Import of Services explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 7(1)(a) applies the business test to every supply. Section 7(1)(b) removes it for one category:
"(b) import of services for a consideration whether or not in the course or furtherance of business"
Read literally, an individual paying a foreign designer, a foreign university, or an overseas subscription service is making a taxable import of services. They are not registered, they have no business, and the levy still attaches — because the words say so.
The reason nobody pays it is not that the levy fails. It is that an exemption catches it.
Section 7(1)(b) makes the import of services a supply regardless of business purpose, and s.5(3) of the IGST Act read with the RCM notification makes the importer liable under reverse charge. Relief for individuals comes from Entry No. 10(a) of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017, exempting services imported by an individual otherwise than in the course or furtherance of business. For OIDAR, the burden shifts differently — the foreign supplier registers and pays where the recipient is a non-taxable online recipient.
Why the business test was switched off
If the import of a service by a non-business person were outside the levy, the base would leak in an obvious way. A person could procure services abroad, use them personally, and pay nothing — while the same service procured domestically bears tax.
More importantly, GST is a destination-based consumption tax. Consumption in India of a service produced abroad should bear Indian tax on principle, whatever the consumer's business status.
So the levy was drawn wide and the relief was put in an exemption. That is a deliberate design, and it has two consequences worth understanding.
An exemption is conditional. The relief in Entry 10(a) applies to an individual and only where the import is otherwise than in the course or furtherance of business. A sole proprietor importing a service that touches the business does not get it.
An exemption can be withdrawn. The levy stays; only the relief is discretionary. Businesses relying on the personal-use characterisation should be able to evidence it.
The three routes an imported service can take
Business importer, non-OIDAR service. The Indian recipient pays under reverse charge as an inter-State supply, self-invoices under s.31(3)(f), issues a payment voucher under s.31(3)(g), pays in cash (RCM cannot be discharged from the credit ledger), and takes credit subject to s.16 and s.17. Time of supply is governed by s.13(3) — the earlier of payment or the day following 60 days from the supplier's invoice.
Individual, personal use. Exempt under Entry 10(a). No registration, no payment, no return. The exemption does the work; there is no need to argue that the levy fails.
OIDAR service to a non-taxable online recipient. Different machinery. Section 14 of the IGST Act requires the overseas supplier (or its intermediary) to take registration in India and pay the tax, filing GSTR-5A. The Indian consumer pays a tax-inclusive price and does nothing.
The definition of "non-taxable online recipient" was widened by the Finance Act, 2023 — it now covers any unregistered person receiving OIDAR services for any purpose, not only for purposes other than commerce, industry or business. So an unregistered business receiving OIDAR services is now the supplier's problem, not its own.
Where the characterisation goes wrong
Proprietorship blending. A proprietor's GSTIN and personal identity are the same PAN. A foreign subscription used for both business and personal purposes is not cleanly within Entry 10(a). The safer treatment is to pay under RCM and take credit to the extent of business use.
Free imports. Entry 10(a) and s.7(1)(b) both speak of import for a consideration. A genuinely free service has no consideration and is outside s.7(1)(b) — but Schedule I paragraph 4 separately deems the import of services by a person from a related person or from any of his other establishments outside India, in the course or furtherance of business, to be a supply even without consideration. Related-party imports therefore cannot rely on the absence of a payment.
Establishments of the same person. An Indian branch receiving services from its foreign head office is caught by Schedule I paragraph 4. Circular No. 210/4/2024-GST addressed valuation of such imports where full credit is available — the value declared in the self-invoice is deemed to be open market value.
Services vs goods. Import of goods is not covered by s.7(1)(b) at all; it is taxed under the Customs Tariff Act read with s.3(7) of that Act, collected at the point of import. The two regimes are separate.
Key takeaways
- s.7(1)(b) taxes imported services regardless of business purpose.
- Individuals importing for personal use are relieved by Entry 10(a) of Notification No. 9/2017-IT(Rate) — an exemption, not an absence of levy.
- Business importers pay under reverse charge, in cash, with a self-invoice and payment voucher.
- OIDAR to a non-taxable online recipient shifts liability to the foreign supplier, who files GSTR-5A.
- Schedule I paragraph 4 catches related-party and inter-establishment imports without consideration.
- Import of goods is outside this scheme entirely.
Read next
- "In the Course or Furtherance of Business" — The Undefined Test
- Import of Services Under GST: Reverse Charge and ITC
- OIDAR Services Under GST
- Self-Invoice for Reverse Charge Purchases
Disclaimer: Positions stated as on 5 September 2026, based on ICAI Background Material on GST, Volume I (2026 edition).