GST on Digital Services and SaaS in India 2026 — OIDAR, Foreign Suppliers, Compliance | RushTax Blog

Digital services and SaaS (Software as a Service) have specific GST rules in India that differ from traditional goods and services. Whether you are a foreign SaaS provider selling to Indian customers, an Indian business buying foreign software, or an Indian SaaS company exporting services, the GST treatment is different in each case. Here is the complete guide for 2026.

What Are OIDAR Services?

OIDAR stands for Online Information and Database Access or Retrieval services. Under GST, OIDAR services include:

Cloud computing and SaaS
Online gaming and gambling
Streaming services (Netflix, Spotify, YouTube Premium)
Online advertising
E-books and digital content
Online education platforms
Website hosting and domain registration
Software downloads and app purchases

The key characteristic: these services are delivered over the internet with minimal human intervention.

GST Rate on Digital Services

All OIDAR and digital services attract 18% GST in India.

Foreign SaaS Providers — Must Register for GST

Since October 1, 2023, foreign digital service providers supplying to Indian consumers (B2C) must register for GST in India and charge 18% GST.

Who must register:

Netflix, Spotify, Adobe, Microsoft (for consumer subscriptions)
Any foreign company providing digital services to Indian individuals
No threshold — even ₹1 of B2C digital service supply requires registration

How foreign providers register:

Simplified registration on the GST portal (no physical presence required)
File GSTR-5A (monthly return for OIDAR providers)
Pay IGST at 18%

Examples of foreign services now charging GST:

Netflix subscription: 18% GST
Spotify Premium: 18% GST
Adobe Creative Cloud: 18% GST
AWS, Google Cloud (B2C): 18% GST

B2B Foreign Software Purchases — Reverse Charge Mechanism (RCM)

When an Indian GST-registered business purchases software or digital services from a foreign provider, the Reverse Charge Mechanism (RCM) applies:

The Indian business pays GST (not the foreign provider)
Rate: 18% IGST
The Indian business can claim ITC on the RCM GST paid

Example:

Indian startup pays $1,000/month to AWS (foreign provider)
RCM GST: 18% × ₹83,000 (approx.) = ₹14,940
The startup pays ₹14,940 as IGST under RCM
The startup claims ₹14,940 as ITC (if used for business)

How to pay RCM GST:

Report in GSTR-3B under "Inward supplies liable to reverse charge"
Pay the GST liability
Claim ITC in the same return (if eligible)

Indian SaaS Companies — Exporting Services

If you are an Indian SaaS company selling to foreign clients, your services are zero-rated exports:

Invoice at 0% GST (file LUT)
Claim ITC refund on inputs
No GST charged to foreign clients

This is a significant advantage — Indian SaaS companies can compete globally without the GST burden.

Conditions for zero-rating:

Supplier is in India
Recipient is outside India
Place of supply is outside India
Payment received in foreign exchange
Supplier and recipient are not related entities

Indian SaaS Companies — Domestic Sales

For sales to Indian customers:

B2B (to GST-registered businesses): 18% IGST (inter-state) or CGST+SGST (intra-state)
B2C (to individuals): 18% GST, collected and deposited by the SaaS company

Place of supply for SaaS:

B2B: Location of the recipient (their GSTIN state)
B2C: Location of the recipient (their address)

GST on App Store and Play Store Purchases

When Indian users buy apps or in-app purchases:

Google Play Store: Google charges 18% GST on behalf of the app developer
Apple App Store: Apple charges 18% GST on behalf of the app developer
Indian app developers receive their share after platform commission and GST

Indian app developers must report this income in their GST returns. The platform (Google/Apple) files GSTR-8 showing TCS collected.

GST on Online Advertising

Advertising Platform	GST Treatment
Google Ads (Indian business advertising)	18% GST under RCM (if Google is foreign)
Facebook/Meta Ads	18% GST under RCM
Indian advertising platforms	18% GST (forward charge)

Indian businesses paying for Google Ads or Facebook Ads must pay 18% GST under RCM and can claim ITC.

GST Registration for Indian Digital Businesses

Situation	Registration Required?
Indian SaaS company, turnover > ₹20L	Yes
Indian SaaS company, inter-state supply	Yes (regardless of turnover)
Indian freelancer providing digital services to foreign clients	Yes if turnover > ₹20L (voluntary for ITC refund)
Foreign SaaS provider to Indian consumers	Yes (no threshold)

ITC on Digital Service Purchases

Indian businesses can claim ITC on GST paid for digital services used for business:

Cloud hosting (AWS, Azure, GCP): ITC available
Software subscriptions (Slack, Zoom, Salesforce): ITC available
Online advertising: ITC available
Streaming services for personal use: ITC not available

Frequently Asked Questions

Does an Indian individual need to pay GST on Netflix subscription?

No. As an individual consumer, you do not pay GST separately — Netflix includes 18% GST in the subscription price and deposits it with the government. You just pay the total price shown.

Can an Indian startup claim ITC on AWS charges?

Yes. If you are GST-registered and use AWS for business purposes, you pay 18% GST under RCM and can claim the same amount as ITC. Net GST cost = zero (if you have sufficient output tax liability).

Is GST applicable on cryptocurrency transactions?

Cryptocurrency is not classified as goods or services under GST. However, services related to cryptocurrency (exchange fees, wallet services) attract 18% GST. The GST treatment of crypto is still evolving.

What is the GST treatment for SaaS companies with freemium models?

Free tier services are not subject to GST (no consideration). Paid tier services attract 18% GST. If you offer a free trial that converts to paid, GST applies from the date of first payment.

Indian SaaS company or digital business needing GST compliance help? I handle GST registration, LUT filing, RCM compliance, and ITC refunds for tech companies. WhatsApp for a quote.