GST on Import of Services Under RCM

Definition: when is a service imported?

IGST Act Section 2 defines import of services as a supply where the supplier is located outside India, the recipient is located in India and the place of supply is in India. Section 7 treats import of services into India as inter-State supply. Section 5 provides for IGST levy and reverse charge where notified/applicable.

For the connected rule, example or next step, see GST RCM Year-End True-Up for Services and Imports.

AP review checklist

Time of supply under RCM

For services liable under reverse charge, Section 13 contains specific time-of-supply rules. For associated enterprises where the supplier is located outside India, the time of supply can be the date of entry in books or the date of payment, whichever is earlier. This makes month-end AP accrual controls important.

Worked Example

An Indian company receives a $10,000 SaaS subscription invoice from a US vendor for business-use software. The supplier is outside India, the recipient is in India, and the place of supply is India — this is an import of service. At ₹84/$, the invoice value is ₹8,40,000. As inter-State supply under Section 7, RCM IGST applies at 18% = ₹1,51,200, self-invoiced and paid in cash via GSTR-3B Table 3.1(d) — the foreign vendor never charged GST, so there is no ITC to “claim from” before paying. Once paid, the company can separately claim the ₹1,51,200 as ITC in the same or a later return period if the subscription is used for business, subject to the usual conditions.

Common mistakes

• Assuming no GST because supplier did not charge GST.
• Ignoring foreign currency invoices below materiality threshold.
• Missing RCM on group-company service charges.
• Paying RCM but not reconciling ITC claim.
• Not checking place of supply for intermediary, OIDAR or property/event-linked services.

Official References Used

This article uses official GST law, rules, GST Council, CBIC/GST portal and e-invoice/e-way bill portal sources only. Notifications, circulars, rule text and portal workflows can change after this article’s last-reviewed date — verify against the current official source before relying on it.

• CBIC Tax Information: IGST Act Section 2 — import/export/intermediary definitions
• CBIC Tax Information: IGST Act Section 7 — inter-State supply and import of services
• CBIC Tax Information: IGST Act Section 5 — levy and reverse charge under IGST
• CBIC Tax Information: CGST Section 9 — levy and reverse charge mechanism
• CBIC Tax Information: CGST Section 13 — time of supply of services including reverse charge
• CBIC Tax Information: CGST Rule 46 — tax invoice particulars and export invoice endorsement

For the connected rule, example or next step, see GST on Education Services: Exempt vs Taxable Cases: Comparison, Tax Impact and Decision Framework.