GST for Foreign Companies in India: Registration, Filing & Input Credit

This article is part of our Tax Guide for Foreign Companies in India. Here we dive deep into the Goods and Services Tax (GST) framework as it applies specifically to foreign companies — whether you have a permanent establishment in India or operate as a non-resident taxable person.

Why GST Compliance Is Different for Foreign Companies

India's Goods and Services Tax, implemented in July 2017 and substantially reformed through the GST 2.0 changes effective September 2025, is the country's most significant indirect tax. For foreign companies, GST creates compliance obligations that differ fundamentally from those of domestic entities.

The core distinction is this: a domestic company deals with GST only when its turnover exceeds the registration threshold (INR 40 lakh for goods, INR 20 lakh for services). A foreign company making taxable supplies in India must register for GST regardless of turnover — there is no threshold exemption for non-resident taxable persons.

Add to this the reverse charge mechanism (where the Indian recipient pays GST instead of the foreign supplier), OIDAR provisions for digital services, and the input tax credit rules that foreign companies must navigate, and you have a compliance framework that demands careful planning from day one of Indian operations.

GST 2.0: The Simplified Rate Structure (September 2025)

Before diving into registration, it is important to understand the current GST rate structure. The 56th GST Council meeting introduced GST 2.0, which simplified the rate framework effective September 22, 2025:

The earlier 12% and 28% slabs have been eliminated and merged into the 18% and 40% slabs respectively. For foreign companies, the 18% rate applies to most B2B transactions including management services, consulting fees, software licensing, and technical services.

Two Paths to GST Registration for Foreign Companies

Foreign companies register for GST under one of two categories, and the distinction has significant implications for compliance obligations, deposit requirements, and input tax credit eligibility.

Path 1: Regular Registration (Permanent Establishment in India)

If your company has a permanent establishment in India — a subsidiary, branch office, project office, or any fixed place of business — you register as a regular taxpayer. This is the standard registration that domestic companies also use.

Key characteristics:

• Turnover threshold applies: Registration is mandatory only if aggregate turnover exceeds INR 40 lakh (goods) or INR 20 lakh (services). However, most foreign subsidiaries exceed these thresholds quickly.
• Standard GSTIN issued with permanent validity
• Monthly or quarterly return filing depending on turnover
• Full input tax credit (ITC) eligibility on business inputs
• No advance deposit of estimated tax required

Path 2: Non-Resident Taxable Person (NRTP) Registration

If your company does not have a permanent establishment in India but occasionally undertakes taxable transactions in India, you register as a Non-Resident Taxable Person under Section 24 of the CGST Act.

Key characteristics:

• No turnover threshold — registration is mandatory for any taxable supply, from the first rupee
• Temporary registration valid for 90 days, extendable by another 90 days
• Must deposit estimated GST liability in advance at the time of registration
• An Indian resident with a valid PAN must be appointed as authorized signatory
• Registration must be completed at least 5 days before commencing business activities in India
• Limited ITC eligibility — only on goods or services used for making taxable supplies during the registration period

Registration Process: Step by Step

For Regular Registration (Indian Subsidiary/Branch)

The registration is filed on the GST portal (gst.gov.in) using Form GST REG-01. Following the November 2025 framework revision, the process has been streamlined:

1. Aadhaar and PAN verification: All Indian directors, promoters, and authorized signatories must have valid Aadhaar and PAN. The system verifies these through the Aadhaar authentication framework.
2. Application submission: File Form GST REG-01 with business details, place of business proof, bank account details, and the digital signature certificate of the authorized signatory.
3. Risk engine assessment: The GST portal's risk engine evaluates the application. Low-risk applications are processed within 3 working days. High-risk applications are flagged for physical verification and may take 15-30 days.
4. GSTIN issuance: Upon approval, the system issues a permanent GSTIN (15-digit identifier) and the Registration Certificate.

For NRTP Registration

NRTP registration is filed using Form GST REG-09 and follows a different process:

1. Appoint an Indian authorized signatory: An Indian resident with a valid PAN must be appointed to handle GST compliance. This is a mandatory requirement — the foreign company cannot file GST returns using only foreign identification.
2. File GST REG-09: Submit the application with the company's Certificate of Incorporation, TIN (or equivalent), passport/visa details of the authorized signatory, proof of business premises in India, and an Indian bank account.
3. Deposit estimated GST liability: Along with the application, deposit the estimated GST liability for the registration period. This advance deposit is adjusted against actual GST payable during the period.
4. Temporary GSTIN issuance: The registration is valid for 90 days (extendable by 90 days on application).

Documents Required for Foreign Company Registration

GST Filing Obligations for Foreign Companies

Once registered, foreign companies must comply with regular GST filing requirements. The filing frequency depends on your registration type and annual turnover.

Monthly Filing (Turnover Above INR 5 Crore)

• GSTR-1: Filed by the 11th of the following month, detailing all outward supplies (sales invoices) for the month
• GSTR-3B: Filed by the 20th of the following month, summarizing sales, ITC claimed, and net GST payable

Quarterly Filing Under QRMP Scheme (Turnover Up to INR 5 Crore)

The Quarterly Returns with Monthly Payment (QRMP) scheme allows eligible taxpayers with aggregate turnover up to INR 5 crore to file GSTR-1 and GSTR-3B quarterly. However, tax payments must still be made monthly using a challan.

• GSTR-1: Filed by the 13th of the month following the quarter
• GSTR-3B: Filed by the 22nd or 24th of the month following the quarter (date varies by state)

Annual Return: GSTR-9 and GSTR-9C

• GSTR-9 (Annual Return): Due by December 31 following the financial year. Mandatory for taxpayers with turnover above INR 2 crore. Provides a comprehensive summary of all outward and inward supplies, ITC, and tax paid during the year.
• GSTR-9C (Reconciliation Statement): Mandatory for taxpayers with aggregate annual turnover exceeding INR 5 crore. Requires reconciliation of the annual return with audited financial statements, certified by a Chartered Accountant or Cost Accountant.

Late filing of GSTR-9 attracts a penalty of INR 200 per day (INR 100 CGST + INR 100 SGST), capped at 0.5% of the turnover in the state or UT.

Input Tax Credit (ITC) for Foreign Companies

Input tax credit is the mechanism by which GST paid on business inputs is offset against GST collected on outputs. For foreign companies, ITC represents a significant cash flow advantage — but the rules must be followed precisely.

Eligibility Conditions

Under Section 16 of the CGST Act, ITC can be claimed only if:

• The company has a valid tax invoice or debit note from a registered supplier
• The goods or services have been received
• The supplier has actually paid the GST to the government (verified through GSTR-2B auto-populated data)
• Payment for the invoice (including GST) has been made within 180 days of the invoice date
• The return (GSTR-3B) has been filed claiming the ITC

Blocked Credits (Items Where ITC Cannot Be Claimed)

Certain categories of inputs are permanently blocked from ITC, regardless of whether they are used for business purposes:

• Motor vehicles and conveyances (except for resale, transportation of goods/passengers, or driving schools)
• Food and beverages, outdoor catering, beauty treatments, health services, and cosmetic/plastic surgery
• Membership of clubs, fitness centers, or health clubs
• Construction of immovable property (except when built for resale as a works contract)
• Goods or services used for personal consumption
• Tax paid under composition scheme

Time Limit for Claiming ITC

The deadline to claim ITC on any invoice is the earlier of:

• November 30 of the year following the financial year to which the invoice relates, or
• The date of filing the annual return (GSTR-9) for that year

Missing this deadline means the ITC is lost permanently. Foreign companies with complex procurement cycles must implement rigorous invoice tracking to ensure no ITC is forfeited.

Reverse Charge Mechanism (RCM) for Import of Services

The reverse charge mechanism is particularly relevant for foreign companies because it shifts the GST payment obligation from the foreign supplier to the Indian recipient. This applies in two key scenarios:

Import of Services (Section 5(3) of IGST Act)

When an Indian entity (including a foreign company's subsidiary) receives services from a supplier outside India, the Indian entity must pay IGST on the value of the imported services under the reverse charge mechanism. The rate applicable is the standard rate for the specific service category — typically 18% under the GST 2.0 framework.

Crucially, the Indian entity can claim ITC on the IGST paid under RCM, provided the services are used for making taxable outward supplies. This makes the reverse charge mechanism largely cost-neutral for businesses that have sufficient output GST liability to offset the ITC.

OIDAR Services (Online Information and Database Access or Retrieval)

OIDAR services include cloud computing, SaaS subscriptions, online advertising, data analytics, and other digital services delivered over the internet. The GST treatment of OIDAR services depends on whether the recipient is a business or a consumer:

• B2B (to registered Indian businesses): The Indian business pays IGST under the reverse charge mechanism and claims ITC
• B2C (to Indian consumers): The foreign OIDAR supplier must register for GST in India and collect and remit GST directly. This applies from October 2023 onward.

GST on Cross-Border Transactions: Practical Scenarios

Scenario 1: Foreign Parent Charges Management Fees to Indian Subsidiary

When a foreign parent company charges management fees, brand royalties, or shared service costs to its Indian subsidiary, the subsidiary must pay IGST at 18% under the reverse charge mechanism. The subsidiary can claim ITC on this IGST if the management services are used for making taxable supplies. The subsidiary must also deduct TDS under Section 195 of the Income Tax Act and file Form 15CA/15CB before remitting the payment.

Scenario 2: Foreign Company Provides Consulting Services in India

A foreign consulting firm that sends professionals to India for a project must register as an NRTP if it is making taxable supplies in India. It must charge IGST on its invoices, file returns during the registration period, and can claim ITC on expenses incurred in India during the project.

Scenario 3: Foreign E-Commerce Platform Selling to Indian Consumers

A foreign e-commerce platform that provides digital services (streaming, SaaS, online courses) to Indian consumers must register for GST in India and collect and remit GST at the applicable rate. This is a significant compliance burden for foreign digital businesses and one that many still overlook.

Common GST Compliance Pitfalls for Foreign Companies

Pitfall 1: Not Registering When Required

Foreign companies that supply digital services (OIDAR) to Indian consumers or occasionally make taxable supplies in India often fail to register. The penalty for operating without GST registration is 100% of the tax due or INR 10,000, whichever is higher.

Pitfall 2: Missing the 180-Day Payment Rule

If payment for an invoice is not made within 180 days, the ITC already claimed must be reversed, and interest at 18% per annum is payable on the reversed amount. This is a cash flow trap for foreign subsidiaries with extended payment cycles with their parent companies.

Pitfall 3: Incorrect HSN/SAC Classification

Using the wrong Harmonized System of Nomenclature (HSN) code for goods or Services Accounting Code (SAC) for services can result in applying the wrong GST rate. This creates a potential demand for differential tax plus interest and penalties during audits.

Pitfall 4: Not Filing Nil Returns

Even if a registered entity has no transactions in a given period, a nil return must be filed. Failure to file nil returns attracts the same late fee as regular returns — INR 50 per day (INR 25 CGST + INR 25 SGST) for returns with tax liability, and INR 20 per day for nil returns.

Pitfall 5: Ignoring E-Invoicing Requirements

E-invoicing is mandatory for businesses with annual turnover exceeding INR 5 crore. Foreign subsidiaries that cross this threshold must generate Invoice Reference Numbers (IRN) through the GST portal for every B2B invoice. Non-compliance with e-invoicing makes the invoice invalid for ITC purposes for the recipient.

Key Takeaways

• Foreign companies with a permanent establishment in India register as regular taxpayers; those without one register as Non-Resident Taxable Persons (NRTP) with no turnover threshold exemption
• GST 2.0 (effective September 2025) simplified rates to four primary slabs: 0% (exempt), 5%, 18%, and 40%, with 40% for luxury and sin goods
• NRTP registration is temporary (90 + 90 days), requires advance deposit of estimated GST, and mandates an Indian authorized signatory
• The reverse charge mechanism applies when Indian entities receive services from foreign suppliers — the Indian entity pays IGST and can claim ITC
• ITC must be claimed within the deadline (November 30 of the following year) or it is permanently lost
• Annual returns (GSTR-9) are mandatory for turnover above INR 2 crore; reconciliation statements (GSTR-9C) for turnover above INR 5 crore