A GST-registered business in India that buys a cloud, collaboration or software subscription from a supplier outside India pays IGST on it itself, under reverse charge. The foreign supplier is not liable for Indian GST on a supply to a registered business customer. The recipient self-assesses the tax, pays it in cash, and can claim it as input tax credit, subject to the conditions in the CGST Act. The first thing to check is who issued the invoice. Where the subscription is billed by the provider's Indian entity or an Indian reseller, with Indian GST on the invoice, it is an ordinary domestic purchase, and there is no reverse charge. Where the buyer is not registered for GST, the position is different again.
This post sets out how to tell which case applies and how to handle each.
Start with the invoice
Before any GST analysis, look at who issued the invoice.
- An Indian entity, with a GSTIN and GST charged. This is a domestic supply. Pay the invoice, and claim input tax credit through GSTR-2B in the normal way. There is no reverse charge.
- A foreign entity, with no Indian GST. This is an import of services. Read on.
- A foreign entity that does show Indian GST, because it is registered in India under the simplified registration scheme for online services. Under section 14 of the IGST Act, such a supplier pays the tax on supplies to unregistered customers. If you are registered, add your GSTIN to your billing profile with the supplier.
Check each subscription, because the answer varies from provider to provider and can change when billing arrangements change.
The rule for registered businesses
A subscription delivered over the internet is tested against the definition of online information and database access or retrieval services (OIDAR) in section 2(17) of the IGST Act. From 1 October 2023, under section 160 of the Finance Act, 2023, the definition no longer requires the service to be "essentially automated and involving minimal human intervention". The definition continues to cover services whose delivery is mediated by information technology over the internet or an electronic network, and whose supply is impossible to ensure without information technology. Its examples expressly include cloud services, software supplied through the internet, and digital data storage.
What matters next is whether the buyer is a non-taxable online recipient. From the same date, section 2(16) defines this as any unregistered person receiving OIDAR services who is located in the taxable territory, whatever the purpose. A person registered only as a GST TDS deductor is treated as unregistered for this purpose.
- A business registered for GST in the ordinary way is not a non-taxable online recipient. For a supply to it from a supplier outside India, the recipient pays IGST under reverse charge. This follows from section 5(3) of the IGST Act and Serial No. 1 of Notification No. 10/2017-Integrated Tax (Rate), which applies reverse charge to services from a person in a non-taxable territory to any person in the taxable territory other than a non-taxable online recipient.
- An unregistered buyer is a non-taxable online recipient. Here the foreign supplier is liable for the tax under section 14 of the IGST Act, and must register in India under the simplified scheme to collect it.
Even where a subscription is not OIDAR, for example because it includes significant human-delivered services, a registered recipient importing services from abroad pays IGST under reverse charge under the same Serial No. 1, where the place of supply is in India under section 13 of the IGST Act. Either way, a registered buyer pays the tax under reverse charge.
How to comply, month by month
- Keep a subscriptions register. List each foreign subscription, the billing entity and country, the currency, the billing frequency and the GST position you have taken.
- Raise a self-invoice for each import. Rule 47A of the CGST Rules, in force from 1 November 2024, requires a registered person who must issue an invoice under section 31(3)(f) of the CGST Act, for reverse charge supplies received from unregistered suppliers, to issue it within 30 days of receiving the supply. Keep to the same 30 days for imported subscriptions, so each self-invoice is on record before the return is filed.
- Convert at the right rate. Value the supply in rupees at the exchange rate determined under generally accepted accounting principles for the date of the time of supply, under Rule 34(2) of the CGST Rules.
- Pay the IGST in cash. Report it in Table 3.1(d) of GSTR-3B, as inward supplies liable to reverse charge.
- Claim the credit. Report the input tax credit in Table 4(A)(2) of GSTR-3B, as import of services, in the same return where conditions allow. Check that the subscription is used for business and is not blocked under section 17(5) of the CGST Act.
Where full credit is available, the tax paid comes back as credit, so the effect is mainly on cash flow. The cost of getting it wrong is not small. Unpaid reverse charge carries interest, and credit taken without the tax having been paid is not available.
Common mistakes
- Assuming card payments are outside GST. Paying a foreign subscription by company credit card does not change the GST position. The card statement is not the invoice. Download the invoice from the provider's billing page every month.
- Missing small subscriptions. Small monthly charges add up across a year and are easily left off the register. Review card statements each month for foreign charges, so each one is self-invoiced in time.
- Forgetting income tax. The GST position does not settle the income tax question. Whether tax must be withheld on the payment is a separate analysis under the Income-tax Act, 2025 (for payments from 1 April 2026). See TDS on payments to foreign software and service vendors.
For unregistered businesses
A business that is not registered for GST, such as a small professional below the threshold, is a non-taxable online recipient for OIDAR services. The foreign supplier, if registered in India, charges GST. The business cannot claim that GST back, because it is not registered. It is simply part of the cost.
Where this fits
Imported subscriptions are one side of cross-border services. For the other side, services you supply abroad, see GST on export of services after the Finance Act 2026 intermediary change, which also explains why commission paid to foreign agents now attracts reverse charge.
Wissen Solutions maintains subscription registers and reverse charge compliance for Indian businesses through our GST, income tax and TDS return filing services.
Sources (checked 26 October 2026)
- Notification No. 10/2017-Integrated Tax (Rate), Serial No. 1: reverse charge on services from a non-taxable territory
- Finance Act, 2023, section 160: amendments to IGST sections 2(16) and 2(17)
- Notification No. 28/2023-Central Tax dated 31.07.2023: sections 137 to 162 of the Finance Act, 2023 in force from 1 October 2023
- CBIC: GST flier on OIDAR services: examples in the definition, reverse charge for registered recipients, supplier liability and simplified registration
- Notification No. 20/2024-Central Tax dated 08.10.2024: Rule 47A
- Notification No. 17/2017-Central Tax dated 27.07.2017: Rule 34 as substituted, exchange rate for services