OIDAR GST for Foreign SaaS Providers

If you sell software from outside India to customers inside it, Indian GST reaches you. Not through a permanent establishment, not through a treaty, but through a category called OIDAR that was written specifically so that a supplier with no presence in India still ends up inside the tax net. And if you are an Indian company buying foreign SaaS, the same rules push the tax onto you instead. Either way the outcome turns on one question — is the Indian recipient a registered person — and that question has a factual answer you can check.

What OIDAR actually means

OIDAR stands for Online Information and Database Access or Retrieval services. The definition in the IGST Act describes services whose delivery is mediated by information technology over the internet or an electronic network, and which are impossible to supply in the absence of that technology. That last phrase is the real test. A consulting engagement conducted over video calls is not OIDAR, because the same advice could be delivered in a room. A subscription to a hosted analytics product is, because without the network there is nothing to sell.

The illustrative list in the law has been stable for years and is a good guide to the boundary.

Order the questions correctly: is the supply OIDAR at all, where is it supplied under the place of supply rules, and who bears the tax. Taking those out of order is how a foreign supplier concludes it has no Indian obligation when it does.

What the 2023 change widened

Two amendments took effect on 1 October 2023 through the Finance Act 2023, and together they made the category noticeably larger.

The automation test went. The old definition required the supply to be essentially automated and to involve minimal human intervention. That gave suppliers an argument whenever a real person touched the service — managed onboarding, a human-reviewed report, a service desk that did more than reset passwords. With those words removed, a supply can involve substantial human effort and still be OIDAR, provided it is delivered over the network and impossible without the technology.

The non-business carve-out went. The definition of a non-taxable online recipient used to require that the recipient was receiving the service for purposes other than commerce, industry, business or profession. In practice that meant an unregistered business could be argued out of the consumer bucket. Now the test is simply registration: a person in India who is not registered under GST is a non-taxable online recipient, whatever they use the service for.

The practical consequence is that a foreign supplier selling to small Indian businesses below the registration threshold can no longer treat those sales as business-to-business. They are B2C for OIDAR purposes, and the supplier carries the tax.

Two paths: reverse charge or register

Every OIDAR supply into India lands on one of two tracks, and which one depends entirely on the recipient.

The B2B track is the ordinary import-of-service treatment described in our guide to the reverse charge mechanism. The B2C track is the one that surprises foreign finance teams, because it creates an Indian tax registration for a company with no Indian entity, no Indian bank account and no employees in the country.

Registering: REG-10, a representative, GSTR-5A

The scheme for foreign OIDAR suppliers is deliberately lighter than ordinary GST registration. There is no requirement for a place of business in India and no state-by-state registration. The application is Form GST REG-10, filed electronically as a person supplying OIDAR services from a place outside India to a person in India.

Three things are worth knowing before you start.

A representative is optional but common. The law allows a foreign supplier to appoint a representative in India for the purpose of paying tax, and where one is appointed, that person is liable for the tax. Many suppliers take this route because it supplies a signing authority and a local contact who can deal with a notice, without creating a subsidiary.

There is no threshold to hide behind. The turnover limits that exempt small domestic suppliers do not rescue a foreign OIDAR supplier making taxable B2C supplies into India. Treat the obligation as arising with the first such supply and confirm the current position on cbic-gst.gov.in before you decide otherwise.

The return is GSTR-5A, monthly. It reports the taxable supplies made to unregistered recipients in India and the tax payable, and it stands apart from the regular return cycle. You are not filing GSTR-1 and GSTR-3B; you are filing one self-contained return. Due dates and portal behaviour change from time to time, so verify them on the portal rather than trusting a blog post, including this one.

When a marketplace is deemed the supplier

Most digital services reach India through an intermediary — an app store, a payment-facilitating platform, a reseller, a marketplace. The law anticipates this. An intermediary located outside India that arranges or facilitates the supply of OIDAR services to a non-taxable online recipient is deemed to be the supplier, and carries the registration and payment obligation itself.

That deeming is not absolute. An intermediary can step out of it only by satisfying every one of a set of conditions at once, broadly: the invoice issued to the customer clearly identifies the service and the actual supplier; the intermediary does not collect or process payment for the supply, or authorise delivery; and it does not set the terms and conditions of the supply. Miss one and the intermediary is the supplier for GST purposes.

For a platform, this is an architectural question rather than a tax one. If you take the money, set the terms and control fulfilment, you are the supplier in India whatever your merchant agreement says.

Rate, place of supply and invoicing

Most digital services carry the standard 18% rate. Because the supplier is outside India and the recipient inside it, the supply is inter-state and the tax is IGST rather than a CGST and SGST pair. Classification is by SAC, and software and IT services sit in the group covered in our note on SAC codes for software services. If your product is a bundle of things — software plus support plus hosting — classify the principal supply and price accordingly rather than inventing a blended rate.

For OIDAR, the place of supply is the location of the recipient, so that location has to be established on evidence rather than assumed. The law contemplates the familiar proxies — billing address, the IP address of the device used, bank or card details, country code of the SIM, fixed landline location. Record which ones you relied on, because if a dispute arises about whether a supply was into India, the contemporaneous evidence is the answer.

On the invoice itself, a B2C OIDAR invoice issued by a registered foreign supplier shows IGST charged to the customer. A B2B supply is invoiced without Indian GST, and the Indian recipient raises the self-invoice. The field-level requirements are in our guide to GST invoice format and rules.

What an Indian buyer of foreign SaaS must do

If you are the Indian registered person on the other side of this, the compliance is routine but it has a sequence, and skipping a step in it is one of the more common reconciliation problems we see.

1. Identify the import of service. Any subscription paid to a supplier outside India for a digital service used in your business is in scope. Card-funded SaaS bought by a product team and expensed later is the usual leak.
2. Raise a self-invoice. The recipient issues the invoice for a reverse charge supply from an unregistered supplier, in your own name, on the date of supply.
3. Pay the tax in cash. Reverse charge liability is discharged from the electronic cash ledger. You cannot set it off against accumulated credit, which means a real payment even in a month you have a large credit balance.
4. Claim the credit. Once the tax is paid, the credit is available subject to the normal conditions in the input tax credit rules — business use, no blocked-credit provision, and the usual time limits.
5. Report both sides in GSTR-3B. The liability goes in the inward supplies liable to reverse charge table, and the credit in the input tax credit table. Our GSTR-3B filing guide walks through the table-by-table placement.

The mirror case — an Indian company selling software abroad — runs on entirely different rules, covered in GST for freelancers and service exports and LUT filing for exporters. Keep the two apart in your policy.

The control the whole treatment rests on

Look back at the two-path table. Every row turns on one fact: whether the Indian recipient is a registered person. For the foreign supplier it decides whether an Indian registration and monthly returns are owed. For the Indian buyer it decides whether the supplier should have charged tax.

So the control is not complicated. Before you treat a supply as B2B reverse charge, confirm that the GSTIN you were given exists, belongs to the counterparty you think it does, and is active on the date of supply. A well-formed GSTIN is not a valid one, and a valid one can be cancelled or suspended between the day a customer signed up and the day you invoice them. If it turns out the customer was never registered, the supply was B2C, and the tax was yours to collect and remit.

Do it at two points: at signup, so the customer starts on the right tax track, and again at each renewal, so a mid-term cancellation does not sit undetected in your ledger. Store the response with the invoice — a record of the status you saw and the date you saw it.

That is the part we build. Our API takes a GSTIN and returns the registration record — legal name, status and status dates, jurisdiction, places of business — along with GSTR filing history in the same response, so a billing run settles the question in one call. It is ₹0.50 per verification, ₹0.40 once a single credit purchase crosses 2,500 credits, and purchased credits do not expire; the documentation and pricing have the detail. For one-off checks, the GST number search tool does five free lookups a day with no signup.

None of this is exotic. It is the same discipline any tax position needs: write down the fact the treatment depends on, check it, and keep the evidence. OIDAR just happens to concentrate the entire position into one field.

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