GST on software and SaaS services is uniformly 18% — whether it is custom software development, packaged software, or SaaS subscriptions. Indian companies purchasing software from overseas providers must pay IGST under the reverse charge / OIDAR mechanism.
Quick Reference
SaaS / Software
18%
SAC Code
998313
ITC
Fully allowed
Exports
Zero-rated
Foreign SaaS
IGST under OIDAR
GST Rate
18%
HSN 8523 / SAC 998313
SaaS Subscriptions — 18% GST
Monthly or annual SaaS subscriptions (CRM, accounting, project management tools) attract 18% GST. Indian vendors charge this on invoices. ITC is fully claimable by registered businesses using it for their taxable supplies.
Custom Software Development — 18% (SAC 998313)
Software development services — whether fixed-price or time-and-material — attract 18% GST. This includes mobile app development, web development, API development, and embedded software.
Packaged Software (CD/Download) — 18% (HSN 8523)
Shrink-wrapped and packaged software sold as a product (e.g. antivirus, MS Office box) is classified under HSN 8523 at 18%.
Imported Software / Foreign SaaS — OIDAR Rules
If you purchase SaaS from a foreign provider (AWS, Google Workspace, Adobe, Salesforce, etc.), the foreign company must register in India under OIDAR (Online Information and Database Access/Retrieval) rules and charge 18% IGST. You can claim ITC on this IGST if you are registered.
Software Exports — Zero-Rated
Software developed for and delivered to overseas clients qualifies as export of services — zero-rated. The Indian developer does not charge GST. ITC on inputs can be claimed as a refund.
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Yes. Salesforce registers under OIDAR and charges 18% IGST on your subscription. Since you are a registered business, you can claim this IGST as ITC.
No. Exports of services are zero-rated. You issue invoices without GST to US clients. Register for GST and file LUT (Letter of Undertaking) to export without payment of tax and claim ITC refunds on your input expenses.
SAC 998313 (software development services) for custom development. SAC 998314 (website design/development). HSN 8523 for packaged software sold as a product.
Not mandatory if all customers are in India and turnover is under ₹20 lakh. However, if you have overseas customers (exports), voluntary registration is highly recommended to claim ITC refunds on cloud and infrastructure costs.
