India GST for EU Companies: OIDAR Rules Explained

Hoping India can be folded into your OSS filing?

It can't — see Section 2 for exactly why.

Executive summary

EU companies operate one of the most sophisticated destination-based VAT systems in the world. That sophistication creates a specific, reasonable expectation about India that turns out to be wrong.

What you need to know

The EU's One-Stop-Shop (OSS) lets a business report and pay VAT across all 27 member states through a single registration and one quarterly return — a genuinely elegant simplification.
India is not part of OSS, any equivalent scheme, or any multi-country simplification. A standalone REG-10 registration and dedicated monthly GSTR-5A filing are unavoidable, however good your EU compliance infrastructure is.
The EU's own €10,000 threshold only applies to EU-established businesses selling cross-border within the EU — non-EU-established sellers face no threshold at all under the EU's own Non-Union OSS scheme, which is actually the closer parallel to how India treats you.
EU VAT rates vary by destination country, from 17% (Luxembourg) to 27% (Hungary). India applies a single national 18% rate with no state-by-state variation for a foreign supplier.

The concept you already know: OSS

If your company is established in Ireland, the Netherlands, or any other EU member state, you likely already operate exactly this kind of destination-based compliance system for your EU sales.

The parallel

Since 1 July 2021, the EU's One-Stop-Shop lets a business established in one member state report and remit VAT on B2C digital-service sales to consumers across all other member states through a single quarterly return, filed with its home "Member State of Identification." The underlying logic — tax follows the customer's location, one central filing covers many destination jurisdictions — is architecturally similar to what OIDAR does, just scoped to India specifically rather than a bloc of 27 countries.

If your finance team manages Union OSS today, the conceptual muscle memory — destination-based rate application, quarterly reporting discipline, location-evidence capture — transfers directly to thinking about India. What doesn't transfer is the expectation of consolidation, covered next.

Why India isn't, and won't be, part of it

This is worth stating plainly, because OSS's elegance makes the opposite assumption genuinely tempting.

Common mistake

Assuming that because OSS consolidates VAT reporting across 27 EU countries into one filing, a similarly consolidated approach might extend to major non-EU markets like India — or that India revenue can somehow be folded into existing OSS infrastructure. It cannot. OSS is an EU-specific mechanism under EU VAT law; India's OIDAR is entirely independent, governed by India's own IGST Act, requiring its own REG-10 registration and its own monthly GSTR-5A return, filed directly with Indian authorities. There is no multi-country simplification that includes India, and none is likely to exist — this is a standalone compliance obligation, however many other jurisdictions your OSS filing already covers.

Professional tip

Budget India as a genuinely separate compliance workstream from your EU VAT function — not a small add-on to an existing OSS filing, but its own registration, its own monthly rhythm, and its own dedicated tracking.

Threshold: it's more subtle than "€10,000"

Most summaries of EU VAT quote a single €10,000 threshold. The reality has an important carve-out that's actually the more relevant data point for understanding India.

The EU-established carve-out

The €10,000 EU-wide threshold applies only to businesses established in the EU selling cross-border to consumers in other EU member states. Below it, an EU seller may continue charging its home-country VAT rate; above it, EU rates for the destination country apply via OSS. Crucially, this threshold does not apply to non-EU-established businesses — those must register and charge VAT on EU sales via the Non-Union OSS scheme from the very first sale, with no threshold at all.

The irony is that the EU's own treatment of non-EU sellers — zero threshold, register from the first sale — is actually the closer parallel to how India treats every foreign OIDAR supplier, including EU companies. The €10,000 figure that's commonly quoted describes intra-EU treatment among EU members, not how the EU (or India) treats outsiders. Don't let the widely-cited €10,000 number create an expectation of a comparable buffer in India — the more relevant comparison is the EU's own zero-threshold treatment of non-EU sellers, and even that is generous compared to India's approach, since it at least sits within one unified filing system.

Professional tip

If you've ever explained your own company's Non-Union OSS obligations to a non-EU counterparty ("you must register from your first sale to our consumers, no threshold"), you've already made India's argument to someone else. Apply the same logic to your own India position.

Rate complexity vs a single rate

One area where India is genuinely simpler than what you already manage.

Within the EU, VAT rates on digital services vary by destination country — from 17% in Luxembourg to 27% in Hungary, with most member states somewhere in between, and some countries applying reduced rates to specific digital content categories like e-books. Your OSS return has to reflect the correct rate for each destination country, and getting this wrong is a commonly cited compliance failure.

India applies one rate, nationally

OIDAR is a flat 18% IGST regardless of which Indian state the customer is in — there is no per-state rate table to maintain, unlike the 27-country rate matrix your OSS system already handles. Don't build India-specific rate-variation logic anticipating EU-style complexity; it isn't there. The customer's state must still be recorded on the invoice under a 2024 CBIC circular, but this is a data-capture requirement, not a rate-determination one.

The marketplace deeming parallel

If you operate a platform rather than selling directly, the EU's own marketplace rules give you a useful head start.

The EU's deemed supplier rule

Under EU VAT rules, online marketplaces facilitating supplies of goods (and in certain circumstances, services) can be deemed to have received and supplied those goods or services themselves for VAT purposes — with additional record-keeping obligations even where the marketplace isn't the deemed supplier.

India's approach, detailed in full on our Marketplaces & Advertising guide, uses a specific four-condition test (control over charging, terms, delivery, and payment) rather than the EU's framework — but the underlying question is the same one you already ask about your EU marketplace operations: are you a genuine facilitator, or has your platform's operational structure made you the substantive supplier?

Checklist

Work through this specifically

Treat India as a standalone compliance workstream — it cannot be folded into OSS or any multi-country filing
Apply your Non-Union OSS zero-threshold logic to India, not the €10,000 EU-established figure
Don't build India-specific per-state rate logic — it's a single flat 18% rate nationally
Reset your compliance calendar for India's monthly GSTR-5A cadence alongside your quarterly OSS rhythm
If you operate a platform, apply India's four-condition intermediary test specifically — see our Marketplaces guide
Use our applicability checker to confirm your specific position

Common questions

Do EU Companies have to pay tax in India?

If you sell digital services to customers in India, yes — but not income tax. The charge is GST, under India's OIDAR rules, and it applies to the sale rather than to your profits. There is no registration threshold: a single Indian consumer paying a small amount creates the obligation from that first sale. The rate is 18%. Where your Indian customer is a GST-registered business that gives you its GSTIN, the customer accounts for the tax instead under reverse charge and you do not collect it. Where the customer is a consumer or an unregistered business, you must register in India, charge 18%, and file a monthly return. Your home-country tax treaty does not remove this, because treaties cover income tax, not GST.

We have received an OIDAR GST notice from India — what should we do?

Treat it as time-bound. A Show Cause Notice carries a fixed response window, and if it passes without a reply the authority can decide the matter without hearing you, which is far harder to undo than it is to answer in time. Do not ignore it because your company has no Indian entity or presence — that does not limit the demand. Establish first what the notice actually is, since a routine enquiry, a DRC-01 and a Show Cause Notice carry different deadlines and consequences. Pull together your India revenue by period, your customer classification, and any GSTINs you captured, because the reply stands or falls on that evidence. Our notice response guidenotice response guide sets out the sequence in detail.

Glossary

OSS

One-Stop-Shop — the EU's consolidated VAT reporting system, covering all 27 member states through a single registration. Does not extend to non-EU markets like India.

Union scheme

The OSS scheme for EU-established businesses selling to consumers in other EU member states.

Non-Union scheme

The OSS scheme for non-EU-established businesses selling services to EU consumers — no threshold applies, the closer analogy to how India treats foreign OIDAR suppliers.

ViDA

"VAT in the Digital Age" — the EU's ongoing package of VAT reforms rolling out 2026–2030, including mandatory e-invoicing and expanded single VAT registration for platforms.

CA Parmod Bindal, FCA

Founder & Lead OIDAR Specialist, OIDARIndia™

A finance leader with over three decades in taxation, corporate governance, and cross-border advisory. Former Independent Director of Steel Authority of India (SAIL), a Maharatna PSU, and Independent Director of CSL Finance Limited, a listed NBFC. Read full profile →

About this guide & sources: This guide reflects the position as at July 2026, drawing on the EU VAT e-commerce package (effective 1 July 2021) and European Commission published OSS guidance. It is provided for general information and does not constitute professional advice — EU VAT and Indian OIDAR obligations should each be assessed on their own specific facts.

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