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Goods
About
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About
Digital services
About
Digital services
Goods
Digital services
Goods
Digital services
VAT Standard rate
The standard VAT rate in India in 2024 is 18%. The cumulative GST rate in India depends on the good code and differs from 0 to 28%.Here you can see several examples of cumulative VAT (IGST) rates:
- CGST – Central Goods and Services collected by the central government and applicable on transactions intra-state i.e. within a state.
- SGST – State Goods and Services Tax collected by the respective state government and applicable only on the transactions that are intra state i.e. within the state.
- IGST – Integrated Goods and Services Tax collected by the central government and applicable when goods or services are being supplied from one state to another state and also on imports.
- UTGST (or UGST) – Union Territory Goods and Services Tax collected by the Union Territory government only and applicable in all the Union Territories of India. It taxes transactions within 1 Union Territory only.
GST rates
The following rates apply to goods in India:
- 0% – Exports, supplies to a special economic zone (SEZ) unit of SEZ developer
- 0,25% and 3% – Diamonds and other precious stones, gold, silver
- 5% – some food and goods such as apparel, footwear, vital medicines, and coal;
- 12% – most goods such as phones and processed foods (cheese, frozen meat);
- 18% – scented candles, water heaters, detergents;
- 28% – “luxury” goods, for example, cars, yachts, aircraft, and casinos fall under this category.
Effective since 1 July 2017.
As per the IGST Act, online information and database access or retrieval services provided to B2C or to non-taxable entities by foreign companies are subject to Indian GST if the location of the customer is India. For business-to-business (B2B) service supplies, the recipient registered for GST is responsible for paying the tax, following the reverse-charge mechanism.
VAT Standard rate
The standard VAT rate in India in 2024 is 18%.VAT Reduced rate
There is no reduced rate.VAT calculation peculiarity
VAT= Total revenue * 18/118.
VAT Standard rate
18%
VAT Reduced rate
0,25%, 3%, 5%, 12%, 28%
Thresholds
INR1 million
GST registration threshold
Local businesses with turnover above the threshold limit of INR1 million (appr. 12.000 USD) or INR2 million (appr. 24.000 USD) or INR4 million (appr. 48.000 USD) (depending on the category of state) are required to register for GST. A business with a turnover below the specified threshold has the option to voluntarily apply for GST registration.Remote Sellers
There is compulsory GST registration requirement for non-resident taxable persons making taxable supply of goods or services to individuals or companies located in India irrespective of their turnover. In the CGST Act, a “non-resident taxable person” has been defined any person who occasionally undertakes transactions involving the supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. And Section 24 of the CGST Act, has mandated that non-resident taxable persons making taxable supply mandatorily obtain GST registration. The same applies to entities who supply via e-commerce platforms.Requirements for online marketplaces
In India online marketplaces are required to collect and remit GST under the law known as “Tax Collection at Source (TCS)”. India’s Central Goods and Services Tax Act Section 52 says: “These operators should collect “an amount calculated at such rate not exceeding one per cent of the net value of taxable supplies made through it by other suppliers.” It mean that sellers are still must to collect the GST on their sales to Indian customers and online platform will take 1% of the sellers’s taxable transactions and pay it to the government.Registration procedure
GST registration for a foreign taxable entity requires the electronic submission of the following documents:
- Certificate of incorporation with confirmation of the place of business;
- Identity Proof;
- Bank Account information;
- Application form GST REG 09.
Tax representative
A non-resident taxable person may appoint an authorized representative in India with a valid Permanent Account Number.GST payment and filing date
For businesses selecting the composition scheme, the filing is done annually. Taxable individuals with a turnover below INR 50 million file on a quarterly basis, while all other taxable individuals file monthly. Non-residents are required to file GST returns and pay the tax due monthly. Deadline is the 20th of the month following the reporting period.Penalties
Failure to acquire registration may result in a penalty of INR 20,000 (appr. 240 USD). Failure to pay taxes, incomplete tax payments, inaccurate refunds, or improper utilization of input tax credit may result in a penalty of INR 20,000 (appr. 240 USD) or 10% of the tax due, whichever is greater. Additionally, late submission of periodic returns incurs a penalty calculated on a daily basis, capped at a maximum of INR 10,000.Record keeping
The obligation is to preserve accounts and records for a duration of 72 months, equivalent to 6 years, starting from the due date of submitting the annual return for the relevant year associated with those accounts and records. For easier and automated VAT management, check out our VAT software solution. Need to register for VAT in the EU or beyond? Explore our VAT registration service for fast and compliant setup.Threshold
The revenue threshold is €0 for digital services.Pieces of evidence
The person receiving DIGITAL Service would be deemed to be located in India if any 2 of the following non-contradictory conditions are satisfied:
- The location of the address provided by the service received via the Internet is India;
- The Credit/Debit/any other card by which the service recipient settles the payment has been issued in India;
- The service recipient’s billing address is in India;
- The service recipient’s bank in which the account is used for payment is maintained in India;
- The country code of the subscriber identity module (SIM) card used by the service recipient is in India;
- The location of the service recipient’s fixed landline, through which the service is received by the person, is in India.
E-services (OIDAR) list
- Website supply, web-hosting, distance maintenance of programs and equipment;
- Supply of software and updating thereof;
- Supply of images, text, and information and making available databases;
- Supply of music, films, and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific, and entertainment broadcasts and events;
- Distance education.
Registration procedure
Companies need to fill a single registration in Form GST REG-10. The average time taken to obtain a GST Certificate is about 5 – 10 working days. E-merchants can instead appoint a tax agent which will bear all GST obligations instead of the merchant.VAT returns filing date
Digital service providers will have to file return and pay tax monthly by the 20th of the month succeeding the month for which the return is filed. The return is to be filed even if there is no business activity for any period under tax (Nil return in such cases). No Input Tax Credit is available. The return can be filed only after payment of due taxes and any other amounts due. Returns for the current period can’t be filed before filing a return for the previous tax period.Penalties
Failure to acquire registration may result in a penalty of INR 20,000 (appr. 240 USD). Failure to pay taxes, incomplete tax payments, inaccurate refunds, or improper utilization of input tax credit may result in a penalty of INR 20,000 (appr. 240 USD) or 10% of the tax due, whichever is greater. Additionally, late submission of periodic returns incurs a penalty calculated on a daily basis, capped at a maximum of INR 10,000. For easier and automated VAT management, check out our VAT software solution. Need to register for VAT in the EU or beyond? Explore our VAT registration service for fast and compliant setup.
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