Do you charge GST on SaaS subscriptions sold to foreign customers?

Software as a service (SaaS) is one of the cleanest cases of a service export: the product is built in India, delivered over the internet, and paid for by card or bank transfer from abroad. Most of the time no GST is charged. The answer depends on who the customer is, where they are, and how the money reaches you.¹²

This guide is for Indian SaaS founders, indie developers, plugin and template sellers, and agencies running hosted products. It covers the export test, place of supply, consumer versus business buyers, invoices, and the foreign exchange rules, as of 28 October 2026.¹⁵

What is GST on SaaS sold to foreign customers?

GST on SaaS sold to foreign customers is nil when the sale is an export of services, because an export of services is a zero-rated supply under section 16 of the Integrated Goods and Services Tax (IGST) Act; no GST is charged on it while input tax credit on your costs stays available.³ A SaaS subscription is an export when all five conditions in section 2(6) are met:¹

• Supplier: your business is located in India.¹
• Recipient: the subscriber is located outside India.¹
• Place of supply: the place of supply is outside India.¹
• Payment: payment is received in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India (RBI) permits.¹
• Distinct persons: the supplier and recipient are not merely establishments of a distinct person.¹

If any condition fails, the sale is taxed like a domestic supply.

How is the place of supply decided for SaaS?

The place of supply for SaaS is the location of the recipient. Online information and database access or retrieval (OIDAR) services, which include cloud services and software supplied over the internet, follow section 13(12) of the IGST Act.¹² For SaaS that is not OIDAR, for example a hosted product with heavy custom implementation work, the default rule in section 13(2) also uses the location of the recipient.² Section 2(14) defines the location of the recipient: the registered place of business, a fixed establishment, the establishment most directly concerned, or, failing these, the recipient's usual place of residence.¹

Which SaaS customers qualify for GST zero-rating?

SaaS customers located outside India qualify for zero-rating, and the subscriber's type decides what evidence of location you keep.¹²

Section 13(12) lists seven indicators (address given online, card country, billing address, IP address, bank, SIM country code, landline) and deems a recipient to be in India when any two non-contradictory ones point to India.² Using the same signals to evidence a foreign location is a sensible record-keeping practice, though the law does not prescribe it for exports.

How does a registered SaaS business sell to foreign customers without charging GST?

A registered SaaS business sells to foreign customers without charging GST by filing a Letter of Undertaking (LUT) and invoicing without IGST.³¹¹

1. Check the conditions: confirm all five conditions in section 2(6) hold for each subscriber.¹
2. Keep location evidence: record billing address, card country and IP location.²
3. File an LUT: in FORM GST RFD-11 for the financial year, before the first export invoice.¹¹ See how to file an LUT.
4. Issue export invoices: with the rule 46 endorsement, the recipient's name and address, and the country of destination.⁴ Card-billing systems can generate these if configured; check the endorsement text.
5. Generate e-invoices: if your aggregate turnover is above ₹5 crore, under Notification No. 10/2023-Central Tax.¹⁰ See e-invoicing for export of services.
6. Track collection and the EDF: see the deadlines below.⁵⁶

If you are not registered, you charge no GST on any invoice. A supplier making only inter-State supplies of taxable services with aggregate turnover up to ₹20 lakh is exempt from registration, and exports count towards that turnover.⁸

What changes if SaaS is sold through a merchant of record or marketplace?

When a merchant of record or marketplace sells your software to end users in its own name, your customer under the contract is usually that platform, not the end user. Read the platform's terms to see who buys from whom: if the platform resells to end users, your supply is to the platform, and the export test is applied to the platform's location.¹ If the platform only acts as your agent and the contract is between you and each end user, the test is applied to each end user. See merchant of record in India and, for app stores, app store income, GST and tax.

What deadlines and limits apply to SaaS export receipts?

SaaS receipts from abroad are export proceeds under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (the 2026 Regulations), in force from 1 October 2026, so the realisation and EDF deadlines apply alongside GST rules.⁵⁶

How the EDF works for many small card payments collected through a payment aggregator is not yet clear in practice; ask your bank or aggregator.

What happens if a foreign SaaS subscriber does not pay?

If a foreign SaaS subscriber does not pay, the GST and FEMA deadlines keep running from the invoice date.⁵¹¹

• GST under an LUT: under rule 96A, if payment is not received within one year of the invoice date, or the period allowed under FEMA including any RBI-permitted extension if that is later, IGST with interest becomes payable.¹¹
• FEMA realisation: the full value must be realised within nine months from the invoice date, or twelve months if invoiced in rupees.⁵
• Condition (iv): an export of services needs payment received in convertible foreign exchange or permitted rupees, so an unpaid invoice does not meet the export test.¹

Track each unpaid invoice against both deadlines.

Which payment routes suit SaaS export receipts?

SaaS export receipts usually arrive by card through a payment aggregator or by bank transfer, and the route affects the transaction limit and the EDF process.⁶⁷ This page does not compare providers; see international payments for SaaS companies in India.

• Payment aggregator: a PA-CB can process export transactions of up to ₹25 lakh per transaction under the RBI Master Direction of 15 September 2025.⁷
• Bank transfer: suits enterprise invoices above the PA-CB limit.⁷
• Merchant of record: changes who your customer is, as explained above.¹

Check how your chosen route reports export receipts to your bank.

What are the common mistakes with GST on SaaS sold abroad?

The common mistakes with GST on SaaS sold abroad come from weak location evidence and missed procedures.¹²¹¹

• No location records: keep billing address, card country and IP data for consumer subscribers.²
• Billing your own branch: condition (v) fails.¹
• Invoicing before the LUT: file it before the first export invoice of the year.¹¹
• Wrong invoice text: the rule 46 endorsement and country of destination are required.⁴
• Ignoring the platform contract: a merchant of record may be your real customer.¹

The answer for any specific product depends on how it is sold and delivered. For unusual set-ups, such as resellers, usage-based billing collected by a third party, or customers with offices in India, confirm with a chartered accountant, or run your facts through the export of services checker.