TechnologySAC 9983

GST on IT & Software Services — Rates, Exports & OIDAR

Complete guide to GST on information technology services, SaaS products, software licenses, cloud computing, BPO/ITES, IT exports (zero-rated), and OIDAR (digital services by foreign companies). Understand SAC codes, place of supply rules, and export compliance.

18%

IT Services Rate

18%

Software (Packaged)

18%

SaaS Products

18%

ITES/BPO

9983

SAC Code

8523

HSN (Software)

0%

Export (Zero-Rated)

0%

SEZ Supply

GST Provisions for IT & Software

IT Services — 18% GST

All information technology services (software development, system integration, IT consulting, cloud computing, hosting, web development, app development) attract 18% GST under SAC 9983. Full ITC available on inputs, capital goods, and input services.

SaaS & Cloud Products — 18%

Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS) are classified as services at 18% GST. Subscription-based software (Microsoft 365, Adobe CC, Zoho) attract 18%. Place of supply rules for B2B differ from B2C.

Packaged Software — 18% (Goods)

Software sold on media (CD/DVD/USB) classified as goods under HSN 8523 at 18%. Off-the-shelf software licenses sold perpetually also treated as goods. Custom-developed software is a service. The distinction: standardized = goods, customized = service.

IT Exports — Zero-Rated

Software services exported outside India are zero-rated (0% GST with full ITC refund). Conditions: payment received in convertible foreign exchange, service recipient located outside India, services delivered outside India. LUT/bond required instead of paying IGST.

ITES & BPO Services — 18%

IT-Enabled Services (data entry, call centres, transcription, back-office processing) at 18% GST. BPO/KPO services at 18%. Intermediary services attract GST even if client is overseas (intermediary exception to export zero-rating). Place of supply = location of supplier.

E-Commerce & Digital Services

Online Information Database Access and Retrieval (OIDAR) services by foreign companies to Indian consumers attract 18% GST — foreign company must register in India. Examples: Netflix, Spotify, AWS to individual consumers. B2B handled via reverse charge.

GST Rate Matrix — IT & Software

Service/ProductGST RateTypeSAC/HSN
Custom software development18%ServiceSAC 998314
IT consulting & advisory18%ServiceSAC 998312
System integration18%ServiceSAC 998313
Cloud hosting (AWS, Azure)18%ServiceSAC 998315
SaaS subscription18%ServiceSAC 998316
Software license (perpetual)18%GoodsHSN 8523
Website/App development18%ServiceSAC 998314
Data processing / BPO18%ServiceSAC 998316
Cyber security services18%ServiceSAC 998319
IT exports (with LUT)0%Zero-ratedSAC 9983
SEZ supply (with LUT)0%Zero-ratedSAC 9983
OIDAR (foreign to Indian B2C)18%ServiceSAC 9984

Frequently Asked Questions

What is the GST rate on software services in India?
All software and IT services attract 18% GST in India, whether it's custom development, SaaS subscriptions, cloud hosting, IT consulting, or system integration. The SAC code is 9983 (Information Technology Services). Full Input Tax Credit is available on all business inputs. Software exported outside India is zero-rated (0%) with ITC refund.
Is GST applicable on software exports?
Software exports are zero-rated under GST — meaning 0% tax applies but full ITC can be claimed and refunded. Conditions: (1) Recipient must be located outside India, (2) Payment received in convertible foreign exchange within prescribed time, (3) Service must be delivered outside India, (4) Supplier must furnish Letter of Undertaking (LUT) or pay IGST and claim refund.
How is SaaS taxed under GST?
SaaS (Software-as-a-Service) is classified as a service and taxed at 18% GST under SAC 998316. Monthly/annual subscriptions attract 18%. For domestic B2B, IGST applies for inter-state; CGST+SGST for intra-state. For foreign SaaS sold to Indian businesses, reverse charge mechanism applies. Indian SaaS sold to foreign clients is zero-rated export.
What is OIDAR and how is it taxed?
OIDAR (Online Information Database Access and Retrieval) refers to digital services delivered over the internet — streaming, cloud storage, online gaming, digital advertising. When foreign companies (Netflix, Spotify, AWS) supply OIDAR services to non-taxable Indian recipients (B2C), they must register in India and charge 18% IGST. For B2B, the Indian business pays under reverse charge.

GST for IT Companies — Automated

Laabam.One handles IT service invoicing, export LUT compliance, reverse charge on foreign SaaS, and OIDAR registration requirements automatically.

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