Why GST Trips Up SaaS Founders
GST feels like an accounting problem but it's actually a product and pricing problem. Getting it wrong means your prices are off, your invoices are non-compliant, and B2B customers can't claim input tax credit — which makes them not want to buy from you.
Do You Need to Register?
GST registration threshold for services: ₹20 lakh annual turnover (₹10 lakh for some northeastern states).
If your SaaS revenue is under ₹20 lakh annually, you're not required to register. However, B2B customers need your GSTIN to claim input tax credit. If you're selling to businesses, register voluntarily even if you're below the threshold — it makes you more credible and removes friction.
Cross-state sales: If you're selling SaaS to customers in other states (almost always yes, since SaaS is delivered digitally), you must register for GST regardless of turnover threshold. This catches many early-stage founders off-guard.
What Rate Applies to SaaS?
SaaS products are classified as 'Online Information and Database Access or Retrieval Services (OIDAR).' The applicable GST rate is 18%.
This applies to:
- Software subscriptions
- Cloud-based services
- API access
- Digital tools and platforms
Invoicing Requirements
Every GST invoice must include:
- Your GSTIN
- Customer's GSTIN (for B2B)
- Invoice number (sequential, no gaps)
- Date of issue
- HSN/SAC code (SAC 9983 for software services)
- Taxable value
- GST amount (CGST + SGST for intra-state, IGST for inter-state)
- Total amount
For B2B sales, the customer's GSTIN is mandatory so they can claim input credit. Many SaaS platforms collect this at signup.
Intra-State vs. Inter-State
Intra-state (same state as customer): Charge CGST (9%) + SGST (9%) = 18% total. Inter-state (different state from customer): Charge IGST (18%).
For SaaS, almost all sales are inter-state (digital delivery to customer's state of registration), so IGST applies in most cases.
Exports — The Zero-Tax Opportunity
If your customer is outside India, the service is an export of service — zero-rated under GST. You charge 0% GST and can claim a refund of any input GST you paid.
To qualify as export of service:
- Supplier is in India ✓
- Recipient is outside India ✓
- Payment received in foreign currency ✓ (critical requirement)
- Services are utilized outside India ✓
Keep payment proof (SWIFT/bank records) for every international transaction.
Filing Requirements
GST returns once registered:
- GSTR-1: Monthly (or quarterly for small taxpayers) — outward supplies
- GSTR-3B: Monthly — summary and tax payment
- GSTR-9: Annual return
Most SaaS founders use a CA for GST filings. Cost: ₹2,000–5,000/month. Worth it — the penalty for non-compliance is steep (₹10,000 minimum + 18% interest on unpaid tax).
The Razorpay/Stripe GST Integration
Razorpay can auto-generate GST-compliant invoices if you configure your GSTIN and tax rates in the dashboard. This saves significant time compared to generating invoices manually.
For Stripe, you'll need a third-party tool like Zoho Books or a custom integration to generate Indian-compliant invoices.
Key Mistakes to Avoid
Not collecting customer GSTIN at signup. Add a GSTIN field in your billing form. B2B customers will ask for it later and backfilling is painful.
Wrong SAC code. Use 9983 for software services, not generic codes.
Missing export documentation. Keep every foreign payment receipt. GST audits check these.
Not filing even when nil. If you're registered, file every month even if revenue was zero. Penalties for missing filings accumulate quickly.
