GST for SaaS Companies in India: Complete Guide

Last Updated: July 2026

Summary

GST for SaaS companies in India involves understanding the applicable GST rate, SAC classification, OIDAR provisions, export rules, ITC eligibility, registration requirements, and ongoing compliance obligations. This guide explains how SaaS businesses can correctly classify their services, issue compliant invoices, claim eligible ITC, manage exports under LUT, and meet GST requirements while avoiding penalties and improving compliance.

Do you own a SaaS business and are not sure if you are liable for 18 % GST on your subscription business, or if your business is a zero-rated export of services, or if you are covered by the OIDAR rules? The taxation of SaaS in India is a complex topic that is subject to change based on factors such as the location of the customer, the method of delivery, and the type of sale made to a customer.

This may mean an incorrect invoice, failure to claim ITC, and possible GST notices, interest, and penalties. This guide discusses the GST rates, registration for Indian SaaS companies, classification of OIDAR, export treatment, ITC eligibility, and compliance obligations for Indian SaaS companies.

GST Rate and SAC Code for SaaS in India

The applicable GST rate and SAC code are the first things every SaaS company must confirm before raising a single invoice. Getting the classification wrong affects every return filed thereafter.

GST Rate on SaaS Services

SaaS services are generally classified under Information Technology Software Services for GST purposes, depending on the nature of the service provided.

• The rate applies regardless of whether the SaaS is industry-specific (HR tech, fintech, edtech, legal tech).
• There is no GST exemption for SaaS products across all sectors.

SAC Code for SaaS

Businesses should determine the correct SAC based on the actual nature of the services provided.

OIDAR GST Rules for SaaS Companies

OIDAR (Online Information and Database Access or Retrieval) is the classification that most Indian SaaS companies overlooked until CBIC began enforcing it strictly.

Understanding this is critical before your next invoice cycle.

What Is OIDAR and Does Your SaaS Qualify?

Many cloud-based SaaS offerings may qualify as OIDAR where the service is delivered over the internet with minimal human intervention. Generally, such services have the following characteristics:

• Delivery is automated (no human fulfilment required per transaction)
• Access is internet-based
• The service cannot be obtained without the internet

OIDAR GST Rules: B2B vs B2C Customers

The most common scenario for Indian SaaS startups: if you charge an Indian company a monthly SaaS subscription fee, raise a GST invoice at 18 percent. 

If you charge a foreign company, it qualifies as an export of service under zero-rated treatment, subject to FEMA conditions being met.

GST on SaaS Exports from India

It is the most valuable compliance zone for Indian SaaS businesses that sell overseas. Zero-rating doesn't involve GST collected, but it will also involve accrued ITC, which will be refunded.

When does SaaS revenue qualify as Zero-Rated Export?

A SaaS subscription supplied to a foreign client qualifies as an export of services under Section 2(6) of the IGST Act and is treated as a zero-rated supply under Section 16, provided all of the following conditions are satisfied:

• The supplier of the service is in India
• The recipient of the service is outside India
• The place of supply is outside India
• Payment is received in convertible foreign exchange (FEMA condition)
• The supplier and recipient are not merely establishments of the same entity

Two GST Routes for SaaS Exporters

• Route 1: Export under LUT (Letter of Undertaking) without paying IGST, then claim ITC refund on accumulated inputs.
• Route 2: Pay IGST on the export invoice, then claim a full refund of IGST paid from the government

Most Indian SaaS companies should use Route 1 (LUT route) because it avoids blocking working capital in IGST payment. File the LUT at the start of every financial year on the GST portal in Form GST RFD-11, before raising your first export invoice.

What ITC Can SaaS Exporters Claim?

SaaS companies accumulate significant ITC on:

• Cloud hosting costs (AWS, GCP, Azure with IGST component)
• Software subscriptions paid to Indian vendors
• Office rent (ITC blocked under Section 17(5) only if for residential accommodation)
• Internet and telecom services
• Professional services (legal, CA fees)
• Marketing and advertising services

All of this ITC can be claimed as a refund if you are exporting services under LUT. Many Indian SaaS companies leave this refund unclaimed, resulting in significant working capital blockage.

GST Registration for SaaS Companies: When and How

Be aware of the situations where GST registration is mandatory for SaaS businesses in India and the critical steps to ensure a proper and hassle-free registration process.

When is GST Registration Mandatory for SaaS?

GST registration is generally required once the applicable aggregate turnover threshold prescribed under the CGST Act is crossed. Certain businesses covered under the compulsory registration provisions must register irrespective of turnover.

• You provide OIDAR services to non-taxable online recipients in India (mandatory regardless of turnover)
• You are liable to pay GST under the Reverse Charge Mechanism (RCM), where applicable.

Documents Required for GST Registration for a SaaS Company

• PAN card of the company or LLP
• Certificate of Incorporation from MCA
• Memorandum and Articles of Association
• Proof of principal place of business (rent agreement or electricity bill)
• Bank account details and cancelled cheque
• Authorised signatory's Aadhaar and PAN
• Digital Signature Certificate (for companies)

GST Registration Process for SaaS Companies

• Visit gst.gov.in and click New Registration
• Select the Taxpayer type and fill Part A with PAN, mobile, and email
• Verify OTP and receive TRN (Temporary Reference Number)
• Fill Part B with business details, address, bank account, and upload documents
• Submit with DSC (for companies) or EVC (for proprietorships)
• ARN is generated; GSTIN allotted within 3 to 7 working days

SaaS GST Compliance India: Monthly and Annual Obligations

Compliance with monthly and annual GST demands is essential for businesses offering SaaS in India to avoid penalties, keep proper records, and run their operations 
uninterrupted.

Return Filing Obligations for SaaS Companies

Invoice Requirements for SaaS Companies

Every SaaS invoice must include:

• GSTIN of the company
• SAC code (998313 for SaaS)
• Place of supply (critical for determining IGST vs CGST plus SGST)
• GST rate (18 percent) and amount
• For exports: mention "Supply meant for export under LUT without payment of integrated tax"
• Sequential invoice number with no gaps

E-Invoicing Applicability for SaaS Companies

• Mandatory for SaaS companies with aggregate turnover above Rs. 5 crore from FY 2023-24
• Generate an IRN on the Invoice Registration Portal before sending invoices to B2B customers.
• Export invoices under LUT also require e-invoicing at this threshold
• Where e-invoicing is mandatory, failure to generate an Invoice Reference Number (IRN) may render the invoice invalid under GST law.

Can SaaS Companies Claim ITC Under GST?

Yes. SaaS companies can generally claim Input Tax Credit (ITC) on eligible business inputs, input services, and capital goods, subject to the conditions and blocked credit provisions under the CGST Act. The key conditions are:

• The vendor must have filed GSTR-1 and reflected the invoice in your GSTR-2B
• ITC must be claimed within the time limits prescribed under Section 16(4)
• ITC under Section 17(5) blocked categories must be excluded (club memberships, motor vehicles for personal use, food and beverages)
• For eligible zero-rated supplies made under a Letter of Undertaking (LUT), unutilised Input Tax Credit (ITC) may be claimed as GST Export Refund by filing the prescribed application under the GST law.

Conclusion

GST for SaaS companies in India involves three distinct compliance streams: domestic invoicing at 18 percent with e-invoicing compliance, zero-rated export treatment for international revenue with LUT filing and ITC refund claims, and OIDAR classification rules for digital services delivered online.

SaaS companies exporting services under LUT are leaving significant ITC refunds unclaimed every year due to poor compliance infrastructure. File your LUT before April 1, raise correct export invoices, reconcile your GSTR-2B monthly, and claim your accumulated ITC as a cash refund to improve working capital.

Whether it's faster export ITC refund processing, automated GSTR-1 and 3B filing, CFO dashboards, expert compliance services, or anything else, businesses across India rely on MYGSTRefund to cut down on the time they waste on export ITC refunds and optimise their SaaS business.

Frequently Asked Questions (FAQ's)

1. What is the GST rate for SaaS software?
SaaS services are generally subject to GST at 18%, subject to the applicable GST provisions and the nature of the supply.

2. What is the GST for software services in India?
In India, an 18 percent tax is applicable on all software products, services like SaaS services, software development services, software consulting services, software licensing services, etc. The applicable SAC code depends on the exact nature of the software service being supplied. Businesses should classify services based on the GST Scheme of Classification.

3. What is the GST rate for digital services?
Certain digital services, including many SaaS offerings, may fall under the OIDAR category depending on how they are delivered and consumed.

4. What is the SAC code for SaaS?
The right SAC code for Software as a Service is 998313, which refers to cloud-based application software that is provided as a subscription. SaaS services are commonly classified under SAC 998313. However, businesses should determine the appropriate SAC based on the actual nature of the services provided.