Foreign companies doing business with India: the GST obligation set
Five ways a foreign company acquires an Indian tax obligation without opening an office.
A foreign company can attract GST obligations in India as a non resident taxable person supplying goods or services in India, as a supplier of online information and database access or retrieval services to unregistered recipients, as an offshore supplier of online money gaming, through an Indian branch or project office that is a distinct person, and indirectly where its Indian customers must discharge reverse charge on imports of services. Each route has its own registration, valuation and compliance consequence.
The five routes
Non resident taxable person under Section 24 read with Section 27: mandatory registration for a person who occasionally undertakes transactions involving supply of goods or services in India with no fixed place of business, with an advance deposit of estimated tax and a limited validity period.
OIDAR supplier under Section 14 of the IGST Act: registration under the simplified scheme for supplies to non taxable online recipients, widened materially by the 2023 amendments.
Offshore online money gaming supplier: a specific registration requirement with enforcement consequences for non compliance.
Branch or project office: a distinct person, registered, taxable on Indian supplies, and liable on reverse charge for head office charges.
Indirect exposure: where no Indian presence exists, the Indian customer discharges reverse charge on the import of services, which becomes a commercial negotiation about gross up and about the customer's credit.
The contractual questions that follow
Who bears the tax. A gross up clause in a services contract with an Indian customer determines whether the reverse charge is a cost to the customer or to the foreign supplier.
Whether the customer can take credit, which determines whether the tax is a real cost or a cash flow item, and therefore how hard the negotiation will be.
Withholding tax and GST together, since the two are frequently confused in negotiation and the combined cost is what matters commercially.
Documentation the Indian customer will need — the invoice, the description of the service, and the place of supply position — to support its own credit.
The practical advice
Determine the route before contracting. A foreign supplier that discovers a registration obligation after supplying has an exposure with interest and penalty and no easy cure.
For OIDAR, determine the registration status of the Indian recipients, because that single fact decides whether the supplier or the recipient accounts for the tax.
For a branch, build the reverse charge process for head office charges from the first month.
For an equipment supply with installation, examine whether the arrangement creates a taxable presence and whether a project office or a non resident registration is required.
What to do on Monday
Determine the applicable route before contracting, not after the first supply.
For digital supplies, establish the registration status of Indian recipients.
Negotiate the gross up clause with the credit position of the customer in view.
Build the reverse charge process for head office charges from the branch's first month.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Does a foreign company need GST registration to sell software to Indian businesses?
Where the Indian recipient is registered, the recipient accounts for the tax under reverse charge. Where recipients are unregistered, the OIDAR scheme may require the supplier to register.
What is a non resident taxable person?
A person who occasionally undertakes supplies in India with no fixed place of business here; registration is mandatory with an advance deposit and a limited validity.
Can a foreign supplier claim Indian credit?
A non resident taxable person's credit entitlement is restricted. Plan the procurement accordingly.
Who bears the reverse charge?
Legally the Indian recipient. Commercially it depends on the gross up clause.
Does an Indian subsidiary solve the problem?
It changes the analysis rather than removing it; the subsidiary is a separate taxable person and intra group supplies become related party supplies.
In this cluster
- Place of supply under GST: the full decision tree
- Intermediary services: characterisation, exposure and structuring
- Export of services: the five conditions and where claims fail
- Dharmendra M. Jani: the constitutional attack on intermediary taxation, and where it stands
- Mohit Minerals: ocean freight, composite supply, and the sentence that changed GST federalism
- Import of services and reverse charge under Section 5(3) of the IGST Act
- OIDAR services: registration, compliance and the 2023 amendment
- Bill to ship to transactions and Section 10(1)(b)
- High seas sales, bonded warehouse transfers and Schedule III
- Merchant trade and out and out supplies
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.