GST on Foreign SaaS: Reverse Charge Explained

Quick answer: If your business is GST-registered and a foreign company bills you for a cloud or SaaS subscription, the tax is normally yours to pay under reverse charge: the vendor drops the GST from the invoice once you give it your GSTIN, you pay the IGST in cash through your GSTR-3B, and you claim it back as input credit if the tool is used for business. If you are not registered, the vendor charges the IGST itself. Indian vendors such as Zoho issue ordinary GST invoices.

How we researched this: We read the IGST Act and CGST Act sections and Rule 36 on CBIC's tax repository, Notification 10/2017-Integrated Tax (Rate), the GST Council and CBIC flyers on OIDAR and imports, the GST portal's return guides, and the India tax-help pages of AWS, Google, Notion and Zoho. All were checked in October 2026. This is an explainer, not tax advice; confirm treatment with your CA before changing how you file.

Why a US or Singapore invoice becomes an Indian GST question

GST law treats a foreign SaaS subscription as an import of services. The IGST Act defines that as a supply where the supplier is located outside India, the recipient is located in India and the place of supply is in India. The GST Council's flyer on imports adds the constitutional hook: imports of services are deemed inter-State supplies, so the tax is integrated tax (IGST), whichever state you operate from.

Most business software also falls inside a special category called online information and database access or retrieval services, shortened to OIDAR. Section 2(17) of the IGST Act defines it as services whose delivery is mediated by information technology over the internet or an electronic network, and its list of examples includes providing cloud services, provision of software and other intangibles over the internet, providing data or information in electronic form, and digital data storage. The older wording that required supplies to be "essentially automated" with "minimal human intervention" was dropped with effect from 1 October 2023, according to the footnotes on CBIC's copy of the Act.

So when your Pune distributor's accounts team pays for Notion, or your developers run workloads on Amazon Web Services through the US entity, an OIDAR import is happening. Who must pay the tax depends on who you are.

Who pays: the buyer-type rules

Two provisions split the answer.

Registered buyers pay under reverse charge. Section 5(3) of the IGST Act lets the Government notify supplies on which the recipient pays the tax. Serial 1 of Notification 10/2017-Integrated Tax (Rate) does that for any service supplied by a person located in a non-taxable territory to any person in the taxable territory other than a non-taxable online recipient. CBIC's OIDAR flyer puts it plainly: where the supplier is outside India and the recipient is a business entity registered in India, reverse charge is triggered and the Indian recipient pays the GST and handles the compliance.

Unregistered buyers are taxed through the vendor. Section 2(16), as substituted from 1 October 2023, defines a non-taxable online recipient as any unregistered person receiving OIDAR in the taxable territory. For those buyers, Section 14 makes the foreign supplier liable for the IGST, and requires it to take a single registration under a simplified scheme. The GST portal has a dedicated registration route for a "Non-Resident Online Services Provider (OIDAR)", with an authorised signatory and a representative in India.

The last row is our reading of the Act's text; ask your CA before relying on it.

What the vendors actually do

The legal position only helps if the vendor's billing system follows it. The tax-help pages of the vendors below show three different set-ups.

• AWS. Customers of Amazon Web Services India Private Limited are charged SGST 9% plus CGST 9% if they are in Delhi and IGST at 18% elsewhere, and AWS asks business customers to add their GSTIN in the Tax Settings page so it can issue a correct tax invoice. Those invoices appear in the Invoice Management System on the GST portal. For customers of Amazon Web Services, Inc. buying from outside India, AWS says it collects IGST at 18% unless you update your tax settings with your GSTIN.
• Google Cloud. Google's billing documentation says that from 1 February 2025, India-based users contracted with Google Asia Pacific need a valid GSTIN to be charged 0% GST; without one the rate is 18%. Services sold by Google Cloud India Private Limited to customers with an India billing address attract 18% GST regardless of GSTIN status. For Google Cloud Platform this means the contracting entity on your account matters more than the product.
• Google payments and Workspace. Google's payments help says IGST is 18% and CGST plus SGST are 9% each, with CGST and SGST charged when the bill-to state matches the bill-from state, and the GSTIN's state must match the bill-to address. Google Workspace admins add the GSTIN under billing settings, and the new number appears on the following invoice.
• Notion. Notion's help says it is required to charge GST on services provided to consumers in India, and that a business providing a valid GST number in Settings → Billing will not be charged GST on subsequent invoices.

Two lessons follow. Add the GSTIN before the first invoice you want to use for credit, because the pages say changes apply to later invoices. And check which legal entity is on the invoice: for one product you may be a customer of an Indian subsidiary and for another a customer of a foreign parent. Microsoft's India pricing page for Microsoft 365 says "GST extra as applicable", which is why budgeting tax on top of the price is a safe default (see SaaS priced in rupees).

The reverse-charge routine, month by month

Once a foreign invoice arrives with no GST on it, the work moves to your books. The sequence below follows the Act and the GST portal's own guidance.

1. Fix the time of supply. For reverse-charge services, Section 13(3) of the CGST Act sets the time of supply as the earlier of the date the payment is entered in your books or debited in your bank, and the day after sixty days from the date of the supplier's invoice. Where the recipient has to issue the invoice, the date of that invoice is the third option. In practice, the liability usually lands in the month you pay.
2. Raise your own document. Section 31(3)(f) of the CGST Act requires a registered person liable to pay tax under Section 9(3) or 9(4) to issue an invoice for goods or services received from a supplier who is not registered, and clause (g) requires a payment voucher when paying that supplier. Rule 36(1)(b) allows input credit on an invoice issued under clause (f), subject to payment of the tax. Whether and how your accountant applies these clauses to imported SaaS is a question for them, but the credit trail needs a document, so agree the format once.
3. Pay in cash. Section 49(3) lets the electronic cash ledger pay any amount under the Act, while Section 49(4) limits the credit ledger to output tax. The IGST Act's definition of output tax excludes tax payable on a reverse-charge basis. In plain terms, reverse-charge GST has to come out of the cash ledger, not from credit you already hold.
4. Report it. In GSTR-3B, the liability goes in Table 3.1(d), "Inward supplies liable to reverse charge". The GST portal's GSTR-2B FAQ states that reverse-charge credit on import of services is not part of GSTR-2B and continues to be entered by taxpayers in Table 4(A)(2) and Table 3.1(D) of GSTR-3B. Because it is not auto-populated, a GSTR-2B reconciliation tool will not catch a missed entry.
5. Claim the credit. Section 16(1) of the CGST Act entitles a registered person to credit of input tax on supplies used or intended to be used in the course or furtherance of business. A tool used purely for personal purposes does not qualify. The companion guide, claiming GST input credit on SaaS, covers eligibility and blocked credits.

The net effect for a fully eligible business is cash out and credit in within the same return, so the cost is timing, not rupees. For a composition taxpayer or a business making exempt supplies it can be a permanent cost.

Worked example (illustrative figures)

A Coimbatore textile exporter buys a collaboration tool from a foreign vendor. Assume the invoice converts to ₹20,000 for the month, the vendor charges no GST because the GSTIN is on file, and the service attracts IGST at 18%, as AWS and Google state for their own services. The exporter pays ₹3,600 of IGST from the cash ledger, reports it in Table 3.1(d), and claims ₹3,600 in Table 4(A)(2) in the same return. The figures are invented to show the mechanics; take the real rate and conversion from your invoice and your CA.

Software that helps

You do not need a specialised tool, but accounting software that flags reverse charge saves manual journals. Zoho's help for Zoho Books says to tick "Is this transaction applicable for reverse charge?" when you create a purchase transaction, after which the reverse charge is displayed above the bill. For the wider filing workflow, browse GST software and accounting software, or read how GST returns can be filed from billing data.

The control point sits earlier, in purchasing. Teams that buy on personal cards or through free trials produce invoices with no GSTIN, which breaks the credit trail: Rule 36(2) lets credit be taken on a document missing some particulars only if it still shows the tax charged, description, total value, GSTIN of supplier and recipient, and place of supply for inter-State supplies. Route software purchases through one billing owner, as the guide on software buying approvals suggests, and track subscriptions with the tools in SaaS spend and shadow IT tools.

Mistakes that cost money

Startups feel this first. Cloud and software credits are usually denominated in dollars (see startup credits from AWS, Google and Zoho), so the reverse-charge routine starts the month the credits run out. The same applies to one-off purchases from foreign marketplaces: a lifetime deal bought for consideration is still an import of services. Plan the compliance cost into your SaaS stack from day one.

• GSTIN added after the invoice. Vendor pages say the number applies to future invoices; the first month is often already taxed.
• State mismatch. Google says the GSTIN's state must match the bill-to state, otherwise the account is treated as having no GSTIN.
• Paying reverse charge from the credit ledger. The Act sends it through cash.
• Skipping Table 4(A)(2). Because the portal does not pre-fill it, you can pay the tax and forget the credit.
• Treating free tools as taxable. The GST Council's imports flyer notes that import of services without consideration is generally not a supply, so a free plan carries no reverse-charge liability.
• Mixing up GST with other taxes. Payments to non-residents can raise income-tax questions that this article does not cover; ask your CA.

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