Executive summary
US companies are often more tax-treaty-literate than companies from other markets — which paradoxically creates a specific blind spot. Being confident about your US-India tax position on income tax doesn't tell you anything about your GST position.
- OIDAR GST is an indirect (consumption) tax. It has no connection to the US-India income tax treaty (DTAA), which governs a completely different question — direct tax on your income, not consumption tax on your India sales.
- It's also not the same as India's former "Equalisation Levy" — the 2% digital services tax the US challenged under Section 301 in 2020–21. That was a different tax on a different base, targeting different companies, and has since been withdrawn.
- If you already navigate economic nexus under US state sales tax law (post-Wayfair), the underlying logic of OIDAR will feel immediately familiar.
- USD invoicing is permitted — Indian GST law allows foreign-currency invoices, provided the INR equivalent is also shown.
- Your US entity structure (LLC, C-Corp, Delaware or otherwise) has no bearing on your OIDAR obligation — India assesses the entity supplying the service, not its US corporate form.
The concept you already know: Wayfair
If your finance or tax team has dealt with US state sales tax in the last several years, you already understand the core logic behind OIDAR — just applied at the country level instead of the state level.
OIDAR applies the same underlying logic to India, at the national level: your company doesn't need an office, employees, or servers in India — a customer being located there is sufficient to create a GST obligation. If your organisation already has the muscle memory for economic-nexus-style compliance from managing US multi-state sales tax, the operational mindset transfers directly. The specific rules differ (the two-indicator place-of-supply test, the 18% flat rate, monthly GSTR-5A filing), but the underlying principle — tax follows the customer, not the seller — is one you've likely already internalised.
Why the tax treaty doesn't help here
This is the single most common point of confusion for US companies specifically, and it's worth being direct about it.
India has comprehensive tax treaties with over 90 jurisdictions, including the US, and DTAA compliance — TRC documentation, Form 10F, withholding rate claims — is a genuine, important compliance area for US companies with India-sourced income or payments. But none of that machinery has any bearing on whether you need to register for OIDAR, charge 18% IGST, or file GSTR-5A. These run on completely separate tracks, under separate statutes, assessed by separate criteria.
Not the old "Google Tax" dispute either
If your organisation has any institutional memory of a US-India digital tax dispute, it's very likely about a different, now-discontinued tax — worth explicitly ruling out.
This is a genuinely different tax from OIDAR GST: different rate (2% vs. 18%), different legal basis (a standalone levy vs. the GST framework), and different history (discontinued vs. actively enforced). If your organisation's prior India tax research turned up information about the Equalisation Levy — including its US trade dispute history — that information doesn't tell you anything about your current OIDAR GST position, which is a live, currently-enforced obligation.
Practical points for US companies specifically
Entity structure is irrelevant to the analysis
Whether you're a Delaware C-Corp, an LLC, or any other US entity form has no bearing on OIDAR — India assesses the entity actually supplying the service to Indian customers, not its domestic corporate structure. Multi-entity US groups should identify which specific entity is the contracting party and revenue recipient for Indian sales, since that's the entity with the registration obligation.
USD invoicing and FX
You can invoice Indian customers in USD — Indian GST law permits foreign-currency invoicing, provided the INR equivalent is also shown, either on the same invoice or a companion document. Apply a consistent, documented FX conversion methodology for your GSTR-5A reporting; inconsistent rates across periods is a common audit flag, as covered in our Complete Guide.
State-level sales tax teams are your natural internal resource
If your company has an established US multi-state sales tax function (common for SaaS, streaming, and digital-goods companies given the post-Wayfair compliance landscape), that team already has the operational muscle memory for economic-nexus-style compliance. Looping them into your OIDAR assessment, even though India isn't a US state, often accelerates internal buy-in and process design.
Treaty network context, for completeness
US companies with broader India operations (income tax filings, transfer pricing, potential permanent establishment exposure) should continue managing that DTAA compliance track in parallel — TRC documentation, Form 10F, and treaty-rate withholding claims remain genuinely important for direct tax. Just don't let that track substitute for a separate, dedicated OIDAR assessment.
Checklist
- Confirm OIDAR has been assessed separately from your DTAA/income tax compliance — don't assume one covers the other
- Identify which specific US entity is the contracting party for Indian sales, if you operate a multi-entity structure
- If you have a US multi-state sales tax function, involve them early — the compliance mindset transfers directly
- Set up consistent USD-to-INR conversion methodology for GSTR-5A reporting
- Use our applicability checker if you haven't yet confirmed OIDAR applies to your specific service
Glossary
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 →
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