ITC for advance deposit by CTP

ITC for advance deposit by CTP:

This advisory is based on the clarification given by CBIC via circular no. 71/45/2018-GST. In this circular basic issues related to a CTP are resolved. It is resolving the issue related to adjustment of ITC to calculate advance deposit by CTP. The other one is related to period of registration for CTP.

Issue 1: Whether ITC can be adjusted to calculate advance deposit amount by CTP?

Whether the amount required to be deposited as advance tax while taking registration as a casual taxable person (CTP) should be 100% of the estimated gross tax liability or the estimated tax liability payable in cash should be calculated after deducting the due eligible ITC which might be available to CTP?

1. It has been noted that while applying for registration as a casual taxable person, the FORM GST REG-1 (S. No. 11) seeks information regarding the “estimated net tax liability” only and not the gross tax liability.

2. It is accordingly clarified that the amount of advance tax which a casual taxable person is required to deposit while obtaining registration should be calculated after considering the due eligible ITC which might be available to such taxable person.

Related Topic:
Casual Taxable Person (CTP) (Section 2(20) of CGST Act)

Issue 2: Whether the period of registration of CTP can be extended beyond 180 days?

As per section 27 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the said Act), period of operation by causal taxable person is ninety days with provision for extension of same by the proper officer for a further period not exceeding ninety days. Various representations have been received for further extension of the said period beyond the period of 180 days, as mandated in law.

1. It is clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a CTP and thus such person would be required to obtain registration as a normal taxable person.

2. While applying for normal registration the said person should upload a copy of the allotment letter granting him permission to use the premises for the exhibition and the allotment letter/consent letter shall be treated as the proper document as a proof for his place of business.

3. In such cases he would not be required to pay advance tax for the purpose of registration.

4. He can surrender such registration once the exhibition is over.