GST for Foreign Companies: Registration, OIDAR & Compliance
📌 Quick Answer: Do Foreign Companies Need GST Registration in India?
Yes — foreign companies supplying goods or services in India must register under GST as a Non-Resident Taxable Person (NRTP) under Section 24(v) of the CGST Act or through the Simplified Registration Scheme for OIDAR (Online Information and Database Access or Retrieval) services under Section 14 of the IGST Act. The place of supply for services to unregistered recipients in India is determined under IGST Section 13, which is critical for determining whether IGST applies. Our firm provides end-to-end GST registration services for foreign entities entering the Indian market, including OIDAR compliance and company secretary services for subsidiary formation.
📖 Definition — OIDAR Services: Online Information and Database Access or Retrieval (OIDAR) services are defined under Section 2(17) of the IGST Act as services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology. Examples include cloud computing, SaaS products, online gaming, digital content streaming, online advertising, and e-book downloads.
📖 Definition — Non-Resident Taxable Person (NRTP): Under Section 2(77) of the CGST Act, a non-resident taxable person means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.
1. Types of GST Registration Available to Foreign Companies
Foreign companies operating in or supplying to India have three primary registration pathways under the GST framework, depending on the nature of their operations:
1.1. Non-Resident Taxable Person (NRTP) Registration — Section 24(v) read with Section 27
This registration category applies to foreign companies that occasionally undertake taxable transactions in India without having a fixed place of business or residence in the country. The key features of NRTP registration are:
- Compulsory registration regardless of turnover — Section 24(v) mandates registration irrespective of the aggregate turnover threshold
- Application must be filed at least 5 days before commencing business operations in India
- Validity period — 90 days from the date of registration, extendable by a further 90 days
- Advance tax deposit — the NRTP must deposit an amount equivalent to the estimated tax liability for the registration period at the time of filing the application
- No Aadhaar authentication — NRTPs are not required to undergo Aadhaar authentication
- Authorised signatory must have PAN — a person in India who is duly authorised by the foreign company must possess a valid PAN and act as the authorised signatory
- Returns — the NRTP must file GSTR-5 (instead of GSTR-1 and GSTR-3B) on a monthly basis within 20 days after the end of the tax period or within 7 days after the expiry of the registration period, whichever is earlier
1.2. Simplified Registration for OIDAR Service Providers — Section 14 of the IGST Act
Foreign suppliers of OIDAR services to non-taxable online recipients (i.e., unregistered consumers) in India are required to obtain a simplified registration under Section 14(1) of the IGST Act. This is a distinct registration mechanism that does not require PAN or Aadhaar.
The simplified registration process involves:
- Filing Form GST REG-10 on the GST Portal
- Providing details of the foreign entity including name, address, country of incorporation, and nature of services
- Appointing an authorised representative in India — the person responsible for paying tax and complying with GST provisions on behalf of the foreign supplier
- Filing GSTR-5A on a quarterly basis (within 20 days after the end of each quarter), declaring the taxable value of OIDAR services supplied to non-taxable online recipients in India and the IGST payable
The OIDAR supplier is liable to pay IGST at 18% (the rate applicable to IT services under SAC 998314 and related codes) on the value of services supplied to unregistered persons in India. If the recipient is a registered person, the liability to pay IGST shifts to the recipient under the reverse charge mechanism under Section 5(3) of the IGST Act read with the relevant notification.
1.3. Regular Registration Through Indian Subsidiary or Branch Office
Foreign companies that establish a permanent presence in India — whether through a wholly owned subsidiary, branch office, liaison office, or project office — must obtain regular GST registration in the State where the establishment is located. This follows the standard registration process under Section 25 using Form GST REG-01.
For assistance with setting up an Indian subsidiary, our private limited company registration service covers incorporation, GST registration, and post-incorporation compliance as an integrated package.
2. Place of Supply for Cross-Border Services — IGST Section 13
The place of supply provisions under IGST Section 13 are the cornerstone for determining whether GST applies to cross-border service transactions. Getting the place of supply determination right is critical — an incorrect determination can lead to double taxation or non-compliance.
2.1. General Rule — Section 13(2): Location of Recipient
The default rule under Section 13(2) provides that the place of supply of services (other than those specified in sub-sections (3) to (13)) made to a person other than a registered person shall be the location of the recipient of services. Where the location of the recipient is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services.
This means that when a foreign company supplies services to an Indian consumer (non-registered person), the place of supply is in India, making the supply subject to IGST.
2.2. Specific Rules for Certain Categories of Services
| Section | Service Category | Place of Supply |
|---|---|---|
| 13(3)(a) | Services in respect of goods required to be made available by the recipient | Location where services are actually performed |
| 13(3)(b) | Services supplied to an individual, requiring physical presence (beauty treatment, health service) | Location where services are actually performed |
| 13(4) | Services relating to immovable property | Location of the immovable property |
| 13(5) | Services of admission to, or organisation of, events | Location where the event is actually held |
| 13(8)(a) | Banking, financial institution, or NBFC services to account holders | Location of the supplier of services |
| 13(8)(b) | Intermediary services | Location of the supplier of services |
| 13(12) | OIDAR services | Location of the recipient of services |
2.3. The Intermediary Issue — Section 13(8)(b)
One of the most contentious provisions affecting foreign companies with Indian intermediary entities is Section 13(8)(b), which provides that the place of supply of intermediary services shall be the location of the supplier. This means that if an Indian entity provides intermediary services (arranging or facilitating supply between two or more persons) to a foreign client, the place of supply is in India, and GST is payable. This provision has been the subject of extensive litigation and judicial scrutiny.
Foreign companies structuring their Indian operations through intermediary arrangements must carefully analyse the place of supply implications. Where the Indian entity is acting as an intermediary (rather than providing services on its own account), the export benefits under LUT/refund may not be available. For strategic advice on structuring such arrangements, contact our team.
3. OIDAR Services — Detailed Compliance Framework
3.1. What Qualifies as OIDAR Services?
The CBIC has issued Circular No. 202/14/2023-GST dated 27.10.2023 providing clarification on the scope of OIDAR services. Services that qualify as OIDAR include:
- Cloud computing services (IaaS, PaaS, SaaS)
- Online advertising and digital marketing services
- Supply of digital content (music, videos, games, e-books)
- Online gaming and gambling platforms
- Search engine and social media services
- Web hosting and domain registration
- Online database access and retrieval
- Software as a Service (SaaS) and application hosting
- Distance learning and e-learning platforms (where delivery is automated)
Services that do not qualify as OIDAR:
- Services rendered by a professional (lawyer, architect, doctor) merely communicated via email or video call — the use of internet is merely incidental
- Physical goods ordered online but delivered offline
- Services where human intervention is a substantial component (customised software development, consultancy delivered via video conference)
- Telephone or fax services provided via the internet
3.2. Tax Liability Matrix for OIDAR Services
| Supplier Location | Recipient in India | Who Pays GST? | Registration Required? |
|---|---|---|---|
| Outside India | Unregistered person (B2C) | Foreign supplier (forward charge) | Simplified registration (Form REG-10) |
| Outside India | Registered person (B2B) | Indian recipient (reverse charge) | No registration needed for foreign supplier |
| India (through subsidiary) | Any person | Indian entity (forward charge) | Regular registration (Form REG-01) |
3.3. GSTR-5A Filing for OIDAR Suppliers
Foreign OIDAR suppliers registered under the simplified scheme must file GSTR-5A on a quarterly basis. The return captures the taxable value of OIDAR services supplied to non-taxable online recipients in India during the quarter, IGST payable, tax already paid, and details of amendments to supplies reported in earlier periods.
The due date for filing GSTR-5A is the 20th of the month succeeding the quarter. Payment of IGST must be made at the time of filing the return using prescribed electronic modes (international wire transfer, debit/credit card, or through the authorised representative’s bank account in India).
🔍 Practitioner Insight — CA V. Viswanathan
At Virtual Auditor (IBBI/RV/03/2019/12333), we have assisted several global SaaS companies and digital platforms with their India GST compliance. The most common confusion I encounter is the distinction between B2B and B2C OIDAR supplies. When a foreign SaaS company sells subscriptions directly to individual consumers in India (B2C), the foreign company is liable to register and pay IGST under the simplified scheme. However, when the same company sells to a GST-registered Indian business (B2B), the Indian recipient pays under reverse charge, and the foreign company has no registration obligation for those specific supplies. The practical challenge arises when a foreign company has both B2B and B2C customers in India — they need simplified registration for the B2C component while also ensuring B2B customers properly discharge their reverse charge obligations. I always recommend maintaining clear customer segregation records and ensuring that invoices to registered Indian customers clearly state the recipient’s GSTIN.
4. Import of Services — Reverse Charge Mechanism
When an Indian registered person receives services from a foreign supplier, the transaction qualifies as an import of services under Section 2(11) of the IGST Act if the following conditions are satisfied:
- The supplier of services is located outside India
- The recipient of services is located in India
- The place of supply of services is in India
Import of services is subject to IGST under reverse charge — the Indian recipient is liable to pay IGST at the applicable rate on the value of services received. The IGST so paid is available as input tax credit to the recipient, subject to the conditions under Section 16 of the CGST Act and Rules 42 and 43 for ITC reversal.
The reverse charge on import of services must be reported in Table 3.1(d) of GSTR-3B and the corresponding ITC claimed in Table 4(A)(2). The time of supply for import of services under reverse charge is the earlier of the date of payment or the date immediately following 60 days from the date of issue of invoice by the supplier — Section 13(3) of the CGST Act.
5. Import of Goods — IGST at Customs
Import of goods by a foreign company (or by its Indian subsidiary/branch) is subject to Basic Customs Duty (BCD) under the Customs Tariff Act, 1975, plus IGST under Section 3(7) of the Customs Tariff Act levied on the assessable value plus BCD plus applicable cess. Compensation Cess applies for specified luxury or demerit goods.
The IGST paid at import is available as ITC to the importer (if registered under GST) and can be utilised against output tax liability. The Bill of Entry serves as the input tax document for claiming ITC on imports under Rule 36(1)(b) of the CGST Rules. For verification of IGST on imports, the CBIC GST Portal provides reconciliation tools.
6. Compliance Obligations for Foreign Companies Registered Under GST
6.1. Return Filing Summary
| Registration Type | Return Form | Frequency | Due Date |
|---|---|---|---|
| Non-Resident Taxable Person | GSTR-5 | Monthly | 20th of the following month or 7 days after expiry of registration |
| OIDAR Simplified Registration | GSTR-5A | Quarterly | 20th of the month after the quarter |
| Regular Registration (subsidiary/branch) | GSTR-1, GSTR-3B, GSTR-9 | Monthly/Annually | Standard due dates |
6.2. Invoicing and Tax Payment
NRTPs must issue tax invoices compliant with Rule 46 of the CGST Rules and pay IGST on supplies made during the registration period. The advance tax deposit made at registration is adjusted against final liability, with any excess refundable upon filing the final GSTR-5. For OIDAR suppliers, IGST payment is made quarterly along with GSTR-5A filing through international wire transfer, the authorised representative’s Indian bank account, or international credit/debit cards.
7. Equalisation Levy vs GST — Interaction and Overlap
Foreign companies must consider the interaction between GST and the Equalisation Levy under Chapter VIII of the Finance Act, 2016. The Equalisation Levy at 2% (introduced in 2020) applies to e-commerce supply or services made by a non-resident e-commerce operator. Transactions on which Equalisation Levy is charged are exempt from GST under Notification No. 15/2020-Integrated Tax (Rate).
The Equalisation Levy at 6% on online advertising services (introduced in 2016) applies only where the annual consideration exceeds ₹1 lakh. Where Equalisation Levy applies, GST is not leviable, and vice versa. Foreign companies must ensure they do not inadvertently pay both on the same transaction. For handling disputes arising from dual levy situations, see our guide on GST demand orders — accept or appeal.
8. Liaison Office, Branch Office, and Project Office — GST Implications
Foreign companies establishing offices in India under RBI approval must understand the GST implications for each type:
- Liaison Office — Generally not required to register as it cannot undertake commercial activities. However, if the liaison office provides services (even to the head office abroad), anti-avoidance provisions may apply.
- Branch Office — Must register under GST in the State where located. All supplies made are subject to GST. Services provided to the head office abroad may qualify as export of services if conditions under Section 2(6) of the IGST Act are met.
- Project Office — Must register if it undertakes taxable supplies. Project offices executing infrastructure contracts must charge GST on supplies and can claim ITC on inward supplies.
9. Reverse Charge on Head Office Cost Allocations
A critical compliance area that foreign companies often overlook is the reverse charge obligation on cost allocations from the head office. When a foreign parent company allocates costs — management fees, shared services charges, royalty, technical know-how fees, or employee secondment costs — to its Indian subsidiary or branch, the Indian entity must discharge GST under reverse charge on such allocations.
The valuation of such inter-company supplies must be determined under Section 15 of the CGST Act read with Rule 28 of the CGST Rules (for supplies between related persons). Where the open market value is not available, the value must be determined as per Rule 30 or Rule 31. The Indian entity must include these amounts in its GSTR-3B under Table 3.1(d) and can claim ITC on the reverse charge paid, subject to eligibility conditions.
Non-compliance with reverse charge on head office allocations is a frequent finding during GST audits under Section 65 and often results in demand notices. Our GST appeal services include defending such reverse charge demands before the Appellate Authority.
🔍 Practitioner Insight — CA V. Viswanathan
In my experience advising foreign companies at Virtual Auditor (IBBI/RV/03/2019/12333), the most overlooked aspect is the reverse charge on services received from the head office. Many MNCs fail to account for cost allocations such as management fees, shared services, and secondment charges, leading to demands during GST audits. I always recommend that foreign companies entering India conduct a comprehensive GST impact assessment covering not just forward supplies but also all cross-border cost allocations, secondment arrangements, and group service agreements. This proactive approach saves significant compliance costs and avoids appeal proceedings later.
📋 Key Takeaways
- Foreign companies must register as NRTP under Section 24(v) for occasional taxable transactions in India, with advance tax deposit mandatory
- OIDAR service providers use simplified registration under IGST Section 14, filing GSTR-5A quarterly for B2C supplies to Indian consumers
- B2B OIDAR supplies shift liability to the Indian recipient under reverse charge — no foreign registration required for those transactions
- Place of supply under IGST Section 13 determines whether IGST applies — the general rule is location of the recipient for B2C supplies
- Intermediary services under Section 13(8)(b) are taxed at the location of the supplier, creating GST liability on Indian intermediaries
- Equalisation Levy and GST are mutually exclusive — ensure no double levy on the same transaction
- Indian subsidiaries and branch offices must account for reverse charge on cross-border cost allocations, secondment, and group service charges
Frequently Asked Questions
Does a foreign SaaS company need GST registration in India?
Yes, if the foreign SaaS company supplies services directly to unregistered consumers (B2C) in India, it qualifies as an OIDAR service provider and must obtain simplified registration under Section 14 of the IGST Act by filing Form GST REG-10. However, if it only supplies to GST-registered Indian businesses (B2B), the Indian recipients pay IGST under reverse charge, and the foreign company does not need to register for those transactions.
What is the difference between NRTP registration and simplified OIDAR registration?
NRTP registration (Section 27) is for foreign entities occasionally undertaking any taxable supply in India — it requires advance tax deposit, is valid for 90 days, and uses Form GSTR-5. Simplified OIDAR registration (Section 14 IGST) is specifically for foreign suppliers of online digital services to Indian consumers — it has no advance tax requirement, no time limit, and uses Form GSTR-5A filed quarterly. The authorised signatory for NRTP must have PAN, while simplified registration does not require PAN.
Is a foreign company’s Indian liaison office required to register under GST?
Generally, no. A liaison office is permitted only to undertake liaison activities (market research, communication, quality control) and cannot engage in commercial or trading activities. Since it does not make taxable supplies, GST registration is typically not required. However, if the liaison office is found to be providing services — even to the head office — the tax department may argue that registration is required.
How does a foreign company pay GST in India without an Indian bank account?
Foreign companies under simplified OIDAR registration can pay IGST through international wire transfer or through the bank account of their authorised representative in India. NRTPs must deposit advance tax via the authorised signatory’s Indian bank account. The GST Portal supports international payment modes for foreign entities. We recommend appointing a reliable authorised representative with an active Indian bank account.
Can a foreign company claim ITC on GST paid in India?
NRTPs can claim ITC on goods or services received in India for making taxable supplies during their registration period, except for personal consumption. OIDAR suppliers under simplified registration cannot claim ITC. Foreign companies operating through an Indian subsidiary or branch can claim ITC through that entity’s regular registration, subject to Section 16 and Rules 42-43 conditions.
What are the penalties for a foreign company failing to register under GST in India?
Under Section 122(1)(xi) of the CGST Act, a penalty equal to the tax evaded or ₹10,000 (whichever is higher) applies. Interest at 18% per annum is payable under Section 50 on tax not paid from the due date. Indian tax authorities have become increasingly active in identifying non-compliant foreign digital service providers through data from payment gateways and app stores.
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