GST on Import of Services: India’s Guide to Cross-Border Billing

Rohit, a graphic designer based in Mumbai, just hired a digital marketer from Australia. The Aussie expert sends an invoice of ₹1,50,000 for a three-month social media blitz. Rohit pays it. Done and dusted, right? Wrong.

A few weeks later, his accountant calls:
“Bhai, reverse charge mein ₹27,000 ka GST bhi bharna padega!”

Wait, what?

Yup. Because under Indian tax law, this is a classic case of ‘import of services’. The service provider is outside India, the recipient (Rohit) is in India, and the service is being consumed in India. That ticks all the boxes for GST on import of services. The tax? A flat 18 %—₹27,000 in Rohit’s case—paid directly by him, not by the Aussie.

It does not matter that the person who gave the service never stepped foot in India. If the benefit of the service is enjoyed here, the Indian government wants its share.

And here is the plot twist—it is not added to the invoice. Rohit must pay it from his own wallet under the reverse charge mechanism, file it on the GST portal, and, if he is lucky (and registered), he may be able to claim it back as input tax credit.

So, while Rohit was vibing with Aussie creativity, the GST officer was quietly calculating his cut.
Imported ideas? Yes. Imported tax? Also yes.

This is just the beginning of the wild, wonderfully confusing world of GST on import of services—where the invoice feels global but the taxman knocks on your door like a true desi guest, asking, “Aur bhai, GST bhara ki nahi?”

Kya Imported Hai? Yeh Teen Shartein Check Karo!

For any service to be taxable as import:

1. Supplier is located outside India
    
2. Recipient is located in India
    
3. Place of supply is also India
    

If all three light up, boom—GST on import of services is triggered!

GST on Import of Services – Service Categories and Tax Rates
 

Total invoice = ₹4,70,000. Total IGST = ₹84,600. And yes, this IGST must be paid by you via your GST portal.

Bill dollar mein aaya, par tax rupee mein gaya – samjhe Ramesh bhaiya?

Service HSN Codes – Know Them, Or Pay the Price

Each imported service must be reported using an HSN or SAC code in your GST return.
 

Misreporting these? Your GST refund may get delayed—or worse, denied!

GST Applicability Table – Know Who Pays, How Much, And When
 

So remember: registration matters. If you are not registered, you cannot claim input tax credit, even if you pay the tax.

Real-World Mistakes to Avoid
 

• Mistake 1: Paying in dollars via PayPal and forgetting to report the inward service in GSTR-3B. This may trigger a notice.
   
• Mistake 2: Freelancer receiving monthly payments from Google or YouTube. These are exports but buying editing help from abroad? That is a service import.
   
• Mistake 3: Thinking services are exempt if vendor is not Indian. No—place of supply is what counts.
   

GST reverse charge hai aisa jadoo – milega bhi nahi, chalega bhi zaroor!

Impact of GST on the Import of Services Industry with Examples

• Example 1: Amit’s SaaS firm in Mumbai procures project management software from USA provider at USD 5,000 (~INR 4,15,000). He must pay 18 % IGST, i.e. INR 74,700, under reverse charge. He can use this amount as input tax credit because software is used in business.
   
• Example 2: Nisha in Bengaluru orders design services from a UK freelancer for GBP 2,000 (~INR 2,10,000). Under import rules she pays INR 37,800 IGST. If Nisha is unregistered she cannot claim ITC and the tax adds to her costs.
   
• Example 3: A Delhi startup buys e‑books under OIDAR for INR 2,000. Vendor is outside India. Since purchase is below INR 5,000 and the recipient is unregistered, vendor collects 5 %. This avoids reverse charge and ensures ease.
   

Budget tight hai bhai, tax dekh lo aajai!

What About Input Tax Credit (ITC)?

Here is the good news: if you are a registered business, you can claim ITC for the IGST paid on imported services.

Example:

Ritu pays ₹45,000 as IGST on imported consulting. She uses this for building her product strategy. So in her next GSTR-3B, she can claim the full ₹45,000 as credit against her outgoing GST.

But if she used it for personal reasons or non-business work? No ITC. Sorry.

Bonus: Commonly Ignored Scenarios
 

1. Social Media Ad Credits – Imported if billed by Facebook Ireland. You owe IGST.
    
2. Overseas Education Counselling – If you pay to a US agent for your Indian clients, GST applies.
    
3. Freelancer Collabs – That Australian designer? GST time!
    
4. SEZ Units – Imports for authorised operations are zero-rated. Do not pay IGST if documentation is correct.

How to Pay GST on Imported Services – The Checklist
 

1. Log into the GST Portal.
    
2. Go to Payment section.
    
3. Report service value in GSTR-3B.
    
4. Pay IGST from your Electronic Cash Ledger.
    
5. Claim ITC in the same return (if eligible).
    
6. Maintain invoice, payment record, and agreement.
    

Conclusion

So here is the deal: the world is open for business—freelancers are hiring designers from Poland, startups are subscribing to tools from Silicon Valley, and digital creators are buying editing services from Dubai. But while your services might come with a foreign accent, your tax responsibilities wear a crisp Indian kurta.

GST on import of services is not just a compliance formality. It is a reality check that global collaboration comes with local tax consequences. If you are registered, this tax is not a loss—it can be claimed back as Input Tax Credit. But if you are not registered, that tax is your cost to bear.

Let us quickly recap what you should always remember:

• If the service provider is outside India, and you are in India, GST likely applies.
   
• The rate is generally 18 %, paid under reverse charge.
   
• You need to declare and pay it via the GST portal.
   
• You can claim credit if you are a registered business and using the service for business purposes.
   

Miss a return or pay late? Penalties and interest will follow. Use foreign tools, hire global talent, buy international software—but do not let tax compliance slip through the cracks.

Because in India, even imported creativity comes with a price tag.

Tax may not be fun—but you can still be smart about it.

FAQs on GST on Import of Services

Q1. Do freelancers need to pay GST on imported services?
Yes, if they are registered. If unregistered, no ITC is allowed.

Q2. Is GST applicable on foreign Facebook or YouTube ads?
Yes, if billed by non-Indian entities, IGST must be paid.

Q3. What if service is partly used for personal work?
Then only proportionate ITC is allowed. Keep usage record.

Q4. Are all imported services taxed at 18%?
Most are, but e-books and training services could have lower rates.

Q5. How to determine 'place of supply'?
If recipient is in India and service consumed in India—it counts as import.

Apply for Loans Fast and Hassle-Free

Apply Now

About the Author

LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?