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Do I pay GST on foreign software subscriptions if I am a registered exporter?

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Editorial team, serviceexportguide.com
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Editorial team
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2 min read

Short answer

Usually yes, under reverse charge. Entry 1 of Notification No. 10/2017-Integrated Tax (Rate), issued under section 5(3) of the IGST Act, makes a recipient in India pay IGST on any service from a supplier located outside India, except where the recipient is a "non-taxable online recipient".12 A registered exporter is not one, so it pays IGST on its foreign design, editing or project tools itself, and that tax counts as input tax.134

An Indian motion designer pays for a foreign animation suite, a web agency for a project management tool and a hosting platform, and a SaaS founder for cloud infrastructure, all billed from abroad in dollars. The export side of their business is zero-rated, but these purchases are imports of services.

Why does a registered exporter pay GST on foreign subscriptions?

A registered exporter pays GST on foreign subscriptions because of reverse charge. Section 5(3) of the IGST Act lets the Government notify supplies on which the recipient pays the tax.2 Entry 1 of Notification No. 10/2017-Integrated Tax (Rate) covers "any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient", with the recipient in the taxable territory liable.1

A "non-taxable online recipient" is an unregistered person receiving online information and database access or retrieval (OIDAR) services in India, under section 2(16) of the IGST Act.3 A GST-registered freelancer or agency is not one, so it is the person liable for IGST on its foreign software bills.13

Who pays if I am not registered?

If you are unregistered and buy an online software subscription, the foreign supplier is usually liable. Section 14 of the IGST Act makes a supplier located outside India pay IGST on OIDAR services received by a non-taxable online recipient.5 That is why some foreign tools add GST at checkout for Indian users without a GSTIN.

Services that are not OIDAR, such as a foreign freelancer's design work, still fall under entry 1 for any recipient other than a non-taxable online recipient, and section 24(iii) of the CGST Act requires persons liable to pay tax under reverse charge to register.16 If that applies to you, take advice before assuming you can stay unregistered.

Does the exporter get the tax back?

Generally yes. Section 2(62) of the CGST Act defines input tax to include tax payable under section 5(3) of the IGST Act.4 Subject to the usual conditions, the reverse charge IGST becomes credit you can use, and an exporter under a Letter of Undertaking can include eligible credit on input services in the refund of unutilised credit. See refund of ITC on zero-rated supplies.

Where can I read more?

The reverse charge guide covers timing, reporting in returns and payment in cash, and the OIDAR guide explains which digital services count as OIDAR. Confirm your registration position with a chartered accountant (CA).

How did we verify this?

We checked this page against the sources below on 28 October 2026. Read our methodology or report an error.

  1. [1]GST Council: Notification No. 10/2017-Integrated Tax (Rate), 28 June 2017, updated version as amended up to 1 April 2019, entry 1
  2. [2]CBIC: IGST Act, 2017, section 5 (levy and collection), sub-section (3)
  3. [3]CBIC: IGST Act, 2017, section 2, clauses (16) non-taxable online recipient and (17) OIDAR services
  4. [4]CBIC: CGST Act, 2017, section 2, clause (62) input tax
  5. [5]CBIC: IGST Act, 2017, section 14 (payment of tax by a supplier of OIDAR services)
  6. [6]CBIC: CGST Act, 2017, section 24 (compulsory registration in certain cases)

Frequently asked questions

The foreign software company already charged me GST. Do I pay again?+

Check your GST status in the account. A supplier collects IGST under section 14 only from a non-taxable online recipient, which is an unregistered person; a registered business normally pays under reverse charge instead.35

Can I use my credit ledger to pay the reverse charge IGST?+

The reverse charge guide covers how reverse charge IGST is paid and reported, and when it can then be claimed as credit. Confirm the mechanics with your CA.

I am not registered. Do I pay GST on my design tool subscription?+

For an online software subscription, usually the foreign supplier is liable under section 14, because an unregistered recipient is a non-taxable online recipient.35

Does reverse charge apply when I hire a foreign freelancer?+

Usually, since entry 1 covers any service from a supplier outside India to a recipient in India other than a non-taxable online recipient. Section 24 requires persons liable under reverse charge to register.16

This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.

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