The implementation of the Goods and Services Tax (GST) in India has significantly impacted foreign companies operating within the country. India GST foreign entities must navigate a unified tax system that has replaced multiple indirect taxes such as VAT, service tax and central excise duty, simplifying compliance but introducing new challenges.

For foreign entities providing services to Indian consumers, GST applies through the Integrated GST (IGST) framework. Services classified under Online Information and Database Access Retrieval (OIDAR), such as online advertising and cloud services, require foreign service providers to register for GST, charge GST on transactions, and comply with tax filing requirements​​. This ensures that digital services consumed in India are taxed, creating a level playing field for domestic and international service providers.

On the goods front, foreign companies importing products into India are subject to IGST and customs duty. This tax is payable at the time of goods clearance from customs, impacting the cost structure and pricing strategies of foreign businesses​​.

Moreover, India GST foreign entities must consider the exemption rules. Indian branches of foreign companies are exempt from GST when supplying services to their foreign headquarters, provided the place of supply is outside India. However, this exemption does not apply to the import of services by Indian entities from their foreign counterparts, which remain taxable under the reverse charge mechanism.