GST for Foreign-Owned Companies in India: Registration & Compliance: Everything You Need to Know (2026)

Here’s a fact that surprises almost every foreign business: you can owe GST in India without ever setting foot there. Sell a software subscription to a customer in Mumbai, stream content to viewers in Delhi, or ship goods to a buyer in Bengaluru — and India’s GST system may require you to register, charge tax, and file monthly returns, even with zero physical presence in the country.

For foreign-owned companies, GST isn’t one rulebook — it’s three, depending on how you reach the Indian market. A wholly-owned subsidiary is taxed like any Indian company. A foreign business making occasional supplies becomes a “Non-Resident Taxable Person.” And a foreign digital company selling to Indian consumers falls under the fast-tightening “OIDAR” regime. Get your category right and compliance is straightforward; get it wrong and you risk show-cause notices, 18% back-taxes, and penalties — and in 2026, Indian authorities are actively hunting unregistered foreign sellers using payment-gateway data.

This guide untangles all three routes — who must register, the thresholds (or lack of them), reverse charge, GSTR-5A, place-of-supply rules, input tax credit, and penalties — so a foreign company knows exactly where it stands. Let’s decode it.

1. Three Ways a Foreign Company Meets GST

The single most important step is identifying which category you fall into — because the rules, forms, and thresholds differ sharply. Here’s the map:

Category	Who it covers	GST treatment
Permanent establishment	Foreign company with an Indian subsidiary, branch, or project office	Taxed as a regular Indian taxpayer
Non-Resident Taxable Person (NRTP)	Foreign business making occasional supplies with no fixed place in India	Mandatory temporary registration, advance tax
OIDAR provider	Foreign digital company selling online services to Indian consumers	Simplified registration, GSTR-5A, 18% IGST

Which route applies to you?Foreign company, Indian revenueIndian entitySubsidiary, branch or LORegisters like anyIndian businessGSTR-1 · GSTR-3BFull ITC availableNRTPNo fixed place in IndiaRegister 5 daysbefore supplyAdvance tax depositNo ITCOIDARDigital services, no entityRegister from thefirst B2C rupeeGSTR-5A monthlyNo threshold at allThe OIDAR route catches companies that never intended an Indian presence — and it has no minimum turnover.

2. Route 1: Foreign-Owned Companies with an Indian Presence

If your foreign company operates through an Indian subsidiary, branch, or project office, GST treats it as a regular Indian taxpayer. That means:

• Threshold-based registration: generally ₹40 lakh turnover for goods, ₹20 lakh for services (lower in special-category states) — though several conditions force registration regardless of turnover.
• Standard returns: GSTR-1 and GSTR-3B (monthly or quarterly under QRMP), plus the annual GSTR-9.
• Input Tax Credit available: a registered subsidiary/branch can claim ITC on its business inputs, subject to standard conditions.

In short, an Indian subsidiary follows the same GST playbook as any domestic company — the “foreign” element matters more for FEMA and income tax than for everyday GST.

3. Route 2: Non-Resident Taxable Person (NRTP)

An NRTP is a foreign business that occasionally supplies goods or services in India without a fixed place of business here — for instance, a foreign company exhibiting and selling at an Indian trade fair, or fulfilling a short-term contract. The rules are strict:

• No threshold: registration is mandatory for any taxable supply, from the first transaction.
• Register before you start: the application must be filed at least 5 days before commencing business in India.
• Advance tax deposit: the NRTP must deposit an amount equal to the estimated GST liability for the registration period, upfront.
• Temporary validity: registration is valid for up to 90 days, extendable by another 90 days.

4. Route 3: OIDAR — the Digital Economy Trap

This is the fastest-growing — and most misunderstood — category. OIDAR (Online Information and Database Access or Retrieval) covers foreign companies delivering automated digital services over the internet to Indian customers: cloud software and SaaS, streaming, online gaming, e-books, digital advertising, e-learning, and data services.

The three-part test

A service is OIDAR if it is: (1) delivered over the internet, (2) essentially automated with minimal human intervention, and (3) impossible to provide without information technology. If all three are true, you’re in OIDAR territory.

What OIDAR providers must do

• Register regardless of turnover (Section 24(xi) CGST Act) — even one B2C supply to an unregistered Indian consumer triggers it.
• Simplified registration via Form GST REG-10 — no Indian PAN needed (uses the home-country tax ID), but an authorised representative in India is mandatory.
• File GSTR-5A monthly by the 20th — even for nil months.
• Charge 18% IGST on most OIDAR services (e-books are 5%).
• No Input Tax Credit under the simplified scheme — the 18% is a pure cost.

Why OIDAR catches companies by surprise

OIDAR is the route that produces the most unpleasant discoveries, for three structural reasons.

There is no turnover threshold. The ₹20 lakh and ₹40 lakh thresholds that domestic businesses rely on do not apply. A foreign SaaS company with a handful of Indian consumer subscribers has a registration obligation from the first rupee. Companies that reason “our India revenue is negligible” are applying a threshold that does not exist for them.

The obligation attaches without any Indian presence. No office, no employee, no bank account, no entity — and still a registration requirement, because the test is where the customer is, not where you are.

It accrues silently. Nothing prompts a foreign company to check. The liability is typically discovered years later, when a payment processor asks, an Indian acquirer runs diligence, or the company decides to formalise its India operation and finds the historical exposure sitting there.

What counts as OIDAR

The definition turns on services delivered over the internet with minimal human intervention. In practice this covers cloud and SaaS subscriptions, downloadable software and apps, streaming media, e-books and digital publications, online gaming, online advertising space, data storage, and online course platforms where delivery is automated.

The boundary that matters is human intervention. A recorded course delivered automatically is OIDAR. A live tutorial with an instructor generally is not — it falls under ordinary import-of-service rules with a different treatment. Platforms offering both need to look at their revenue lines separately rather than classifying the whole business one way.

5. B2B vs B2C: Who Pays the Tax?

This distinction decides whether you (the foreign seller) or your Indian customer bears the GST — and it’s where most foreign companies get confused.

Your customer is…	Who pays GST	Mechanism
A registered Indian business (B2B)	The Indian recipient	Reverse Charge Mechanism (RCM)
An unregistered consumer (B2C)	You, the foreign provider	Forward charge — you register & file GSTR-5A

So if you sell only to registered Indian businesses, the reverse charge shifts the burden to them and you may not need to register. But the moment you have any B2C exposure — even a single consumer sale — full registration obligations can kick in. Mixed B2B+B2C models almost always require registration.

Where the platform, not the supplier, is liable

One rule catches marketplaces and app stores specifically. Where a foreign supplier reaches Indian consumers through an intermediary — an app store, a marketplace, an aggregator — the intermediary can be treated as the supplier for GST purposes, and carries the registration and payment obligation.

The intermediary escapes that treatment only in narrow circumstances: where it does not authorise the charge, does not authorise delivery, does not set the terms, and the invoice clearly identifies the underlying supplier. Most platform arrangements fail at least one of those tests, which is why app stores and marketplaces generally handle Indian GST on behalf of the developers and sellers on them.

The practical consequence for a foreign software business: your obligation may differ by channel. Revenue reaching Indian consumers through a major app store may already be handled; the same product sold directly from your own website to the same customers is your obligation entirely. Companies with both routes frequently register for one and overlook the other.

6. Reverse Charge on Services Your Subsidiary Imports

There’s a flip side that catches Indian subsidiaries of foreign groups: when your own Indian company receives services from its foreign parent — management fees, IT support, brand licensing, software, consultancy — your Indian entity must pay GST under reverse charge, even though the parent has no Indian GST registration. The liability is self-assessed and self-paid by the recipient. It’s one of the most commonly missed obligations for foreign-owned companies, so flag every intercompany charge.

Here’s how it works in practice. Say a German parent invoices its Indian subsidiary ₹10 lakh for management services. Because this is an “import of service,” the Indian subsidiary must self-charge 18% IGST — ₹1.8 lakh — and deposit it with the government, reporting it in its GSTR-3B. The good news is that, in most cases, the subsidiary can then claim that same ₹1.8 lakh back as input tax credit, making it cash-flow-neutral overall. But here’s the trap: you must actually pay the tax first to claim the credit. Companies that simply ignore the reverse charge don’t just miss a neutral entry — they accrue unpaid tax, interest, and penalties on something that would have cost them nothing if reported correctly.

The same reverse-charge logic applies to a range of other imported services and to certain notified domestic supplies (such as legal services from an advocate, or goods transport). The practical rule for any foreign-owned company is simple: every payment to your foreign parent or group for a service should be reviewed for reverse-charge GST — build it into your monthly close, not your year-end scramble.

The intercompany charges to review every month

Reverse charge on imported services is the obligation most consistently missed by Indian subsidiaries, because the payment feels internal — money moving within the same group — rather than like buying something.

The charges that commonly attract it:

• Management and head-office recharges — the most common, and often the largest
• IT and software support provided by the parent or a group service centre
• Brand, trademark or technology licence fees and royalties
• Consultancy, professional and technical services from group entities
• Cost allocations for shared functions such as HR, finance or legal
• Foreign professional fees — overseas counsel, auditors, advisors billing the Indian entity directly

The cash-flow point deserves restating precisely, because it is what makes the omission so costly relative to how little it should have cost. Where the subsidiary is entitled to full input tax credit, reverse charge is economically neutral — pay it, claim it, net zero. But the credit is available only if the tax was actually paid. Ignoring the obligation therefore does not save the tax; it converts a neutral entry into unpaid tax plus 18% interest plus penalty exposure, with the credit unavailable for the period in question.

7. Penalties for Getting It Wrong

• Failure to register: a penalty of ₹10,000 or 10% of the tax due, whichever is higher (and up to 100% in fraud cases).
• Late GSTR-5A: ₹200 per day (₹100 for nil returns), accruing daily until filed.
• Unpaid tax: interest at 18% per annum, plus Section 73/74 demands.
• Severe cases: bank-account attachment (Section 79) and cancellation of registration.

Two hard deadlines with no discretion

Most GST penalties are recoverable — pay the tax, pay the interest, move on. Two rules are different, because they close the door permanently rather than pricing the delay.

The three-year cliff. Returns left unfiled for three years from their due date can no longer be filed at all. The liability crystallises on the department’s assessment, and the ability to regularise by filing simply ends. There is no fee that reopens it. For a foreign company that has been unknowingly non-compliant, this converts an expensive problem into a closed one at a fixed date.

The input tax credit deadline. Credit for an invoice must be claimed by the statutory cut-off for that financial year. Claim it late and the credit is lost outright — not deferred. For companies with substantial reverse-charge or vendor credits, this is the more expensive of the two rules in practice, because it recurs every year rather than once.

8. Step-by-Step: Registering as a Foreign Entity

1. Identify your category — permanent establishment, NRTP, or OIDAR. This determines everything that follows.
2. Determine place of supply — which Indian states you supply to, and whether customers are B2B or B2C.
3. Obtain a PAN (for subsidiaries/branches/NRTPs) — OIDAR providers use the simplified REG-10 without an Indian PAN.
4. Appoint an authorised signatory/representative — an Indian resident is required for OIDAR and recommended generally.
5. File the registration — standard GST registration for PE/NRTP; Form REG-10 for OIDAR (at least 5 days before first supply).
6. File returns on time — GSTR-1/3B for PE; GSTR-5 for NRTP; GSTR-5A for OIDAR.

What compliance looks like once you are registered

Registration is the beginning of an ongoing obligation, and the shape of it differs sharply by route.

Obligation	Indian entity	NRTP	OIDAR
Primary return	GSTR-1 and GSTR-3B	GSTR-5	GSTR-5A
Frequency	Monthly or quarterly	Monthly, plus final	Monthly
Input tax credit	Yes, in full	Generally not available	Not available
Indian representative	Not applicable	Authorised signatory required	Representative or appointee
Advance deposit	No	Yes, estimated liability	No
Annual return	GSTR-9 / 9C where applicable	Not applicable	Not applicable

Two points that follow from that table and are worth planning around:

No input tax credit under OIDAR or NRTP means GST is a real cost, not a wash. Any Indian input tax you bear is unrecoverable. For businesses with meaningful Indian expenditure, this is frequently the argument for establishing an Indian entity instead — the subsidiary recovers credit, which the foreign registration cannot.

Pricing needs to reflect the position from the start. If your Indian consumer pricing was set without GST in it, the tax comes out of margin, and it is not realistically recoverable retrospectively. Deciding whether prices are GST-inclusive or exclusive is a commercial decision that should be made before registration rather than discovered after it.

Conclusion

For foreign-owned companies, GST in India turns on one question: how do you reach the Indian customer? Through an Indian subsidiary, you’re a normal taxpayer with thresholds and ITC. As an occasional supplier, you’re an NRTP who must register upfront and deposit advance tax. As a digital seller, you’re an OIDAR provider with no threshold, mandatory GSTR-5A, and 18% IGST as a pure cost. With enforcement sharpening in 2026 — and a hard 3-year cliff on unfiled returns — the safest path is to classify yourself correctly, register before you start, and file every month without fail. Compliance here isn’t just cheaper than the alternative; it’s the price of selling to 1.4 billion people.

Frequently Asked Questions (FAQ)

The questions foreign companies ask us most often about Indian GST: