Do I have to register in India to sell digital services there?
If your customers are consumers in India and what you supply falls within the regime, registration is the starting assumption rather than the exception. The regime exists precisely because the supplier is abroad and outside the ordinary collection machinery, so the obligation is placed on the foreign supplier directly. What has to be settled first is whether your service is of the kind covered, and whether the customers concerned are consumers or businesses, because that answer decides who accounts for the tax.
What kinds of services count as OIDAR?
Broadly, services delivered over a network whose supply is essentially automated and needs little or no human intervention: access to databases, downloadable content, software provided as a service, advertising space and similar. The boundary sits where human involvement becomes more than incidental, because a service performed by people and merely delivered electronically is generally a different thing. That line is where most disputes are found. It is worth testing your own product against it deliberately, with the customer-facing description and the technical reality both in front of you.
Who pays the tax if my Indian customer is a business?
Where the recipient is a registered business, a regime of this kind generally asks the recipient to account for the tax instead of the foreign supplier. The supplier's difficulty is proving which customers those were. A registration number captured at the point of sale and stored with the transaction is what supports the treatment later; a claim made at checkout and never verified is not. Businesses and consumers therefore need to be distinguishable in your billing data, not merely in your commercial understanding of who buys from you.
Can a foreign company register in India without an Indian entity?
Yes. The regime is built for suppliers with no presence in the country, and the registration route reflects that. Many suppliers appoint a representative in India to hold the registration and to file, which is often the practical answer even where it is not compulsory, because the returns, the notices and any query all arrive locally. The mechanics are amended from time to time, so confirm the current route before committing to a structure. Keep the question separate from whether the business has an income tax presence in India, which is decided under different rules.
How do I prove my customer is in India?
With evidence collected at the time of the sale and kept with it. The billing address, the country of the payment instrument, the network address used and the country code of a mobile number are the usual indicators, and the point is to record what you relied on rather than to find a single perfect test. Where indicators conflict, note which one governed and why. This part of the regime is administrative rather than technical, and it is the part that decides whether a position can be defended when a period is examined years later.
I have sold to Indian consumers for years without registering. Now what?
Deal with it deliberately, rather than registering quietly from today and hoping the history is not asked about. The first task is to measure it: which sales were to consumers, in which periods, on what evidence. The size and shape of the exposure decides the approach. India's disclosure and assessment machinery treats a taxpayer who arrives with a quantified position very differently from one who is found. Expect interest and penalty exposure to form part of the outcome, and expect the exchange-control side of the money already received to need its own answer.
Branch or subsidiary — which should we use to expand?
A branch keeps one taxpayer: results consolidate at home, losses are usable sooner, and the exposure is that the branch is a permanent establishment whose profit the host country taxes, sometimes with a branch tax on repatriation. A subsidiary is a separate taxpayer with limited liability and local rates, at the cost of withholding on dividends home and transfer pricing on everything between them. The deciding facts are usually expected losses, liability and exit plans. See branch against subsidiary.
What happens if the two countries disagree about which of them can tax me?
The treaty has a procedure for exactly that. You apply to the competent authority in your residence country, which takes the case up with its counterpart, and the two negotiate a position that removes the double taxation. Some treaties add binding arbitration if they cannot agree. It is slow and it runs on documents, so the practical work is preserving the record and filing protective claims while the clock runs. See our treaty work.
