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These records support your GST position, but collecting them does not by itself establish that tax is due or that input tax credit is available. First classify the service, confirm the supplier and recipient locations, determine the place of supply, and then apply the current reverse-charge and credit rules.
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Start with the import-of-service test
CBIC describes an import of service through three conditions: the supplier is located outside India, the recipient is located in India, and the place of supply is in India. All three must be examined for the actual arrangement. Paying in US dollars, euros, rupees, or another currency does not change that test; CBIC’s software FAQ states that “the factum of which currency was used to pay the consideration is immaterial.”
Do not treat every overseas payment as taxable automatically. Identify what was supplied, where each party is located, and which place-of-supply rule applies. An overseas software subscription, a remote consulting engagement, an intermediary arrangement, and a service connected with property can fall under different rules.
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General place-of-supply rule
For cross-border services, the IGST Act generally places the supply where the recipient is located when no special rule applies. CBIC says IT and IT-enabled services generally follow the recipient-location rule. Its FAQ also notes a qualification for an unregistered recipient when the supplier does not have the recipient’s address in its records.
Important exceptions
The IGST Act contains specific treatment for categories including services related to goods, services related to immovable property, intermediary services, and online information and database access or retrieval services. A consulting or software contract must therefore be reviewed on its terms rather than processed under a blanket “foreign vendor” rule.
The core document checklist
The following file structure gives an auditor a continuous trail from the commercial purchase to the GST return. Keep the original supplier records together with recipient-created documents and accounting evidence.
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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minute| Record | What it should establish | Examples to retain |
|---|---|---|
| Foreign supplier billing record | Who supplied the service, what was billed, the covered period, amount, and currency | Invoice, receipt, account statement, subscription billing page, credit note, or debit note |
| Commercial terms | The legal arrangement and pricing basis | Master agreement, order form, statement of work, engagement letter, subscription terms, renewal notice, or purchase order |
| Service and business-purpose evidence | What your business received, who used it, and why it was purchased | Deliverables, project correspondence, account activation, usage or access confirmation, acceptance record, or internal approval |
| Payment evidence | That the billed amount was paid to the stated supplier | Bank confirmation, card statement, payment-platform record, remittance advice, and foreign-exchange details shown by the payment provider |
| Recipient-side GST documents | How a reverse-charge transaction was documented | Self-invoice, payment voucher, and any adjustment document required for a change or cancellation |
| Tax and return reconciliation | How tax was calculated, paid, recorded, and reported | Tax calculation, ledger entry, evidence of GST paid, and return working connected to the transaction |
| Audit-trail information | That a reviewer can retrieve the source document and follow its accounting path | Document IDs, linked folders, accounting references, approval history, and electronic audit-trail data |
Supplier invoices, contracts, and subscription records
Preserve the supplier’s original invoice or billing record even when the document is generated in an online portal. It should identify the supplier, describe the software or consulting service, state the billing period, and show the amount and currency. Download the record when practical rather than relying only on a portal that may later change or close.
Keep the agreement that explains the charge. For software, this may be the order form and subscription terms, together with renewal or upgrade notices. For consulting, retain the engagement letter, statement of work, milestones, rate schedule, and amendments. Credit notes and debit notes belong in the same file so that an auditor can understand why the original amount changed.
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If the supplier’s document uses a platform account name that differs from the contracting entity, retain evidence that connects the account, legal supplier, and payment recipient. Where a group company, reseller, or payment processor appears in the chain, document each party’s role instead of assuming that the name on a card statement proves who supplied the service.
Prove the service and its business purpose
An invoice alone may not show what your business actually received. Add records that identify the service and the period in which it was used. A software file might contain the subscription confirmation, administrator activation, renewal notice, user allocation, or support correspondence. A consulting file might contain the statement of work, deliverables, meeting records, acceptance email, or project correspondence.
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Keep an internal purchase approval or explanatory note when the invoice description is abbreviated. The note should state the business function, cost centre or project, users or team receiving the service, and the relevant service period. This helps connect a recurring charge to the business activity without rewriting the supplier’s document.
CBIC’s accounts-and-records rules require a true and correct account of imported services and supplies attracting reverse charge, together with relevant documents. The rules do not prescribe one particular evidence format for every type of software or consultancy; use records that substantiate the actual arrangement.
Payment evidence and the currency question
Match each supplier invoice to the payment that settled it. Retain the bank, card, or payment-platform confirmation, the transaction date, and the reference that lets you reconcile the amount. If a payment covers several invoices, keep the allocation schedule or remittance advice showing how the total was applied.
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Foreign currency does not remove the need to analyze GST. CBIC’s FAQ on foreign software expressly says the currency used for payment is immaterial to the import-of-service test. Currency conversion may still be needed for accounting and tax calculation under the applicable rules, but the fact that a charge was paid in dollars or another currency does not, by itself, determine place of supply or reverse-charge liability.
When to issue a self-invoice and payment voucher
For the specified reverse-charge case involving a registered Indian recipient and services received from an unregistered person located outside India, CBIC’s FAQ requires recipient-created documents in addition to the supplier’s paperwork.
- Confirm the facts. Establish that the recipient is GST registered, the supplier is located outside India and is not charging Indian GST as the supplier for this transaction, the service has been received, and the applicable place-of-supply and reverse-charge rules make the recipient liable.
- Issue the self-invoice on receipt. CBIC states that the registered recipient must raise a self-invoice on the date of receipt of such services. Use the particulars and document controls required by the current GST invoice rules, and preserve the self-invoice with the original foreign supplier record.
- Record the tax position. Enter the resulting tax payable and any input tax credit claim separately in the accounting and GST working, subject to the conditions that apply to the transaction. Keep the calculation showing the value, rate, and period used.
- Issue the payment voucher when paying. Section 31(3)(g) of the CGST Act, as cited by CBIC, mandates a payment voucher in these circumstances at the time of making payment to the foreign supplier. Retain the voucher with the payment confirmation.
- Report in the relevant return period. CBIC’s FAQ says the applicable invoice or adjustment document is reported in the return for the month in which the supply takes place. Reconcile the return entry to the self-invoice, payment voucher, tax working, and supplier bill.
The exact liability and document requirement can depend on the transaction facts and later amendments. If the supplier is registered in India, charges Indian GST, or the arrangement falls under a special place-of-supply rule, do not copy this workflow without checking the applicable provision.
Separate supplier-issued invoices from self-invoices
CBIC’s invoice-rule material says an invoice for a taxable service is generally issued within 30 days of the supply, subject to specified exceptions. That timing concerns an invoice issued by the supplier under the ordinary invoicing rules. It is not a substitute for the recipient’s self-invoice obligation in a reverse-charge transaction, and it should not be used to postpone a self-invoice that is required on receipt.
Connect tax payment, ledgers, and returns
Keep the GST calculation and the accounting entry that records tax payable and tax paid. Where input tax credit is claimed, retain the working and ledger trail that supports the amount claimed. The accounts-and-records rules call for records of tax payable and paid, input tax, and input tax credit claimed, as applicable.
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Build a reconciliation with one reference number or folder path that links:
- the supplier invoice and contract;
- evidence of the service period and business purpose;
- the payment confirmation;
- the self-invoice or payment voucher, where required;
- the tax calculation and payment evidence; and
- the return working or ledger entry.
Do not rely on a spreadsheet that contains only a total. The underlying source documents must remain retrievable so that each amount can be traced back to the transaction that created it.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to decide which file applies to a transaction
| Transaction feature | Questions to answer | Documentation focus |
|---|---|---|
| Overseas software subscription | Where is the supplier located? What service is supplied? Is the recipient registered, and where is the place of supply? | Subscription terms, invoice or portal statement, renewal record, user or access evidence, payment proof, and reverse-charge documents if applicable |
| Foreign consulting engagement | What are the deliverables and service location? Does a special place-of-supply rule apply? | Engagement letter, statement of work, deliverables, correspondence, acceptance evidence, invoice, payment proof, and tax reconciliation |
| Supplier charges Indian GST | Is the supplier actually supplying through an Indian registration, and does the invoice show Indian GST? | Tax invoice, supplier registration details shown on the document, contract, payment record, and credit or debit notes |
| Payment made in foreign currency | Does the currency alter the import test? What conversion and accounting record supports the reported value? | Supplier bill in original currency, payment record, conversion or accounting working, and the applicable GST analysis |
| Potential exception category | Is the service related to goods or immovable property, intermediary activity, or online information and database access or retrieval? | Contract language and factual evidence needed to apply the specific place-of-supply provision |
Electronic records and audit readiness
CBIC permits records in paper or electronic form. Electronic storage is suitable when the files remain readable, protected from unauthorized alteration, and retrievable for the period required by the applicable law. Preserve the original file format where it carries useful information, such as a portal-generated invoice or digitally signed document.
Maintain a consistent naming convention and access-controlled folder for each supplier and billing period. Link the accounting entry to the source file rather than saving an unreferenced invoice in a general downloads folder. Retain the audit-trail information needed to show who created, approved, amended, or posted the record; CBIC’s rules require such information to be made available on demand.
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Common mistakes and how to correct them
Keeping only the card statement
A card statement proves a payment but normally does not describe the service, supplier terms, or billing period. Retrieve the invoice and subscription or engagement records, then link them to the payment reference.
Assuming every foreign vendor requires the same treatment
Supplier location, recipient status, service classification, and place of supply control the analysis. Recheck the contract when the supplier changes its legal entity, adds an Indian registration, or changes the service model.
Issuing a self-invoice but losing the supplier bill
The self-invoice is a recipient-side GST document; it does not replace the original evidence of what the foreign supplier charged. Keep both documents in the same transaction file.
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Recording tax without a return link
A ledger total that cannot be tied to a return working is difficult to verify. Add the return-period reference and preserve the calculation and payment evidence supporting the entry.
Using the invoice date as the only service evidence
For subscriptions and long engagements, the service period may span months. Retain renewal notices, access or delivery evidence, and correspondence that show when the service was actually received.
A practical close-out checklist
- Supplier identity and location are documented.
- The recipient’s GST registration status and business location are recorded.
- The service classification and place-of-supply rule have been assessed, including any exception.
- The invoice, contract, service evidence, and payment proof are matched.
- A self-invoice has been issued on receipt where the applicable reverse-charge rule requires it.
- A payment voucher has been issued when paying in the specified foreign-supplier case.
- Tax payable, tax paid, and any credit claim are supported by calculations and ledger entries.
- The return entry is linked to the transaction file.
- Electronic source documents and audit-trail information can be retrieved on demand.
GST rules and notifications can change. CBIC FAQs and the IGST Act provisions available on 13 October 2026 provide the framework summarized here, but confirm the current law and transaction-specific treatment before filing a return or claiming credit.
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