GST for Foreign Businesses Selling to India (OIDAR) — 2026 Guide

If you are a business outside India selling digital services, software, or digital content to Indian consumers, you generally must register for Indian GST and charge 18% Integrated GST (IGST) from your first sale. Under India’s OIDAR rules there is no revenue threshold for B2C sales — you collect the tax directly. B2B sales to GST-registered Indian businesses instead shift the tax to the buyer under the reverse charge mechanism.

Navigating cross-border tax compliance is daunting for global digital businesses. For foreign companies selling into India, the tax landscape has changed sweepingly over the last few years, producing a streamlined — yet remarkably broad — tax net in 2026.

If your business provides digital services, software-as-a-service (SaaS), online courses, or cloud infrastructure to users in India, you are likely operating under the Online Information Database Access and Retrieval (OIDAR) framework. This guide breaks down the current (June 2026) Indian GST rules, the recent abolition of the Equalisation Levy, and the separate income-tax question of a “Significant Economic Presence.”

What counts as OIDAR? The expanded scope

OIDAR is the Indian GST framework for services delivered over the internet where supply is essentially automated. To level the field between domestic Indian tech companies and foreign providers, India taxes foreign providers on their sales to Indian consumers.

The October 2023 paradigm shift. Historically, foreign companies often argued their services fell outside OIDAR because delivery involved “minimal human intervention” (for example, a SaaS platform needing some manual backend setup, or an online course with live Q&A). The Finance Act 2023 closed this. Since 1 October 2023 the “minimal human intervention” filter has been entirely deleted from the law. Today almost any service delivered over the internet or an electronic network is OIDAR — if the internet is required for the service to function, it is almost certainly caught.

Common examples of OIDAR services:

• SaaS subscriptions — cloud software, CRM platforms, design tools, productivity suites.
• Apps and in-app purchases — mobile applications, gaming subscriptions, virtual goods.
• Online courses and e-learning — pre-recorded courses, certifications, content portals.
• Digital content and streaming — music, video, television, podcasts.
• E-books and digital publishing — downloadable or access-based materials, research databases, news paywalls.
• Cloud computing and hosting — web hosting, storage, server provisioning, infrastructure.
• Digital advertising — online ad space sold to consumers or unregistered businesses.

If your foreign digital business provides any of these to users in India, you are subject to the OIDAR provisions under the Integrated Goods and Services Tax (IGST) Act.

The decisive question: are you selling B2C or B2B?

The most important operational step is distinguishing a B2C sale from a B2B sale. Under Section 14 of the IGST Act, this distinction dictates who is responsible for paying the tax.

Selling B2C: the Non-Taxable Online Recipient (NTOR)

In an OIDAR context a B2C customer is a Non-Taxable Online Recipient (NTOR). Before October 2023 an NTOR was an unregistered person using the service for “non-business purposes” — which created confusion, because a foreign SaaS company could not realistically verify personal vs business use.

The law was simplified. An NTOR is now simply any unregistered person in India. The “business vs non-business use” qualifier was removed entirely. If your Indian customer does not provide a valid Indian GST Identification Number (GSTIN), they are legally an NTOR.

When you sell to an NTOR, the transaction is on a forward charge basis: the foreign supplier must register for Indian GST, add 18% IGST to the invoice, collect it from the Indian consumer, and remit it to the government. There is no turnover threshold — the obligation applies from the very first rupee of sales to an Indian NTOR.

Selling B2B: GST-registered businesses

If your Indian customer is a business registered for GST (and provides a valid GSTIN), it is a B2B sale under the reverse charge mechanism. The foreign supplier does not charge IGST; the Indian GST-registered buyer self-assesses and pays the 18% IGST directly to the government.

Do not confuse the terminology. Some pre-2023 materials wrongly call the B2C/NTOR requirement a “reverse charge” on the foreign supplier. That is stale. B2C is a standard forward charge collected by the foreign supplier; B2B is a reverse charge paid by the Indian recipient.

B2C vs B2B decision matrix

Aspect	B2C (selling to an NTOR)	B2B (selling to a GST-registered business)
Customer profile	Individuals, freelancers, or companies without a GSTIN	Businesses holding a valid 15-digit Indian GSTIN
Tax mechanism	Forward charge	Reverse charge
Who registers for GST?	The foreign supplier must register in India	The Indian buyer is already registered
Who pays the tax?	The foreign supplier collects and remits 18% IGST	The Indian buyer pays IGST directly
Turnover threshold	None — mandatory from the first sale	Not applicable to the foreign supplier
Invoice	Must show 18% IGST added to the price	Should state “subject to reverse charge”

Operational tip: to automate this, your checkout should ask Indian customers for a GSTIN. If a valid GSTIN is provided, strip the 18% from the total (B2B); if not, add 18% IGST (B2C).

How to comply: registration and returns

If you make B2C sales (to NTORs), India provides a simplified compliance track for foreign OIDAR providers.

1. Simplified registration (Form REG-10)

Under Rule 14 of the Central Goods and Services Tax (CGST) Rules, foreign OIDAR providers do not need a physical presence or a local subsidiary to register. You apply for a single, simplified all-India registration using Form GST REG-10.

• No Indian PAN required. Unlike domestic businesses, you do not need an Indian Permanent Account Number; you can register using your home-country tax identification number (TIN) or unique company registration number.
• Single jurisdiction. You do not register state-by-state. Foreign OIDAR registrations are centralised and processed by the Principal Commissioner of Central Tax, Bengaluru West.
• Operating the account. You generally appoint an authorised signatory (or a local tax agent) in India to operate the GST portal and file returns on your behalf; the registration itself remains in your foreign company’s name.

2. Monthly returns (Form GSTR-5A)

Once registered, compliance is a straightforward monthly filing under Rule 64 of the CGST Rules.

• The form. File Form GSTR-5A every month, reporting the total value of services provided to NTORs in India and the IGST collected.
• The deadline. Due on the 20th of the following month (your August return is due by 20 September).
• Nil returns are mandatory. If you make zero sales to India in a month, you must still file a nil return; failing to file causes compounding consequences.
• No Input Tax Credit (ITC). Foreign OIDAR providers under this scheme cannot claim ITC — you cannot offset GST paid on Indian expenses against your OIDAR liability.
• Pay before filing. The portal requires you to pay the exact tax liability via an electronic challan before it will accept the GSTR-5A.

The Equalisation Levy is fully abolished

If you have researched selling into India, you have likely seen warnings about the “Equalisation Levy” — the so-called “Google Tax.” You can disregard it entirely in 2026. It has been fully abolished:

• The 2% Equalisation Levy on non-resident e-commerce operators was abolished effective 1 August 2024.
• The 6% Equalisation Levy on digital advertising was abolished effective 1 April 2025.

These were temporary measures pending a global consensus on digital taxation, and India has now removed them. If a legacy article or advisor warns you about a 2% or 6% charge on gross digital revenues, that information is outdated — GST and income tax are the only frameworks left to consider.

Income tax: Significant Economic Presence (SEP)

GST is an indirect tax on consumption; income tax is a separate, direct tax on profits. Complying with OIDAR GST does not automatically create an income-tax liability — but your sales volume might.

Under the overhauled Income-tax Act, 2025 (which repealed the legacy 1961 Act), India can tax a foreign digital business that establishes a Significant Economic Presence (SEP). Per Section 9(8)(d) of the Income-tax Act, 2025, an SEP is a taxable “business connection” in India. The specific thresholds are set out in Rule 13 of the Draft Income-tax Rules, 2026 (still in draft).

A foreign digital business triggers an SEP if, in the Indian financial year (1 April – 31 March), it meets either:

1. Revenue threshold — payments arising from India exceed ₹2 crore (approximately US$230,000), or
2. User threshold — it systematically engages with more than 3 lakh (300,000) users in India.

If you cross either threshold, the profits attributable to your Indian operations can become subject to Indian corporate income tax.

Treaty relief (a DTAA can override SEP). The domestic SEP rule does not give India an automatic right to tax you if your home country has a Double Taxation Avoidance Agreement (DTAA) with India. For sellers in treaty jurisdictions (the US, UK, EU states, Singapore, and many others), the treaty overrides domestic law — and most treaties let India tax business profits only if you have a physical Permanent Establishment (PE) there. Because digital businesses rarely have a PE in India, they are generally shielded from Indian income tax even after crossing the SEP thresholds. To claim this protection you must obtain a Tax Residency Certificate (TRC) from your home tax authority and provide it as required.

Common mistakes and compliance traps

1. The “minimal human intervention” trap. Many foreign SaaS companies still believe their setup is manual enough to escape OIDAR. The Finance Act 2023 deleted that exemption — if you deliver software over the internet, you are an OIDAR provider.
2. Assuming a turnover threshold. Many countries have a minimum before you must register for a local digital tax. India has no threshold for B2C OIDAR — you are liable from your first sale to an Indian consumer.
3. Conflating B2C with reverse charge. If the customer has no GSTIN, the liability falls 100% on the foreign seller (forward charge), not the consumer.
4. Worrying about the Equalisation Levy. It is gone — do not let outdated software or advisors make you file for it.
5. Confusing GST with income tax (SEP). Registering for OIDAR GST does not mean you owe Indian corporate income tax. GST is a transactional tax paid by the consumer; SEP is a direct tax on profits, heavily mitigated by treaties if you hold a TRC.

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This guide explains the law as it stands in June 2026; it is general information, not tax advice for your specific situation. BatchWise coordinates OIDAR registration and monthly GSTR-5A filing for foreign sellers — see our services or talk to us.