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Knowledge Series · Market Entry & Structuring

GST India for foreign companies: registration, reverse charge and rates (2026)

ATB Knowledge Series · 12 min read · Published October 2026

Short answer: A foreign company selling into India usually does not need its own GST registration, because GST-registered Indian business customers pay GST on imported services under reverse charge and Indian importers pay integrated GST on goods at customs [8][9][11]. It must register if it sells online (OIDAR) services, a category that now covers digital content and most internet-delivered software, to consumers or other unregistered customers in India, or if it makes occasional taxable supplies inside India as a non-resident taxable person [3][4][5]. Since 22 September 2025 GST has had a standard rate of 18%, a merit rate of 5% and a special rate of 40% for a short list of goods and services, so the rate on any supply turns on how that supply is classified [1].

Who this is for: CFOs, heads of tax and finance controllers of Dutch, German, Nordic, UK, Swiss and other European software, digital-services and product companies that sell to Indian customers from home.

GST for foreign companies: who registers and who pays

India's goods and services tax (GST; Umsatzsteuer Indien to German readers) is a destination tax. Cross-border supplies bear integrated GST (IGST), the part of GST charged on imports and on supplies between Indian states. For most cross-border services the place of supply is the recipient's location (IGST Act s.13(2)) [4], so sales to Indian customers bear Indian GST. The question is who accounts for it.

Business model GST position Who registers and pays What to do
Services, SaaS or licences to GST-registered Indian businesses Import of services; place of supply in India [4] The customer pays IGST under reverse charge; you do not register [8][9] Keep each customer's GST number (GSTIN); invoice without Indian GST
Online services (OIDAR) to consumers or unregistered businesses Taxable in India; the foreign supplier is liable [4][5] You register under the simplified scheme and pay IGST [4][7] Register before the next sale; settle pricing
Goods shipped to an Indian importer IGST at the border with customs duty [4][11] The importer pays and normally credits it; you do not register [11] Fix the importer of record; check duty on the trade, import-export and customs page
Occasional supplies inside India (exhibits or stock sold at a fair or from a temporary location) Non-resident taxable person [3][10] You register five days ahead and pay an advance deposit [3] Compare with an Indian partner or entity
Goods sold through an Indian online marketplace The seller must register; the marketplace collects tax at source [3][16] The seller (in practice usually an Indian entity or importer) See the consumer, retail and e-commerce page
Royalties and licence fees from an Indian licensee Import of services [8] The licensee, under reverse charge [8] Price net of Indian GST
An Indian subsidiary serving its foreign parent Zero-rated export of services if five conditions are met [4][12] The subsidiary registers and exports under a Letter of Undertaking [4][13] Document the five conditions

For the wider entry choices, see India for European companies: entry, structuring and the EU–India deal

Reverse charge GST India: services, software and royalties bought from abroad

Reverse charge means the customer, not the supplier, pays the tax. Any service supplied by a person outside India to a person in India, other than a "non-taxable online recipient", is taxed in the recipient's hands (Notification No. 10/2017-Integrated Tax (Rate), Sl. No. 1) [8]. The Indian business pays that IGST in cash, then takes input tax credit if it is otherwise eligible, and a person liable under reverse charge must register whatever its turnover [3][9]. For a customer making taxable supplies the tax is a cash-flow cost, not a price increase.

Keep each business customer's GSTIN on file: the same online sale to an unregistered business makes you liable instead [5].

Royalties and licence fees are imported services too, so the licensee pays the GST under reverse charge [8]. What the licensor keeps after Indian withholding tax is covered in licensing your technology to an Indian company, and treaty withholding rates in India withholding tax rates 2026 and how to repatriate profits.

GST registration for SaaS and online services sold to consumers

Online information and database access or retrieval (OIDAR) services are a defined category of services delivered over the internet. Two amendments in the Finance Act 2023, in force from 1 October 2023, widened the rules [5][6]: - a "non-taxable online recipient" is now any unregistered person in India receiving OIDAR services, including a business registered only to deduct tax at source, not just a private consumer; - the definition of OIDAR no longer requires the service to be "essentially automated and involving minimal human intervention".

A foreign supplier of OIDAR services to such a recipient is liable for IGST (IGST Act s.14(1)) and takes a single registration under a simplified scheme (s.14(2)) [4]. CBIC's guidance names Form GST REG-10, processed by the Principal Commissioner of Central Tax, Bengaluru West; where the supplier has a representative in India, that representative registers and pays the tax on its behalf, and otherwise the supplier appoints a person in India to pay it [4][7]. A customer counts as located in India if any two of seven non-contradictory indicators point there, such as billing address, card issuer, IP address, bank or SIM country code (s.13(12)) [4].

Most SaaS sold over the internet is now likely to be OIDAR; the classification turns on how the service is delivered and used.

Non-resident taxable person GST: occasional supplies inside India

A non-resident taxable person is someone who occasionally supplies goods or services in India but has no fixed place of business or residence there (CGST Act s.2(77)) [3], such as a foreign exhibitor selling stock at an Indian trade fair. The rules in the CGST Act and CBIC's guidance [3][10]: 1. Registration is compulsory, with no turnover threshold (s.24(v)), on Form GST REG-09 with a passport copy. 2. Apply at least five days before trading starts (s.25(1)). 3. Registration lasts for the period applied for or 90 days, whichever is earlier, extendable by up to 90 days (s.27(1)). 4. Deposit tax in advance equal to the estimated liability for the period (s.27(2)). 5. Input tax credit is not available except on goods the person imports.

That suits a single event; for recurring sales, an Indian distributor or subsidiary is usually cheaper.

Goods: IGST at the Indian border

IGST on imported goods is collected with customs duty under the Customs Tariff Act 1975 (IGST Act s.5(1)), on the assessable value plus customs duty [4][11]. A GST-registered importer can credit that IGST, but not basic customs duty [11]. A European exporter selling to an Indian importer therefore does not register; one that holds stock in India and sells from it needs a registration route.

Trade agreements do not change GST. The UK–India CETA, in force since 15 July 2026, cuts basic customs duty on qualifying UK goods, and the EU–India FTA, concluded in January 2026 but not yet signed or in force, would do the same for EU goods; IGST at import and GST on services apply as before (see India free trade agreements: tracker of every deal and negotiation (2026), ATB Legal).

India GST rates after the September 2025 reform

The GST Council's 56th meeting (3 September 2025) replaced the four main slabs with two rates plus a special rate, effective 22 September 2025 [1][2]:

Rate What it covers
5% (merit rate) Goods and services moved to the lower rate, e.g. hotel rooms up to INR 7,500 a night, gyms and salons (without input credit) [1][2]
18% (standard rate) The standard rate for goods and services [1]
40% (special rate) A short list of goods and services, e.g. mid-size and large cars and motorcycles above 350cc [2]

Cigarettes and other tobacco products stay on their earlier rates until the compensation-cess loans are repaid [1]. Licences of intellectual property, including software, have carried 18% since 1 October 2021 [19], and the September 2025 reform moved no software, IT or online service to 5% [1], so 18% is the working rate for SaaS, software and licence fees.

With an Indian entity or marketplace sales, two more numbers matter: e-invoicing applies above INR 5 crore of aggregate turnover (since 1 August 2023) [15], and the central-tax share of the tax that marketplaces collect at source was halved to 0.25% in July 2024 [16].

India's equalisation levies, separate from GST, have ended: the 2% e-commerce levy for consideration received from 1 August 2024 and the 6% advertising levy from 1 April 2025 [17]. Whether India taxes your profits is an income-tax question that turns on a permanent establishment (India corporate tax rate for foreign companies: subsidiary vs branch vs PE).

If you have an Indian subsidiary: zero-rated exports of services

Services an Indian subsidiary supplies to its foreign parent are an export of services, and so zero-rated (no GST due, with input credit still recoverable), if five conditions are met (IGST Act s.2(6)): the supplier is in India, the recipient is outside India, the place of supply is outside India, payment arrives in convertible foreign exchange, and the two are not merely establishments of one person [4][12]. CBIC has clarified that an Indian subsidiary and its foreign parent are separate persons, so the last condition does not bar group supplies [12]. Condition four also accepts rupees where the Reserve Bank of India permits [20]. On 8 October 2026 the GST Council recommended dropping the fifth condition altogether and a circular on payment in foreign exchange or rupees; the change takes effect only once enacted, so all five conditions apply until then [18]. The subsidiary can then supply under a Letter of Undertaking (given to the tax authority in place of a bond) without paying IGST, and claim a refund of unused input credit [4][13].

One change helps agency-type work: the rule placing the supply of "intermediary services" at the supplier's location (s.13(8)(b)) was omitted from 30 March 2026 [14], so sales-support or sourcing services an Indian subsidiary arranges for its parent now follow the default rule (the recipient's location) and can qualify as exports if the other conditions are met. Captive billing and transfer pricing are covered on the software, IT and SaaS page.

Worked example (illustrative)

Hypothetical. A Dutch HR-software company sells SaaS subscriptions into India from Amsterdam, with no Indian office or staff. Annual figures; INR 107 = EUR 1 (rounded exchange rates, October 2026). We treat the subscriptions as OIDAR services at the 18% standard rate [1][19].

  1. Business customers. EUR 900,000 (INR 9.63 crore) comes from 40 GST-registered Indian companies. Each self-assesses IGST: 900,000 × 18% = EUR 162,000 (INR 1.73 crore), paid in cash and then credited [8][9]. The Dutch company charges no Indian GST, does not register and keeps every GSTIN on file.
  2. Self-serve plans. EUR 120,000 (INR 1.28 crore) comes from freelancers and small unregistered firms, at tax-inclusive prices. The company registers under the simplified scheme [4][7]. IGST inside the price: 120,000 × 18 ÷ 118 = EUR 18,305 (INR 19.59 lakh), leaving net revenue of EUR 101,695. Priced tax-exclusive, the same customers would pay EUR 141,600.
  3. Hardware. Clocking terminals shipped to an Indian distributor would bear IGST at the border, paid and credited by the distributor; the Dutch company still would not register [11].
  4. Indian support team. If customer support later moves to an Indian subsidiary billing Amsterdam in euros, those services can be zero-rated exports under a Letter of Undertaking [12][13].

The costly choice is item 2: tax-inclusive pricing gives up EUR 18,305 a year. For other Dutch–India questions, see the Netherlands–India corridor page.

Risks and common mistakes, ranked

  1. Assuming no Indian presence means no Indian GST: OIDAR sales to unregistered customers make the foreign supplier liable [4][5].
  2. Treating every business customer as registered: since October 2023 an unregistered business is a non-taxable online recipient [5].
  3. Setting consumer prices before deciding whether IGST sits inside or on top of them.
  4. Using a non-resident registration for a recurring business: 90-day validity, advance deposit and no input credit except on imports [3][10].
  5. Holding stock in India with no registration plan.
  6. Billing group services from an Indian subsidiary without checking the five export conditions [12].
  7. Expecting a tax treaty or trade agreement to reduce GST.

Checklist to forward internally

  • Indian revenue split: GST-registered businesses, unregistered businesses, consumers
  • GSTIN on file for every business customer
  • OIDAR classification of each product recorded
  • Simplified registration before any sale to unregistered customers
  • Consumer prices set tax-inclusive or tax-exclusive, on purpose
  • Supplies inside India (events, projects, local stock) listed, with a registration route
  • Goods: importer of record and Incoterms fixed
  • Indian subsidiary: registration, Letter of Undertaking, export conditions documented
  • Direct tax (permanent establishment, withholding) reviewed in parallel

How ATB Corporate can help

ATB Corporate advises companies and investors on entering, structuring and operating in India and the UAE: choosing the entry route and holding structure, tax and exchange-control planning, regulatory compliance, and setting up and running the local business. To discuss your plans, contact ATB Corporate.

FAQ

Does a foreign company need GST registration in India?

A foreign company needs GST registration in India only in specific cases: when it supplies online (OIDAR) services to consumers or other unregistered customers in India, when it makes occasional taxable supplies inside India as a non-resident taxable person, or when it sells goods through an Indian marketplace that collects tax at source [3][4]. Selling services to GST-registered Indian businesses, or exporting goods to an Indian importer, does not by itself require registration, because the customer accounts for the tax [8][11].

How does reverse charge GST work in India for services bought from abroad?

Under reverse charge the Indian business customer, not the foreign supplier, pays the IGST on services bought from a supplier outside India [8]. It pays the tax in cash, then takes input tax credit if it is otherwise eligible, and it must be registered for GST whatever its turnover [3][9].

Do foreign SaaS companies have to charge GST to Indian customers?

A foreign SaaS company must charge and pay Indian GST on subscriptions sold to consumers and other unregistered customers in India where the service is an OIDAR service, a category that since 1 October 2023 no longer requires the service to be essentially automated [4][5][6]. On sales to GST-registered businesses it charges no Indian GST, because the customer pays under reverse charge [8].

What is a non-resident taxable person under GST?

A non-resident taxable person under GST is someone who occasionally supplies goods or services in India but has no fixed place of business or residence there, such as a foreign exhibitor selling stock at a trade fair [3]. It must register at least five days before trading, pay an advance deposit equal to its estimated tax, and its registration lasts up to 90 days, extendable by up to 90 more [3].

What are India's GST rates in 2026?

India's main GST rates in 2026 are 5% (the merit rate), 18% (the standard rate) and 40% for a short list of goods such as larger cars, under the GST Council reform effective 22 September 2025 [1][2]. Tobacco products stay on their earlier rates until the compensation-cess loans are repaid [1].

Is IGST paid on goods imported into India recoverable?

IGST paid on goods imported into India is normally recoverable as input tax credit by a GST-registered importer, whereas basic customs duty is a cost [11]. That is why the importer of record should be the party that can use the credit.

Can an Indian subsidiary zero-rate services it supplies to its foreign parent?

An Indian subsidiary can zero-rate services it supplies to its foreign parent where the five export-of-services conditions in section 2(6) of the IGST Act are met, because CBIC treats the Indian company and its foreign parent as separate persons [4][12]. It can then supply under a Letter of Undertaking without paying IGST and claim a refund of unused input credit [4]. On 8 October 2026 the GST Council recommended removing the fifth condition, but that change is not yet law [18].

Sources

  1. Press Information Bureau, Ministry of Finance, press release on the recommendations of the 56th GST Council meeting (3 September 2025) — https://gstcouncil.gov.in/sites/default/files/2025-09/press_release_press_information_bureau.pdf (accessed 20 October 2026)
  2. Press Information Bureau, Ministry of Finance, "Frequently Asked Questions (FAQs) on the decisions of the 56th GST Council" (3 September 2025) — https://gstcouncil.gov.in/sites/default/files/2025-09/faq.pdf (accessed 20 October 2026)
  3. Central Goods and Services Tax Act 2017 (Act 12 of 2017), ss.2(77), 24, 25(1) and 27, Gazette of India text as enacted, hosted by the High Court of Tripura (12 April 2017) — https://thc.nic.in/Central%20Governmental%20Acts/Central%20Goods%20and%20Services%20Tax%20Act,%202017.pdf (accessed 20 October 2026)
  4. Central Board of Indirect Taxes and Customs, Integrated Goods and Services Tax Act 2017 (Act 13 of 2017), ss.2(6), 5(1), 13(2), 13(8), 13(12), 14 and 16, text as enacted (12 April 2017) — https://cbic-gst.gov.in/aces/Documents/IGST-bill.pdf (accessed 20 October 2026)
  5. Finance Act 2023 (Act 8 of 2023), s.160 (IGST Act s.2(16) substituted; words omitted from s.2(17)), GST Council copy (31 March 2023) — https://www.gstcouncil.gov.in/sites/default/files/2024-04/finance_act_of_2023.pdf (accessed 20 October 2026)
  6. Central Board of Indirect Taxes and Customs, Notification No. 28/2023-Central Tax (Finance Act 2023 ss.137–162, except ss.149–154, in force 1 October 2023) (31 July 2023) — https://www.gstcouncil.gov.in/sites/default/files/2024-05/gst-ct-28-2023.pdf (accessed 20 October 2026)
  7. Central Board of Indirect Taxes and Customs, GST flyer "Online Information Database Access and Retrieval Services" (Form GST REG-10; Principal Commissioner of Central Tax, Bengaluru West; representative or appointed person in India) (20 July 2017) — https://cbic-gst.gov.in/hindi/pdf/e-version-gst-fliers/OIDAR_online%20version_online%20version_20_July_2017.pdf (accessed 20 October 2026)
  8. Notification No. 10/2017-Integrated Tax (Rate), Sl. No. 1 (services from a person in a non-taxable territory: tax paid by the recipient), consolidated as amended up to 1 April 2019, GST Council copy (28 June 2017) — https://gstcouncil.gov.in/sites/default/files/2024-02/10-reverse_charge-igst-01.04.2019.pdf (accessed 20 October 2026)
  9. GST Council, GST flyer "Reverse Charge Mechanism" (payment in cash; credit if otherwise eligible; compulsory registration) — https://www.gstcouncil.gov.in/sites/default/files/e-version-gst-flyers/Reverse%20charge%20Mechanism.pdf (accessed 20 October 2026)
  10. Central Board of Excise and Customs and NACIN, compilation of 51 GST flyers, chapter 8 "Non-resident taxable person" (Form GST REG-09, Form GST REG-11, GSTR-5, input tax credit) (updated as on 1 January 2018) — https://www.gstcouncil.gov.in/sites/default/files/e-version-gst-flyers/Excise_51%20GST_Flyer_1030-Corr-Binder-230819.pdf (accessed 20 October 2026)
  11. Central Board of Indirect Taxes and Customs, GST flyer "Imports in GST Regime" (IGST on imported goods; value; input tax credit) — https://www.gstcouncil.gov.in/sites/default/files/e-version-gst-flyers/Imports_in_GST_Regime.pdf (accessed 20 October 2026)
  12. Central Board of Indirect Taxes and Customs, Circular No. 161/17/2021-GST, "Clarification relating to export of services – condition (v) of section 2(6) of the IGST Act 2017", paras 3.1, 5.1 and 5.2 (20 September 2021) — https://gstcouncil.gov.in/sites/default/files/2024-06/circular_20no._20161_14_2021_gst.pdf (accessed 20 October 2026)
  13. Central Board of Indirect Taxes and Customs, Circular No. 45/19/2018-GST, "Clarifications on refund related issues", para 6 (zero-rated supplies under bond or Letter of Undertaking) (30 May 2018) — https://www.gstcouncil.gov.in/sites/default/files/2024-06/circular_no.45.pdf (accessed 20 October 2026)
  14. GST Council Secretariat, GST Newsletter, Issue 84 (omission of s.13(8)(b) IGST Act with the Finance Act 2026, assented 30 March 2026) (March 2026) — https://gstcouncil.gov.in/sites/default/files/2026-04/newsletter-march-2026.pdf (accessed 20 October 2026)
  15. GST Council, Notification No. 10/2023-Central Tax (e-invoicing for aggregate turnover above INR 5 crore from 1 August 2023) (10 May 2023) — https://gstcouncil.gov.in/node/4365 (accessed 20 October 2026)
  16. Central Board of Indirect Taxes and Customs, Notification No. 15/2024-Central Tax (amending Notification No. 52/2018-Central Tax: tax collected at source under CGST Act s.52(1) cut from "half per cent." to "0.25 per cent.") (10 July 2024) — https://gstcouncil.gov.in/sites/default/files/2024-09/central-tax-15-2024-11072024.pdf (accessed 20 October 2026)
  17. Income Tax Department, "Equalisation Levy" (2% levy not applicable to consideration received on or after 1 August 2024; provisions not applicable from assessment year 2026-27) — https://www.incometaxindia.gov.in/w/equalisation-levy-1 (accessed 20 October 2026)
  18. GST Council, Press Release regarding recommendations of the 57th meeting of the GST Council (omission of IGST Act s.2(6)(v) recommended; circular on payment in foreign exchange or Indian rupees; effect through circulars, notifications and law amendments) (8 October 2026) — https://gstcouncil.gov.in/sites/default/files/2026-10/press_release.pdf (accessed 20 October 2026)
  19. Central Board of Indirect Taxes and Customs, Notification No. 06/2021-Central Tax (Rate), Sl. No. 17(ii) (temporary or permanent transfer or permitting the use or enjoyment of intellectual property rights at 9% central tax; in force 1 October 2021) (30 September 2021) — https://cbic-gst.gov.in/pdf/central-tax-rate/notfctn-06-2021-2020-cgst-rate.pdf (accessed 20 October 2026)
  20. Integrated Goods and Services Tax (Amendment) Act 2018 (Act 32 of 2018), amending IGST Act s.2(6)(iv) to add "or in Indian rupees wherever permitted by the Reserve Bank of India" (assented 29 August 2018), text as published by PRS Legislative Research — https://prsindia.org/files/bills_acts/bills_parliament/2018/Integrated%20GST%20(Amendment)%20Act,%202018.pdf (accessed 20 October 2026)

Disclaimer: This article is general information, not tax or legal advice; the worked example is hypothetical, and GST rates, classifications and procedures change, so check the current rules and take advice on your facts before acting.

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