GST on Software Licence Plus Implementation and Support: Composite-Supply Classification
By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026
2-minute summary
- Read the statement of work rather than classifying the entire deal from the word “software”.
- If implementation is inseparable from making the licensed solution operational and sold as one normal package, a composite-supply analysis may be appropriate.
- Separately contracted support/AMC after go-live may be an independent service with its own time/place/value issues.
- For foreign software/vendor contracts, determine import-of-service/RCM and whether the supply is automated/OIDAR or a broader B2B implementation service on the actual facts.
Current position
Control and evidence map
| # | Control | What the file should show |
|---|---|---|
| 1 | Break the contract into licence/subscription, implementation, migration, training and support deliverables. | |
| 2 | Identify pricing dependency and whether customers can buy components separately. | |
| 3 | Determine principal supply and document composite-supply rationale where used. | |
| 4 | Map supplier/recipient location and applicable place-of-supply/import rules. | |
| 5 | Reconcile milestone invoices, advances, credit notes and ITC to go-live/support periods. | |
Worked example
An Indian company buys a three-year ERP subscription plus mandatory implementation and data migration for one bundled price, while optional training is separately priced. The core package may support a composite-supply analysis around the software service, but the separately optional training should not be swept in automatically. If the vendor is overseas, RCM and import-of-service analysis must also be performed.
Common mistakes
- Treating every software contract as sale of goods or every SaaS contract as OIDAR without facts.
- Ignoring separately optional implementation/support components.
- Applying composite-supply treatment only because there is one invoice.
- Missing RCM/place-of-supply analysis for foreign vendors.
Frequently asked questions
Is implementation always part of the software licence?
No. Natural bundling, contractual dependency and normal industry practice matter.
Does one invoice prove composite supply?
No.
Can support after go-live be separate?
Yes, especially when separately contracted/priced and not integral to initial implementation.
What changes for an overseas vendor?
Import-of-service, RCM and place-of-supply rules must be tested on the actual supply model.
Official sources
- Central Board of Indirect Taxes and Customs - Central Goods and Services Tax Act, 2017 (current consolidated law)
- Central Board of Indirect Taxes and Customs - Integrated Goods and Services Tax Act, 2017 (current consolidated law)
Disclaimer
Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.