GST on SaaS sales in India: a 2026 guide for founders

Why GST trips up so many SaaS founders

GST is conceptually simple — charge 18% on most SaaS services — but operationally complex once you have customers in multiple Indian states, business buyers with GSTINs, consumers without them, and international customers. The wrong tax treatment doesn't just create an audit risk; it can disqualify your B2B customers from claiming input tax credit, which kills renewals.

The basics: SaaS is 18% GST

Under the CGST Act, Software-as-a-Service is treated as an "online information and database access or retrieval service" (OIDAR) when delivered electronically. The standard rate is 18%, split as either CGST + SGST (intra-state) or IGST (inter-state).

Place of supply: the rule that decides which tax applies

For B2B supplies (customer has a GSTIN), the place of supply is the customer's registered location. For B2C supplies (customer has no GSTIN), it's the customer's location of usual residence. Same state as you → CGST + SGST. Different state → IGST. International → zero-rated (with conditions).

Collecting GSTIN at checkout

Always collect the customer's GSTIN on B2B sign-up — it's the difference between a usable tax invoice and an unusable one. Validate the format with a regex (/^[0-9]{2}[A-Z]{5}[0-9]{4}[A-Z]{1}[A-Z0-9]{1}Z[A-Z0-9]{1}$/), then validate against the GSTN public API at checkout to catch typos.

Reverse charge for international SaaS into India

When an Indian business buys SaaS from a foreign vendor, the Indian business is liable to pay GST under reverse charge. This is why your enterprise customers ask for a tax invoice with the place of supply correctly stated — they need it to claim input credit on the reverse-charge payment they made.

Exporting SaaS from India: zero-rated, conditionally

Exports of services are zero-rated under Section 16 of the IGST Act, but only if: (1) the supplier is in India, (2) the recipient is outside India, (3) the place of supply is outside India, (4) payment is received in convertible foreign exchange or INR where allowed, and (5) the supplier and recipient are not establishments of a distinct person. Document FIRC/BRC from your bank for every international invoice.

E-invoicing thresholds in 2026

As of 1 August 2023, e-invoicing is mandatory for businesses with annual turnover above ₹5 crore. The threshold drops periodically. E-invoices must be generated on the Invoice Registration Portal before delivery to the customer; your invoice ID must be the IRN, not your internal counter.

Tax treatment in your contract

Your master subscription agreement should state: "All fees are exclusive of taxes. Customer is responsible for all applicable taxes, including but not limited to GST, VAT, sales tax and withholding tax." Without this, you eat the tax. With it, the customer does.

Handling refunds and chargebacks

On a refund, you issue a credit note in the same financial year and adjust your output liability. Refunds across financial years require a separate procedure under Rule 89 — much slower. Build your subscription system to issue refunds within the same FY whenever possible.

How ContractScan AI handles GST

For Indian customers, ContractScan AI automatically computes CGST + SGST or IGST based on the customer's state code (derived from their GSTIN), generates a compliant tax invoice with HSN code 998314, and stores the breakdown for your CA's monthly reconciliation. International customers see USD/EUR pricing with zero GST. Always verify with your tax advisor for edge cases.