Import of Services Under GST: Rules, Rates, and ITC

Import of services under GST RCM generally applies when a service is imported by a person in India and the supply falls within a category notified for reverse charge. The nature of the recipient, service, and transaction must be checked before deciding who pays.

A person required to pay tax under RCM may have to obtain GST registration irrespective of the usual turnover threshold, subject to the specific statutory exemptions and exceptions. Check your facts before relying on the general threshold.

To determine whether a transaction is an import of services under GST, review the supplier, recipient, place of supply, and consideration or related-party status.

• Supplier location: confirm that the service provider is located outside India.
• Recipient location: establish that the recipient is located in India.
• Place of supply: apply the relevant rule under Section 13 of the IGST Act. The recipient-location rule applies to many services, but several exceptions exist.
• Consideration and relationship: check whether payment is involved. Services between related persons or establishments in the course or furtherance of business may be treated as supplies even without consideration under Schedule I of the CGST Act.

Once you establish the taxability of the transaction, determine whether reverse charge applies to your category of service and whether any exemption is available.

Under import of services under GST RCM, the Indian recipient—not the foreign supplier—is liable to pay IGST when the service is covered by a reverse-charge notification. The recipient must register for GST where registration is required, discharge the tax liability, and report it in the relevant return. After payment, a registered recipient may claim eligible input tax credit subject to the conditions in the CGST Act.

Example: an Indian agency subscribing to an overseas analytics platform for business use should examine the service classification, place of supply, and applicable RCM entry. If RCM applies, the Indian agency pays the IGST; it does not simply pass the tax obligation to the foreign vendor.

Some import of services GST exemptions apply to specified recipients or uses under the applicable notifications. Exemption is not automatic merely because the recipient is an individual or the supplier is overseas.

For OIDAR services supplied by a foreign provider to a non-taxable online recipient in India, the overseas supplier may be responsible for registration and payment. Check the specific exemption notification and OIDAR provisions before treating an imported service as exempt.

GST rates for imported services commonly include 5%, 12%, 18%, and 28%, depending on the service. The applicable GST rates are determined by the service classification, generally using a Service Accounting Code (SAC), rather than an HSN code used for goods. The HSN codes and GST law should be read with the applicable rate notifications and GST structure.

These are indicative examples, not a substitute for checking the current rate notification and exact SAC classification. For imported services, IGST is the tax charged; the service’s classification determines the rate.

Online Information and Database Access or Retrieval (OIDAR) services are digitally delivered services that rely on the internet or an electronic network and are essentially automated, with minimal human intervention. Examples may include online subscriptions, cloud storage, and software access. Where the Indian recipient is registered and the transaction is covered by RCM, the recipient generally pays IGST. Where the recipient is a non-taxable online recipient, the overseas OIDAR supplier is generally responsible for registration and payment in India under the special rules. The import of services under GST must therefore be assessed separately for OIDAR transactions.

Yes. You may claim ITC on IGST paid under import of services under GST RCM if you meet the applicable conditions:

• You are registered under GST and the service is used or intended to be used in the course or furtherance of business.
• You have paid the IGST liability under RCM in cash and hold the required records and supporting documents.
• The credit is claimed in the appropriate tax period after payment and is otherwise eligible under the CGST Act.
• The service does not fall within blocked-credit provisions under Section 17(5), and the credit is not restricted by other rules.

Where a service is used partly for business and partly for non-business purposes, credit may need to be apportioned. Personal consumption and other blocked-credit categories cannot be claimed merely because IGST was paid.

Import of services under GST can arise when an Indian business receives services from a related entity or its own establishment outside India, even if no payment is made, where the transaction is in the course or furtherance of business. Schedule I, paragraph 4 of the CGST Act treats specified supplies between related persons or distinct persons as supplies even without consideration. The transaction must be valued under the applicable rules, and the recipient should examine the RCM entry and registration requirements before reporting it.

If you fail to pay IGST due under reverse charge mechanism GST, the tax may be recovered with interest and applicable penalties. The exact consequence depends on the financial year, whether the case involves fraud or suppression, and the provisions then in force.

If an unexpected tax demand or delayed payment puts pressure on your working capital, review your cash flow and available funding options rather than postponing a statutory payment. A business loan may help meet eligible operating expenses and preserve liquidity, subject to approval. You can check your business loan eligibility with Bajaj Finance before deciding whether borrowing is appropriate. A loan does not remove or defer your GST liability.

Whether you should import services under GST or hire a local provider depends on expertise, total cost, contractual risk, and the compliance work you can manage. Compare the full commercial picture rather than treating GST alone as the deciding factor.

If importing a specialist service supports your business plans, assess the full cost, including IGST cash flow, currency exposure, and contractual obligations. For broader working-capital needs, you can check your pre-approved business loan offer with Bajaj Finance to review whether an offer is available and understand its amount, pricing, and repayment terms before making a borrowing decision.

Bajaj Finance offers a business loan that eligible businesses may consider for working-capital needs, including managing cash-flow gaps around GST payments under RCM. The loan amount, approval, and disbursal depend on your business profile and lender assessment.

• Loan amount: up to Rs. 80 lakh, subject to eligibility and approval.
• Disbursal: funds may be disbursed in as little as 48 hours of approval, subject to completion of checks.
• Interest rate: the range is 14%–23.50% per annum; review the applicable offer and business loan interest rate details.
• Application: the application process is online; approval and disbursal remain subject to verification.

A business loan is a borrowing commitment, not a substitute for GST compliance. Compare the total borrowing cost, fees, repayment schedule, and your ability to repay before using credit to meet tax or working-capital requirements.