Section 27 can be summarised as follows:
- Section 27 contains special provisions for casual taxable persons and non-resident taxable persons.
- Their registration is temporary rather than unlimited.
- Registration is valid for the period specified in the application or 90 days from the effective date, whichever is earlier.
- The proper officer may extend the 90-day period by a further period of up to 90 days when sufficient cause is shown.
- Taxable supplies can be made only after the registration certificate is issued.
- A casual taxable person or non-resident taxable person must make an advance deposit equal to the estimated tax liability for the registration period.
- If an extension is sought, an additional deposit based on the estimated liability for the extension period is required.
- The deposited amount is credited to the electronic cash ledger.
- The amount can be utilised according to Section 49.
- Casual taxable persons have a special registration procedure under Section 25 and the CGST Rules.
- Non-resident taxable persons use the special registration procedure prescribed under the CGST Rules, including FORM GST REG-09.
- Extension of registration is made through FORM GST REG-10 before the existing registration expires.
- Any eligible balance remaining from the advance deposit can be dealt with under the applicable GST refund provisions.
Conclusion
Section 27 of the CGST Act, 2017 provides a special GST registration framework for casual taxable persons and non-resident taxable persons. These taxpayers are different from ordinary registered businesses because their taxable activities may be temporary, occasional or carried out without a fixed place of business in the relevant jurisdiction.
The most important feature of Section 27 is the limited validity of registration. The registration certificate is valid for the period specified in the application or 90 days from the effective date, whichever is earlier. Where sufficient cause is shown, the proper officer can extend the period by a further period of up to 90 days.
Another important requirement is the advance deposit of estimated tax liability. The taxpayer must deposit an amount equivalent to the estimated tax liability for the period for which registration is sought. This amount is credited to the electronic cash ledger and can be utilised according to Section 49.
Casual taxable persons and non-resident taxable persons must also remember that taxable supplies cannot be made before the registration certificate is issued. The registration rules prescribe specific procedures for applying, making the advance deposit and extending the registration period.
In practical terms, Section 27 ensures that taxpayers conducting temporary or occasional taxable activities are brought within the GST system while providing a registration period and advance-tax mechanism suited to the nature of their activities.
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