An Indian GST-registered business that receives a service from a supplier located outside India, with the place of supply in India, has made an import of services (section 2(11) IGST Act) and must pay IGST itself under reverse charge — section 5(3) of the IGST Act read with entry 1 of Notification No. 10/2017-Integrated Tax (Rate). This covers management fees, software licences, cloud subscriptions, consulting and most other services bought from a foreign parent or vendor. Services received from a related foreign entity in the course of business are a supply even without consideration (Schedule I, para 4). The tax is paid in cash through GSTR-3B, a self-invoice is issued under section 31(3)(f) within 30 days, and the IGST paid is available as input tax credit under section 16 if the service is used for business. Where the Indian recipient is entitled to full ITC, Circular No. 210/4/2024-GST deems the invoiced value — or nil, if no invoice is issued — to be the open market value for related-party imports.
Key facts
| Provision | Old reference (to 31 Mar 2026) | New reference (from 1 Apr 2026) | Rate / threshold | Timing | Form |
|---|---|---|---|---|---|
| Import of services — definition | s. 2(11) IGST Act | Unchanged | Supplier outside India; recipient in India; place of supply in India | — | — |
| Reverse charge on import of services | s. 5(3) IGST; Notification 10/2017-IT(R), entry 1 | Unchanged | Recipient liable (other than non-taxable online recipient) | — | GSTR-3B Table 3.1(d) |
| Related-party import without consideration | Schedule I, para 4, CGST Act | Unchanged | Deemed supply in course of business | — | — |
| Time of supply — RCM services | s. 13(3) CGST Act | Unchanged | Earlier of payment date or 61st day from supplier's invoice; for related parties, date of entry in recipient's books | — | — |
| Self-invoice | s. 31(3)(f); Rule 47A | Unchanged | — | Within 30 days of receipt of service (from 1 Nov 2024) | Self-invoice |
| Valuation — related party | Rule 28; second proviso; Circular 210/4/2024-GST | Unchanged | Invoice value = OMV where full ITC available; nil if no invoice | — | — |
| Input tax credit of RCM tax | s. 16; s. 17(5) | Unchanged | Available if used for business and not blocked | Claimed in the month of payment | GSTR-3B Table 4 |
| OIDAR to business recipients | s. 13(12); s. 14 IGST | Unchanged | Registered recipient pays RCM; supplier registers only for non-taxable online recipients | — | — |
| Exemption — services from a foreign related party for which full ITC available (domestic) | Circular 199/11/2023-GST (domestic cross charge) | Unchanged | Parallel principle applied to imports by Circular 210 | — | — |
What is an import of services
Three elements under section 2(11) of the IGST Act: the supplier is located outside India; the recipient is located in India; and the place of supply is in India under section 13. For most services received by an Indian business from abroad — management and administrative support from the parent, software licences and SaaS, cloud hosting, legal and consulting fees, marketing services, recruitment, royalties for use of IP — the default rule in section 13(2) places the supply at the Indian recipient's location, and all three elements are met. Exceptions follow the section 13 carve-outs (for example, a service performed on goods abroad, or admission to an event held abroad, is not an import).
Who pays and how
Entry 1 of Notification No. 10/2017-Integrated Tax (Rate) under section 5(3) makes "any person located in the taxable territory other than a non-taxable online recipient" liable to pay IGST on any service supplied by a person located in a non-taxable territory. The Indian recipient computes IGST at the rate applicable to the service (18% for most services), pays it in cash through the electronic cash ledger in GSTR-3B (reverse charge liability cannot be discharged from the credit ledger), and claims the same amount as input tax credit in the same or a later return, subject to section 16 and the blocked-credit list in section 17(5). For a fully taxable business the net cash cost is nil apart from the timing gap; for a business making exempt supplies, or for blocked items, the reverse charge is a real cost.
Related-party services without an invoice
Paragraph 4 of Schedule I to the CGST Act deems the import of services by a person from a related person, or from any of its other establishments outside India, in the course or furtherance of business, to be a supply even if made without consideration. Group IT systems, shared HR platforms, access to the parent's brand or know-how, and head-office management time provided to the Indian subsidiary free of charge are therefore supplies on which the Indian subsidiary should self-assess IGST. The valuation rule for related parties (Rule 28) applies — but its second proviso says that where the recipient is eligible for full ITC, the value declared in the invoice is deemed the open market value. Circular No. 210/4/2024-GST (26 June 2024) extended this to imports: where the foreign related party issues an invoice, that value is accepted; where no invoice is issued, the value may be deemed nil, and no tax arises — provided the Indian recipient is entitled to full ITC. For an export captive with full credit entitlement, this removes most of the exposure on un-invoiced group services; it does not help a recipient with exempt output or blocked credits.
Time of supply and the self-invoice
Under section 13(3) of the CGST Act the time of supply for reverse-charge services is the earlier of the date of payment and the sixty-first day after the supplier's invoice; where that cannot be determined, the date of entry in the recipient's books. For associated enterprises located outside India, the second proviso fixes the time of supply as the date of entry in the recipient's books or the date of payment, whichever is earlier — so accruing a management fee in the books triggers the liability even if the parent has not invoiced. A self-invoice under section 31(3)(f) must be issued within 30 days of receipt of the service (Rule 47A, effective 1 November 2024); ITC is restricted to the financial year in which the self-invoice is issued, and interest runs from the time of supply if the tax is paid late.
OIDAR
For online services (cloud, SaaS, downloads, online advertising) the place of supply is the recipient's location under section 13(12). A registered Indian business recipient pays under reverse charge as above. Only where the recipient is a "non-taxable online recipient" (an unregistered person, or a registered person receiving the service for non-business purposes) does the foreign supplier have to register in India under section 14 and pay the tax itself.
Interaction with withholding tax
The same payment to the foreign parent is tested separately under section 393(2) of the Income-tax Act, 2025 for withholding and reported in Forms 145/146. GST reverse charge and income-tax withholding are independent; neither reduces the other. See Forms 145/146.
Worked example
An Indian subsidiary records the following from its foreign group in a month: management fee invoice from the parent USD 50,000 (₹42 lakh); SaaS subscriptions from a US vendor USD 4,000 (₹3.36 lakh); use of the group's HR platform, provided by the parent without charge or invoice.
| Item | Import of services? | Value | IGST @18% (RCM) | ITC |
|---|---|---|---|---|
| Management fee | Yes — s. 13(2) | ₹42.00 lakh (invoice value = OMV, full ITC) | ₹7.56 lakh | ₹7.56 lakh |
| SaaS subscription (OIDAR) | Yes — s. 13(12); registered recipient | ₹3.36 lakh | ₹0.60 lakh | ₹0.60 lakh |
| Un-invoiced HR platform access from related party | Yes — Schedule I para 4 | Nil — Circular 210/4/2024 (no invoice; full ITC) | Nil | — |
The company issues two self-invoices within 30 days, pays ₹8.16 lakh in cash in GSTR-3B Table 3.1(d), and claims ₹8.16 lakh of ITC in Table 4. The management fee is separately subject to withholding under section 393(2) of the Income-tax Act, 2025 and Form 146 certification.
Common mistakes we see
- Not self-assessing IGST on management fees because 'the parent is related and there is no GST abroad'.
- Paying reverse-charge tax through the credit ledger. It must be paid in cash.
- Missing the time of supply for associated enterprises — the liability arises on booking the accrual, not on receiving the invoice.
- No self-invoice, or self-invoices issued months later, which restricts ITC and attracts interest.
- Treating OIDAR subscriptions paid by corporate card as outside GST because the vendor did not charge it.
- Relying on the nil-value position in Circular 210 while making exempt supplies or claiming only partial ITC.
Frequently asked questions
Is GST payable on management fees paid to a foreign parent?
Yes. It is an import of services; the Indian company pays IGST under reverse charge under section 5(3) of the IGST Act and Notification 10/2017, and can claim it as input tax credit if used for business.
Do I pay GST on services received free from my foreign parent?
They are deemed supplies under Schedule I para 4. Where no invoice is issued and the Indian company is entitled to full input tax credit, Circular 210/4/2024-GST permits the value to be treated as nil, so no tax arises. Document the position.
Can reverse-charge tax be paid using ITC?
No. Reverse-charge liability must be discharged in cash. The tax paid is then available as ITC.
When is the tax due on an imported service?
On the earlier of payment or the 61st day after the supplier's invoice; for associated enterprises abroad, on the earlier of payment or the date the expense is entered in the Indian company's books.
Is a self-invoice mandatory?
Yes, under section 31(3)(f) of the CGST Act, within 30 days of receiving the service (Rule 47A). ITC on reverse-charge supplies is tied to the self-invoice.
Does the foreign SaaS vendor have to register in India?
Only for supplies to non-taxable online recipients. For a GST-registered business customer, the customer pays under reverse charge.
Does paying GST under reverse charge affect TDS under section 393?
No. Income-tax withholding on the payment to the non-resident is assessed independently and reported through Forms 145 and 146.
Sources
Primary sources only. Statutory text is read from the official publication; where a provision has been renumbered, the pre-2026 reference is given alongside so older material can be reconciled.
- CGST Act, IGST Act, CGST Rules and GST circulars — CBIC
- GST portal — LUT (Form GST RFD-11), refunds and returns
Last reviewed on 1 November 2026 by Monal Agarwal, FCA, VMS Jhunjhunwala & Co. Law stated as at that date; the Income-tax Act, 2025 and Income-tax Rules, 2026 apply from 1 April 2026.
