(ChatGPT, Grok, Midjourney, Canva Pro, Microsoft 365, Slack, GitHub Copilot & more)
1. Why this matters
Indian companies—from boutique CA firms analysing data with ChatGPT to SaaS start-ups designing UI in Figma or engineers coding with GitHub Copilot—routinely swipe corporate cards on overseas platforms. All of these fall under Online Information & Database Access or Retrieval (OIDAR) services and trigger India-specific GST rules. Understanding who must pay the 18 % IGST and how to claim input-tax credit (ITC) is essential for cash-flow and compliance.
2. Statutory backbone
| Provision | What it says | Relevance to subscriptions |
|---|---|---|
| § 2(17) IGST Act | OIDAR = services “delivered over the internet with minimal human intervention” | Covers AI tools (ChatGPT, Grok), SaaS (Notion, Jira), OTT, cloud storage. |
| § 13(12) IGST Act | Place of supply for OIDAR from abroad = location of recipient in India | Makes the service taxable in India. |
| § 5(3) IGST Act + Notif. 10/2017-IGST | Shifts tax to recipient for any service from a non-taxable territory if the recipient is GST-registered | Basis of reverse-charge mechanism (RCM) for B2B imports. |
| § 14 IGST Act | Foreign supplier must register in India & pay IGST when supplying to unregistered users | Drives forward charge for B2C users. |
| Rule 46 & Rule 34 CGST Rules | Prescribes self-invoice & RBI FX conversion for imports of services | Practical invoicing for RCM. |
3. Did OpenAI’s (or Adobe’s, Atlassian’s) new GSTIN change anything?
Short answer: Only for non-GST users.
Even after OpenAI, Midjourney or Canva obtain an Indian OIDAR GSTIN, GST-registered recipients must still pay IGST under RCM.
CBIC reiterated this in Circular 240/34/2024-GST (31-Dec-2024): supplier registration under § 14 does not override Notification 10/2017 for B2B supplies.
4. Liability matrix for popular scenarios
| Recipient type | IGST on supplier invoice? | Who pays? | Mechanism | ITC availability |
|---|---|---|---|---|
| Individual freelancer using Midjourney, no GSTIN | Yes – supplier collects 18 % | Supplier (forward charge) | Files GSTR-5A | No |
| CA firm with GSTIN buys ChatGPT Teams but forgets to add GSTIN | Yes (treated as B2C) | Supplier | Forward charge | Yes – claim from tax-charged invoice |
| Tech start-up enters GSTIN on Stripe for Notion | No | Recipient | RCM → self-invoice, pay via GSTR-3B (3.1-d) | Full ITC same return |
| Invoice shows IGST despite GSTIN due to system glitch | Yes | Supplier | Forward charge | Claim ITC; do not pay RCM again |
5. Step-by-step compliance for B2B imports (RCM route)
- Update billing profile: add correct GSTIN on ChatGPT, Grok, Canva, AWS, etc.
- Convert value to INR: use RBI TT-buying rate of the day preceding payment (Rule 34).
- Self-invoice: within 30 days; include SAC 998439, value, IGST 18 %.
- Pay IGST: through the cash ledger; report in GSTR-3B Table 3.1-d.
- Claim ITC: in Table 4A(5) of the same return (conditions of § 16 satisfied).
- Annual disclosure: include in Table 4 of GSTR-9.
Illustration – ABC Consulting pays USD 50 for Grok Pro
RBI rate: ₹ 84.00; Taxable value: ₹ 4,200 → IGST: ₹ 756.
ABC books expense, pays ₹ 756 via RCM, and instantly offsets it as ITC—net cash outflow zero.
6. Special issues for professional & software firms
| Issue | GST treatment | Practical tip |
|---|---|---|
| Cross-charging AI costs to group entities | Treat as taxable supply; levy 18 % GST when re-invoicing within India | Use Input Service Distributor to share ITC if centralised procurement |
| Subscriptions partly for exempt education services (e.g. e-learning apps) | ITC restriction under Rule 42 | Maintain cost break-up or reverse proportionate credit |
| Employee reimbursements for personal Canva Pro plans | Tax paid under forward charge by supplier; employer cannot reclaim ITC | Move to corporate billing with GSTIN to avoid credit loss |
| Start-ups below ₹ 20 L turnover importing GitHub Copilot | Threshold irrelevant—RCM applies even if otherwise unregistered | Must obtain GST registration once RCM liability arises |
| Refund of unused credits (Stripe reversal) | Adjust taxable value in subsequent self-invoice; reverse proportionate ITC | Keep credit-note email as evidence |
7. Record-keeping checklist (audit ready)
| Document | Why keep it | Retention |
|---|---|---|
| Supplier invoice / Stripe receipt (ChatGPT, Canva) | Base value, supplier GSTIN/ARN | 72 months |
| Self-invoice under RCM | Mandatory Rule 46(s) | 72 months |
| RBI reference-rate sheet | Supports INR valuation | 72 months |
| Payment proof (SWIFT / card statement) | Time of supply evidence | 72 months |
| GSTR-3B & GSTR-2B copies | Matches tax & ITC | 72 months |
| User licence agreements | Proof of business use | 72 months |
8. Recent developments & future watch-outs
- Circular 242/36/2024-GST (Jan 2025) – OIDAR suppliers must print the state of an unregistered recipient on invoices to ensure correct IGST settlement. Goods and Services Tax Council
- Auto-population of RCM ITC – From Apr 2025, IGST paid under RCM auto-flows into GSTR-2B, easing reconciliation.
- GST Council’s 2025-roadmap – proposal to merge OIDAR and digital-services TCS provisions; may affect marketplaces like Google Play and Apple App Store.
- RBI LRS monitoring – banks now tag outward FX under software subscription code; mismatch with GST filings could trigger scrutiny.
9. Common mistakes—and how to avoid them
| Mistake | Consequence | Fix |
|---|---|---|
| Paying IGST twice (supplier + RCM) | Cash-flow blockage | Claim credit of supplier-charged IGST; skip RCM for that invoice |
| Forgetting self-invoice within 30 days | Interest @ 18 % p.a. on delayed tax | Back-date invoice, pay interest, disclose voluntarily |
| Using personal Gmail to buy Midjourney for office work | No GSTIN captured → credit lost | Switch to corporate account & recharge balance |
| Booking expense net of GST | Overstates cost, understates ITC | Map RCM entries correctly in ERP |
10. Take-aways for finance teams
- RCM is here to stay for GST-registered buyers—even if ChatGPT, Grok, Adobe, or Atlassian have Indian GSTINs.
- Systemise self-invoicing: automate FX conversion & ledger posting.
- Educate employees: personal cards on foreign SaaS equal credit leakage.
- Review cost allocation: AI licences used for taxable projects = full ITC; mixed use may need reversal.
- Stay updated: CBIC circulars evolve rapidly as India’s digital-services tax net widens.
Conclusion
Whether you code with GitHub Copilot, design in Canva Pro, brainstorm with ChatGPT, or manage tasks on Monday.com, every dollar you pay overseas is squarely within India’s GST framework. If you hold a GSTIN, the reverse-charge drill—self-invoice, pay IGST, claim ITC—remains non-negotiable despite the recent wave of OIDAR registrations by foreign tech giants. Master the workflow now, and your digital transformation will stay matched by impeccable tax governance.
(For educational use; seek a formal opinion for transaction-specific decisions.)
Stox N Tax 
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