RCM on Import of Services: What Your OpenAI, Figma and Foreign SaaS Bills Owe the Government

If your business pays for OpenAI, Figma, Slack, MongoDB or any foreign software billed from outside India, each of those invoices is a GST event, and in the standard B2B case the vendor does not charge you GST. One check first: look at the billing entity on the invoice. Some global vendors bill through an Indian company instead (AWS, for instance, typically bills via Amazon Internet Services Private Limited with ordinary forward-charge GST); those are domestic purchases with normal GSTR-2B credit, and reverse charge never enters the picture. Under reverse charge, you are the one who owes the tax. In our audit work this is one of the most commonly missed compliances, and the pattern is always the same: the big subscriptions get booked correctly, and the small or occasional vendors slip through.

Why the foreign vendor does not charge GST

Import of services is taxable under the IGST Act, with the liability shifted to the recipient by Section 5(3) read with Notification 10/2017-Integrated Tax (Rate). The entry is category-free: any service received for consideration from a supplier in a non-taxable territory, by any person in India other than a non-taxable online recipient, is covered. There is no notified list to check and no threshold to cross. For a registered business that means you self-assess IGST on the invoice value; an unregistered business receiving such services becomes compulsorily liable to register under Section 24(iii).

For software, SaaS and cloud services the applicable rate is 18%. A $100 monthly OpenAI invoice at around Rs 88 to the dollar means about Rs 1,584 of IGST that you must declare and pay.

The B2B and B2C difference (why some foreign invoices DO show GST)

Foreign digital service providers register in India under the OIDAR rules (Section 14, IGST Act) only to collect tax from unregistered consumers. If your foreign vendor invoice shows Indian GST, check which entity billed you. A non-resident OIDAR registrant (OpenAI, for example) charges GST only when your GSTIN is not on file: give them the GSTIN, the charge stops, and your own reverse-charge self-assessment (with its creditable IGST) takes over. An invoice from the vendor's Indian entity is different: that is ordinary domestic forward-charge GST, claimable through GSTR-2B, and RCM does not apply to it.

The four things RCM actually requires

1. Self-invoice within 30 days. Since 1 November 2024, Rule 47A of the CGST Rules requires you to raise a self-invoice within 30 days of receiving the supply. Your ITC timing hangs off this document.
2. Declare the liability in GSTR-3B Table 3.1(d) for the month of the time of supply. For RCM services that is the earlier of the payment date or the 61st day from the supplier's invoice (Section 13(3)); interest runs from that month's due date.
3. Pay in cash. RCM liability cannot be settled from your credit ledger. Section 49(4) read with Rule 85(4) requires payment through the electronic cash ledger.
4. Claim the ITC back, normally in the same month's Table 4(A)(3), subject to the usual Section 16 conditions. For most businesses the net cash cost is only the timing gap.

The monthly discipline that prevents misses

• Book the RCM tax entry together with the bill. Month-end batches drift past the 30-day window.
• Keep one list of every foreign vendor you pay, including the one-off tools someone subscribed to on a company card. Card statements are where missed RCM hides.
• Reconcile: every foreign vendor bill in your books should have a matching RCM tax entry in the same month. A month with bills and no tax entry is a miss.
• If you find missed months, self-assess them in the next GSTR-3B with interest at 18% per annum from the original due date, raise the self-invoices, and claim the ITC. On the ITC side there is an important clarification in your favour: CBIC Circular 211/5/2024 says that for RCM supplies from unregistered suppliers, which includes foreign vendors, the Section 16(4) window counts from the financial year in which you issue the self-invoice. Issuing the self-invoice now can therefore still preserve old credit; the cost of the delay is interest and possible penalty for late invoicing, not automatic loss of the credit.

Frequently asked questions

Is there a minimum amount below which RCM on imports does not apply? No. The obligation applies from the first rupee.

We paid the foreign vendor from a personal card and reimbursed it. Still RCM? If the service was received by the business in the course of business, yes.

Does RCM on imports apply if we are unregistered? For OIDAR services (online digital services) supplied to unregistered recipients, the foreign provider must register in India and collect the tax itself. For other imported services, an unregistered business receiving them in the course of business becomes liable to register under Section 24(iii); individuals importing services purely for personal use are generally covered by exemption.

Can we claim ITC on the RCM we pay for these subscriptions? Generally yes, if the service is used for business and is not blocked under Section 17(5). Software subscriptions are typically eligible.

Related reading

• Reverse Charge on Services in 2026: The Current List and the Changes That Trip People Up
• The RCM Credit Trap in Zoho Books: Why Lakhs Sit in 'Reverse Charge Tax Input but not due'
• GSTR-2B Reconciliation, Step by Step: Protect Your ITC Before You File