What is Import of Services Under GST?

Import of services means receiving any service from a supplier located outside India. When an Indian business pays a foreign company for services, it is treated as an import of services under GST and is taxable under Reverse Charge Mechanism (RCM) — meaning the Indian recipient pays GST, not the foreign supplier.

When Does GST Apply on Import of Services?

GST applies on import of services when ALL three conditions are met:

1. The supplier is located outside India
2. The recipient is located in India
3. The place of supply is in India

If the service is received for personal use (not business), RCM does not apply to unregistered individuals. However, all GST-registered businesses must pay RCM on import of services.

Common Import of Services and GST Rate

Service	Foreign Supplier	GST Rate (RCM)
Google Ads / Google Workspace	Google Ireland / Google LLC	18% IGST
Facebook / Instagram Ads	Meta Platforms Ireland	18% IGST
Amazon Web Services (AWS)	Amazon Web Services Inc.	18% IGST
Microsoft Azure / Office 365	Microsoft Corporation	18% IGST
Zoom, Slack, Dropbox subscriptions	Respective foreign entities	18% IGST
Foreign consulting / advisory services	Overseas consultant	18% IGST
Royalty payments for software licences	Foreign software company	18% IGST
Import of legal / accounting services	Foreign law / accounting firm	18% IGST

How to Pay GST Under RCM on Import of Services

1. Identify the transaction: Any payment to a foreign vendor for services
2. Determine the value: Amount paid in foreign currency converted to INR at the RBI reference rate on the date of supply
3. Pay IGST: Pay 18% IGST in cash through your Electronic Cash Ledger — RCM tax cannot be paid through ITC
4. Report in GSTR-3B: Declare in Table 3.1(d) — Inward supplies liable to reverse charge
5. Claim ITC (if eligible): If the service is used for business, claim the IGST paid as ITC in the same or subsequent month in GSTR-3B Table 4

ITC on Import of Services

The IGST paid under RCM on import of services is available as ITC, subject to the normal ITC conditions. This means:

• The service must be used for business purposes
• The service should not be blocked under Section 17(5)
• All GST returns must be filed
• ITC can be claimed in GSTR-3B in the same month or any subsequent month before the September return of the next financial year

Time of Supply for Import of Services

The time of supply (and hence when RCM liability arises) for import of services is the earliest of:

• Date of payment
• Date of receipt of invoice
• 61 days from date of invoice (if neither of above)

Frequently Asked Questions

I am an individual paying for Netflix / Spotify — do I pay GST?

No. Unregistered individuals are not required to pay RCM on import of services for personal use. However, Netflix and Spotify may charge IGST directly — check your billing statement.

We pay Google Ads — our accountant says no GST needed. Is that right?

If your company is GST-registered, paying Google Ads is an import of services and 18% IGST under RCM is payable. Many businesses miss this — it is a common audit finding. Ensure your GSTR-3B correctly reports this.

Can we claim full ITC on Google Ads GST?

Yes — Google Ads is used entirely for business purposes and the IGST paid under RCM is fully claimable as ITC, subject to normal conditions.

Foreign company has GSTIN — do we still pay RCM?

Some foreign companies (like Google, Meta, LinkedIn) have obtained GST registrations in India and charge GST directly on their invoices. In such cases, you do not pay RCM — the tax is already charged on the invoice. Check if the foreign vendor's invoice includes Indian GST before deciding.