Classification of Software Services

• Software development, customization, and implementation are treated as services under GST
  
• Packaged software sold with license keys is categorized as goods
  
• Cloud-based software or SaaS platforms are classified as Online Information and Database Access or Retrieval (OIDAR) services
  
• Software consulting and technical support services are taxable under service codes
  
• Nature of supply determines whether CGST-SGST or IGST is applicable
  

Applicable GST Rates

• Software services are generally taxed at 18% GST
  
• This includes software design, development, maintenance, and cloud services
  
• Pre-packaged software sold electronically also attracts 18%
  
• Software embedded in hardware may fall under mixed supply with composite valuation
  
• Export of software services is zero-rated, subject to conditions
  

Export of Software Services

• Export is considered zero-rated if services are provided to a foreign client, with payment received in foreign currency
  
• Exporters can supply with payment of IGST or under Letter of Undertaking (LUT) without tax
  
• Export turnover must be disclosed in GSTR-1 and GSTR-3B
  
• Refund of input tax credit is allowed on software service exports
  
• Contracts, invoices, and foreign inward remittance certificates serve as documentation
  

Place of Supply Rules

• For B2B domestic services, the place of supply is the recipient’s location
  
• For B2C, it is the supplier’s location unless special rules apply
  
• OIDAR services supplied to unregistered Indian consumers from abroad are taxable in India
  
• GST compliance for cross-border SaaS and licensing must follow reverse charge or direct registration
  
• Accurate classification affects tax jurisdiction and rate
  

Compliance and Invoicing

• Registered software service providers must issue tax invoices with SAC code
  
• Periodic return filing (monthly or quarterly) is mandatory
  
• Maintain records of contracts, payments, and service delivery
  
• Input tax credit on related goods and services is claimable
  
• E-invoicing is applicable if turnover exceeds the prescribed limit