India’s Goods and Services Tax (GST), introduced on July 1, 2017, is a destination-based, value-added tax system that replaced multiple indirect taxes like excise duty, VAT, and service tax. Its purpose is to simplify taxation and remove cascading effects. Governed by the GST Council (comprising the Union Finance Minister and State Finance Ministers), GST regulations are frequently updated to reflect economic conditions and administrative improvements.
Recent Key Updates (2024–2025) The GST Council’s 55th meeting (December 2024) and subsequent decisions have brought the following changes:
- GST on Fortified Rice Kernel was reduced from 18% to 5%.
- Gene therapy is fully exempted from GST.
- Bank penalties (“non-compliance charges”) and vouchers are clarified as non-taxable.
- Dealer margin on used vehicles (including EVs) increased from 12% to 18%.
- Insurer contributions to the motor accident fund are now exempt.
- The amnesty scheme was launched in November 2024 to waive past GST interest/penalties.
- As of April 2025, GST registration must follow a streamlined document list—no extra documentation may be requested.
- The B2C digital services exemption (OIDAR) was withdrawn effective October 1, 2023. Foreign digital service providers to Indian consumers must register and charge 18% GST.
Structure of India’s GST GST in India follows a dual structure:
- Intra-state: Tax is split between Central GST (CGST) and State/Union Territory GST (SGST/UTGST).
- Interstate/Imports: Attract Integrated GST (IGST), which is centrally collected and allocated to the destination state.
GST Slabs
| GST Rate | CGST + SGST | IGST | Examples |
| 0% | 0% + 0% | 0% | Exports, SEZ supplies |
| 5% | 2.5% + 2.5% | 5% | Basic food items, medicines |
| 12% | 6% + 6% | 12% | Processed foods, appliances |
| 18% | 9% + 9% | 18% | Electronics, professional services |
| 28% | 14% + 14% | 28% | Luxury cars, tobacco (plus compensation cess) |
Some items like petrol, diesel, aviation turbine fuel, and alcoholic beverages remain outside the GST regime.
Registration Requirements for Foreign Businesses
- Any business making taxable supplies in India must register.
- No turnover threshold for inter-state suppliers, non-resident taxable persons, e-commerce operators, and agents.
- Foreign e-commerce platforms must register and collect GST. An Indian agent is required if the foreign operator lacks a physical presence.
- Foreign OIDAR service providers (e.g., streaming or online education) must register and pay 18% IGST—no exemption based on turnover.
- From April 2025, authorities may request only listed documents during registration.
Returns and Penalties
- Monthly/Quarterly Returns: GSTR-1 (sales), GSTR-3B (self-assessed tax).
- Annual Return: GSTR-9 by December 31.
- Non-resident Suppliers: File GSTR-5 (monthly).
- Foreign OIDAR Providers: File GSTR-5A.
- E-commerce Operators: File GSTR-8 (TCS).
Penalties:
- Late GSTR-3B: ₹20/day (₹10 CGST + ₹10 SGST), capped.
- Late GSTR-1: ₹200/day.
- Interest: 18% p.a. on late tax payments.
- IGST-only returns are exempt from late fees.
Input Tax Credit (ITC)
- Businesses can claim ITC on input goods/services used for taxable outputs.
- Foreign firms with Indian branches can claim ITC on imports and local inputs.
- Exports are zero-rated; exporters can claim ITC refunds via LUT/bond or by paying and refunding IGST.
- Blocked credits: personal/luxury expenses (e.g., personal-use vehicles).
E-Invoicing and E-Way Bills
- E-Invoicing: Mandatory for B2B businesses with turnover above ₹50 million (~$600,000) from August 1, 2023. IRNs and QR codes are required.
- E-Way Bills: Required for transport of goods above ₹50,000. Not applicable to services-only transactions.
- From January 2025: E-way bills are disallowed for invoices older than 180 days.
Cross-Border Scenarios
- SaaS (B2B): US SaaS company sells to GST-registered Indian firm. The Indian buyer pays IGST under reverse charge and claims ITC.
- Online Education (B2C): A UK-based platform selling to Indian consumers must register and charge 18% IGST.
- Goods Exports/Imports: IGST is paid on import and is refundable if goods are re-exported. Indian service exporters apply 0% GST and claim ITC.
- E-commerce: The Chinese marketplace serving Indian sellers must register, collect 1% TCS, and file GSTR-8.
Strategic Takeaways for Foreign Businesses
- GST is destination-based: Exports are zero-rated, and imports attract IGST.
- Registration is mandatory for digital and e-commerce firms.
- Input credits ensure tax neutrality, but only if compliance is timely and accurate.
- E-invoicing and e-way bill systems are critical for operations and must be integrated.
- Stay alert to GST Council decisions, as rate changes and clarifications (e.g., on vouchers and digital services) have direct impacts on compliance.
Conclusion India’s GST system is evolving toward greater transparency, simplification, and digital enforcement. For international businesses, understanding and complying with this system—especially regarding registration, invoicing, and credit mechanisms—is key to successful and compliant operations in the Indian market.
How TaxDo Can Help Digital Sellers Stay Compliant in India
Navigating India’s GST landscape can be complex, especially for foreign digital sellers. At TaxDo, we specialize in helping international businesses comply with India’s digital tax framework, so you can focus on growth without the risk of penalties or delays.
Here’s how TaxDo supports your business:
GST Registration & Authorized Signatory Support
We help you register for GST with India’s tax authority (GSTN) and appoint a local Authorized Signatory, ensuring smooth compliance and communication.
Accurate and Timely GST Return Filing
Our tax professionals manage your GSTR-5A filings monthly, meeting deadlines and avoiding late fees.
GST Payment Guidance
We support you with accurate tax calculations and assist in the secure processing of payments to the Indian tax authorities through your registered account.
B2B GSTIN Verification
Verify GSTINs of your Indian B2B clients via official government portals to reduce errors and ensure compliance.
Managing GST Notices and Audit Inquiries
If India’s tax authorities initiate inquiries or audits, we help you respond professionally and on time with all necessary documentation.
Whether you’re a SaaS platform, e-learning provider, ad network, or subscription-based service, TaxDo is your trusted partner for digital GST compliance in India.
Contact us today to simplify your tax journey and schedule a free consultation