Indian Subsidiary Receiving Services from a US Parent: GST Reverse Charge

Prepared by AU Corporate's CA-led advisory team · Published 14 October 2026 · Check the current GST provisions and the facts of each service arrangement.

An Indian subsidiary may receive management support, software access, engineering, finance, HR, marketing or shared services from its US parent. Even where the group treats the charge as a cost allocation, the Indian company should assess whether the arrangement is a supply of services and whether import-of-services or reverse-charge provisions apply.

Quick answer

When should an Indian subsidiary review GST reverse charge on parent-company services?

Review each cross-border service arrangement before payment or periodic reporting. Identify the supplier and recipient, describe the actual service, analyse place of supply and the import-of-services conditions, determine whether reverse charge applies, and document any eligible input tax credit separately from income-tax withholding and transfer pricing.

1. Identify the service and the parties

Begin with what the US parent or group entity actually does for the Indian company. A broad “management fee” label can hide different supplies, while a recharge of third-party costs may require its own analysis. Map the contracting entity, service recipient, beneficiary, invoicing party and payment flow.

Management, finance, legal, HR, procurement or regional support.
Software, cloud access, data processing or technical support.
Engineering, research, product development or quality support.
Employee secondment, travel costs or shared third-party expenses.

2. Apply the import-of-services test

Do not assume every cross-border payment is an import of services or that an allocation without a margin is automatically outside GST. Analyse the statutory conditions, including supplier location, recipient location and place of supply, alongside the nature of the transaction and any applicable special rule.

Use the current provisions and official guidance available through the GST portal. If a charge relates to several countries or entities, retain the allocation method and explain why the Indian company bears the amount.

3. Determine whether reverse charge applies

Where a service falls within the applicable import-of-services and reverse-charge provisions, the Indian recipient may need to account for GST even if the foreign supplier does not issue an Indian GST invoice. Confirm the applicable tax treatment, valuation, time of supply, payment process and return reporting for the transaction category.

Do not copy a treatment from a previous invoice without checking whether the current service, parties and contract are the same. New services, a change in the recipient or a revised recharge model can change the analysis.

4. Consider input tax credit separately

GST paid under reverse charge and eligibility to claim input tax credit are separate questions. The Indian company should assess whether the credit conditions are met, whether the service is used for eligible business activities and whether any restriction applies. Keep the tax payment evidence and supporting documents aligned with the return and accounting records.

5. Keep transfer pricing and income-tax withholding distinct

The GST conclusion does not decide whether the fee is deductible, whether transfer-pricing rules apply or whether income-tax must be withheld. Those questions have separate tests. A related-party service may need evidence of actual services and benefit, an arm’s-length pricing analysis and a treaty-aware withholding assessment in addition to GST review.

See our guides to management fees from a US parent and transfer-pricing documentation and Form 3CEB.

6. Build an audit-ready record

Signed intercompany service agreement and current scope of work.
Invoices, cost-allocation schedules and explanation of the charging basis.
Evidence of services performed and benefits received where relevant.
Written GST analysis, reverse-charge workings and payment evidence.
Input tax credit eligibility assessment and return reconciliation.
Separate income-tax withholding and transfer-pricing documentation.

Frequently asked questions

Can GST apply when an Indian subsidiary receives services from its US parent?

Yes, cross-border services can raise import-of-services and reverse-charge questions. The result depends on the supplier, recipient, place of supply, nature of service and applicable statutory conditions.

Does every payment to a US parent attract GST under reverse charge?

No blanket conclusion should be drawn from the overseas status of the recipient or the invoice label. First determine whether there is a supply, how it is characterised, whether the import-of-services conditions are met and whether an exclusion or special rule applies.

Can the Indian subsidiary claim input tax credit for GST paid under reverse charge?

Input tax credit may be available if the statutory conditions are satisfied and the tax is properly paid and documented. Eligibility, blocked credits, business use and documentation should be checked before treating the amount as recoverable.

Is GST the same as withholding tax on a payment to the US parent?

No. GST and income-tax withholding are separate analyses with different legal tests. One payment can require more than one review, and the conclusion under one tax does not decide the other.

What documents should the group retain?

Keep the intercompany agreement, service description, invoices or allocation schedules, evidence of work performed, calculation basis, payment records and the Indian company’s GST analysis and return support.

This article is general information, not tax advice. GST treatment depends on the actual supply and current law; obtain transaction-specific advice before filing or paying tax.