GST Registration for Foreign Companies Selling into India: OIDAR, Reverse Charge and Non-Resident Taxable Persons

A foreign company that supplies services into India without any office here still has to think about GST. The answer depends on what is supplied, to whom, and whether the foreign company has a place of supply in India. This note covers the main registration situations and the common errors.

Online information and database access services

• Online information and database access or retrieval services, often called OIDAR, supplied from outside India to a non-taxable person in India require the supplier to register under the simplified scheme and pay IGST.
• The scheme is meant for B2C supplies, such as software subscriptions, digital content and platform services to consumers.
• Returns are filed monthly, and the registration does not allow the claim of input tax credit.

Services to Indian businesses

• Where the Indian recipient is a registered person, the supply of most imported services is taxed in the hands of the recipient under the reverse charge mechanism, so the foreign supplier need not register.
• The Indian business must pay GST under reverse charge and may claim credit if the use is for business and the credit is not blocked.

Goods and a fixed presence

• A non-resident who occasionally supplies taxable goods or services in India without a fixed place of business can be a non-resident taxable person and needs a registration, valid for a limited period, with an advance deposit of tax.
• A branch or project office may need registration as a normal taxpayer if it supplies in India.

Common errors

• Assuming that a foreign supplier never has to register.
• Treating a B2B supply as B2C because the recipient's GST number was not collected.
• Missing the rule that the place of supply for a service decides whether the supply is within the GST net at all, and that exports and imports have separate conditions.
• Not reviewing the contract, which sometimes shifts the liability to the Indian side by an indemnity.

A one-page matrix of the supplier's offerings, the type of customer and the GST outcome is an effective way to set this out for a global finance team.

The author, N. Sudheer, M.Com., FCS, LL.B., is a Partner at A2 Consultants, Hyderabad, which advises foreign companies on entering and operating in India. The views are personal and for general information only.