Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Imported services are taxed here
An import of service — a supply from a provider outside India to you in India — is taxable, but since the foreign supplier isn’t registered here, you pay the GST under reverse charge, as IGST. This covers common items like foreign SaaS subscriptions, cloud hosting, online advertising and overseas consultants.
Pay and reclaim
You compute IGST on the foreign invoice value, pay it in cash in your GSTR-3B, and then claim it as ITC if the service is for your business — usually tax-neutral. This applies even to small recurring subscriptions, which businesses often overlook. Equalisation levy / other rules can also apply to some digital services — confirm.
A worked example
Example: you pay a US SaaS provider USD 1,000 a month. You account for IGST under RCM on the rupee value each month, pay it in cash, and claim the same as ITC. Across a year of foreign tools, this can be a sizeable figure that the department expects to see reported — missing it is a frequent audit finding. Our team can set up the RCM tracking for your foreign vendors.