India · Tax Guide
How GST actually lands on a SaaS bill.
Software and SaaS subscriptions are taxed as services at a flat 18% GST in India — the same rate whether an Indian vendor bills you directly or a foreign one doesn’t. Who actually remits it depends on the vendor: a compliant one charges it on the invoice, an unregistered foreign one leaves your business to self-assess it under reverse charge. This page walks through both paths, the separate and much smaller GST on currency-conversion markups, and the current rules for recurring card payments.
01 — The Rate, And Who Pays It
One rate. Two possible payers.
Software and IT services sit in the 9983 SAC group and are taxed at a flat 18% GST — most SaaS subscriptions specifically fall under SAC 998314. That is 9% CGST + 9% SGST for a purchase within the same state, or 18% IGST across state lines or from outside India.1 This is not a new or temporary rate: the September 2025 GST rate rationalisation restructured many goods into fewer slabs, but left IT and software services unchanged at 18%.4
The rate does not change depending on who is buying — a business and an individual pay the same 18%. What does vary is who actually remits it to the government, and that is the question worth understanding, because it decides whether the tax is already on your invoice or is your business’s own job to calculate.
02 — The Reverse-Charge Path
When the vendor doesn’t charge it.
If an Indian vendor — or a foreign vendor already registered in India — bills you with GST shown on the invoice against your GSTIN, the story ends simply: you pay it and claim it back as input tax credit, like any other business expense.
If a foreign vendor bills you directly with no Indian tax line at all, the law puts the job on you. Under Section 5(3) of the IGST Act, read with Notification No. 10/2017-Integrated Tax (Rate), a GST-registered Indian business importing a service from a supplier outside India must self-assess and pay 18% IGST under the reverse charge mechanism (RCM) — and registration for this becomes mandatory the moment RCM applies, regardless of the usual ₹20 lakh (₹10 lakh in special-category states) turnover threshold.2 The amount is paid in cash through your electronic cash ledger — it cannot be settled using existing input tax credit — and can then be claimed back as input tax credit once paid, so for a fully taxable business the net cash cost is often zero, even though the compliance step still has to happen.2
Where OIDAR fits in
Some SaaS vendors register in India specifically as suppliers of Online Information and Database Access or Retrieval (OIDAR) services and charge GST on the invoice directly, rather than leaving it to you. Since 1 October 2023, foreign OIDAR suppliers have had to register and collect GST from any unregistered recipient in India, business or personal — a broader rule than before, when only individual, non-business use was covered.1 For a GST-registered business, this mostly changes who else pays GST directly; the practical rule for your own invoice stays the one above.
03 — The Forex-Markup GST
A separate, much smaller charge.
Distinct from everything above: when you pay a foreign-currency invoice with an Indian card, the bank or card network charges a currency-conversion fee — the “forex markup” — and GST applies to that service fee, not to your whole subscription again. Rule 32(2) of the CGST Rules, 2017 lets the bank value this conversion service on a slab: 1% of the amount converted up to ₹1 lakh (minimum ₹250); ₹1,000 + 0.5% of the amount between ₹1 lakh and ₹10 lakh; and ₹5,500 + 0.1% of the amount above ₹10 lakh, capped at ₹60,000.3 GST at 18% applies to this deemed value, not to the full subscription price.
In practice this GST-on-markup is a small line most cardholders never separate from the forex markup itself on their statement. It is not a reason to avoid foreign billing — just something to expect and not mistake for GST on the subscription being charged twice.
Tax = (Value inclusive of tax × rate) ÷ (100 + rate)
Example: ₹118 inclusive at 18% → (118 × 18) ÷ 118 = ₹18 tax, ₹100 base.
Formula per the CBIC/GST Council “Valuation in GST” flyer.3
04 — Getting A Proper Invoice
No GSTIN on the bill, no credit.
For input tax credit (ITC) to apply, the essentials are: the invoice shows your GSTIN correctly, the supply is genuinely for business use, and the tax actually reaches the government — either through the vendor’s own return, or through your own reverse-charge payment.
- Add your GSTIN before the invoice is generated. Most billing portals have a tax-details or GSTIN field in account settings — adding it after the fact does not fix past invoices.
- Confirm the “bill to” shows your legal business name and GSTIN, not just an email address or a personal name.
- If the vendor cannot add a GSTIN at all — common with small or individual foreign tools — treat the whole purchase as a reverse-charge import and self-invoice it under Section 31(3)(f) of the CGST Act.
- Keep every invoice. Reconciliation against your GST returns depends on paperwork existing, not on memory.
05 — The Recurring-Mandate Rules
Not GST — but it can still stop your bill.
Separately from tax entirely, the Reserve Bank of India’s rules on “e-mandates” govern whether your card will keep auto-paying a subscription at all. The Digital Payments – E-mandate Framework, 2026 (RBI/DPSS/2026-27/396, dated 21 April 2026) consolidates the earlier recurring-payment circulars into one set of rules: registering a card, UPI or wallet mandate needs an extra authentication step once, at setup; after that, recurring debits up to ₹15,000 per transaction can go through without extra authentication each time (₹1,00,000 for insurance premiums, mutual-fund subscriptions and credit-card bill payments); your bank must notify you at least 24 hours before every debit; and you can view, modify or cancel the mandate at any time, at no charge.5
In practice: a SaaS bill above ₹15,000 — common for annual team plans — will periodically ask for fresh authentication, and if a card is reissued or a mandate lapses, the subscription can fail silently. If a “payment failed” email arrives unexpectedly, checking the mandate status in your bank’s app is worth doing before assuming the vendor is at fault.
06 — FAQ
Real questions, short answers.
Do I need to charge myself GST if my SaaS vendor already charges it?
No. If the invoice already shows Indian GST (IGST, or CGST plus SGST) and carries your GSTIN, you simply pay it and claim input tax credit. Reverse charge only applies where the vendor has not charged GST.
Is GST 18% for every kind of software, with no exceptions?
For software and IT services in the 9983 SAC group, 18% is standard. Some adjacent digital content, such as e-books, carries a different rate — check the CBIC rate and SAC finder for the exact classification if in doubt.
What if my SaaS vendor won't put my GSTIN on the invoice?
Ask their billing support directly. If they genuinely cannot, treat the purchase as a reverse-charge import and self-invoice it, so the input tax credit is not lost.
Why did my subscription payment suddenly fail?
Most often an expired or reissued card, or a recurring mandate needing fresh authentication under the RBI e-mandate rules. Check your bank's mandate management screen before assuming the vendor is at fault.
Is the GST on my forex markup the same as the GST on my subscription?
No — they are two separate charges. One is 18% on the subscription's value, charged by the vendor or self-assessed by you; the other is 18% on a much smaller currency-conversion service fee, valued under a separate rule.
Is this page tax advice?
No — educational information only. GST classification, reverse-charge applicability and input-tax-credit eligibility depend on your specific facts. Confirm with a qualified chartered accountant or the GST portal before filing or paying.
07 — Sources
Where these figures come from
- Central Board of Indirect Taxes and Customs (CBIC) — GST rate and classification information, including the 18% rate on IT/software services (SAC 9983 group, commonly SAC 998314) and the OIDAR registration requirement for foreign digital-service suppliers effective 1 October 2023 (Finance Act 2023 amendment to the IGST Act’s “non-taxable online recipient” definition).taxinformation.cbic.gov.intaxinformation.cbic.gov.in · accessed 25 Jul 2026
- GST Council / CBIC — “Reverse Charge Mechanism” flyer: Section 5(3) IGST Act read with Notification No. 10/2017-Integrated Tax (Rate); mandatory GST registration for anyone liable under reverse charge regardless of the ₹20 lakh / ₹10 lakh threshold; reverse-charge tax paid via the electronic cash ledger, then claimable as input tax credit.gstcouncil.gov.in — Reverse Charge Mechanism (PDF)gstcouncil.gov.in · accessed 25 Jul 2026
- GST Council / CBIC — “Valuation in GST” flyer: Rule 32(2), CGST Rules 2017, the slab-based valuation of currency-conversion services (1% / 0.5% / 0.1%, capped at ₹60,000), and the GST-inclusive tax back-calculation formula.gstcouncil.gov.in — Valuation in GST (PDF)gstcouncil.gov.in · accessed 25 Jul 2026
- GST Council — press release on the recommendations of the 56th GST Council meeting (rate rationalisation effective 22 September 2025), confirming IT and software services remained at 18% under the revised slab structure.gstcouncil.gov.in — 56th GST Council press release (PDF)gstcouncil.gov.in · accessed 25 Jul 2026
- Reserve Bank of India — Digital Payments – E-mandate Framework, 2026 (RBI/DPSS/2026-27/396, dated 21 April 2026): additional-factor-authentication requirement at mandate registration; ₹15,000 (₹1,00,000 for insurance, mutual funds and credit-card bills) recurring-transaction threshold without further authentication; 24-hour pre-debit notification; free registration; covers cards, UPI and PPIs, domestic and cross-border.rbi.org.in — Notificationsrbi.org.in · accessed 25 Jul 2026
About this page: written for an Indian, GST-registered business buying SaaS. It does not cover composition-scheme dealers, exempt supplies, or a business that also sells software. GST law and RBI rules change — verify anything material on the official GST portal, the RBI website, or with a chartered accountant before you file or pay.
The Concierge
Not sure which path applies to you?
Describe your invoice — Indian GST shown or not, GSTIN present or not — and the concierge will point at the right section above. It routes anything it cannot verify back to the GST portal or a chartered accountant, never a guess.