Emerging
AI & Technology Tax Advisory
Tax advisory for AI-driven businesses — GST on AI/SaaS tools under the OIDAR rules (s.2(17) IGST Act 2017), TDS on payments to overseas technology providers, PE exposure from remote service delivery, and VDA/token income characterisation under s.2(47A) IT Act 1961.
Tax advisory for AI-driven companies: OIDAR GST on imported AI/SaaS tools (s.2(17) IGST Act 2017), TDS on overseas technology payments (s.194J/s.195), PE exposure from remote delivery, and VDA/token characterisation under s.2(47A) IT Act 1961.
- • GST treatment of imported AI/SaaS tools and OIDAR reverse charge analysis
- • TDS opinion on software licences, subscriptions, and overseas vendor payments
- • PE exposure review for remote/AI-driven service delivery into India
- • VDA (crypto/token) income characterisation and tax computation
- • Tax-efficient structuring of the AI product (SaaS, licensing, marketplace)
- • Written opinion with citations, ready for the auditor or tax officer
- • AI/SaaS vendor contracts and subscription invoices
- • Export/import service agreements and payments schedule
- • Revenue model note (subscription, licensing, usage-based)
- • Token/crypto transaction history if applicable
See the fee table below for the statutory filing charge and common delay logic.
- • Section 2(17) of the IGST Act 2017 (OIDAR)
- • Section 194J of the Income-tax Act 1961
- • Section 195 of the Income-tax Act 1961
- • Section 2(47A) of the Income-tax Act 1961 (VDA)
- • Section 5(2) of the Income-tax Act 1961 (taxation of non-residents)
Process
How the service works
The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.
Map the revenue and cost stack
We map your AI product's revenue model (SaaS, licence, marketplace) and its vendor stack (overseas AI tools, cloud, models) so every flow gets a tax characterisation.
Run the GST OIDAR analysis
We test each imported service against the OIDAR definition in s.2(17) IGST Act 2017 — automated, delivered over the internet, essentially automated — and compute the reverse-charge liability.
Run the TDS analysis
We classify overseas payments: s.194J for software/services to residents, s.195 for payments to non-residents, and the 15CA/15CB route for remittance.
Assess PE and characterisation risk
We review whether your AI services create a permanent establishment exposure in India or abroad, and characterise token/VDA income under s.2(47A) and s.115BBH.
Deliver the written opinion
We issue a written advisory with section citations and the computation of any GST/TDS/VDA impact, structured so your auditor and tax officer can follow it.
Execute connected filings
If the opinion concludes in a filing — GSTR-3B with reverse charge, 15CA/15CB, 26Q — we prepare and file it and keep the acknowledgement trail.
AEO summary
AI & technology tax advisory covers the four tax questions an AI company actually hits: GST on imported AI/SaaS tools (OIDAR — s.2(17) IGST Act 2017), TDS on overseas software and licence payments (s.194J, s.195), whether AI usage creates a PE (permanent establishment), and how crypto/token income is taxed under s.2(47A) IT Act 1961. It is advisory — the filings that follow depend on the answers.
The four tax questions every AI company hits
The GST question: imported AI and SaaS tools are OIDAR services under s.2(17) of the IGST Act 2017, attracting reverse-charge IGST for B2B importers — payable in GSTR-3B by the 20th, creditable as input credit. The TDS question: payments to overseas technology providers for software, royalties and technical services fall under s.195 (non-resident) or s.194J (resident), with the DTAA rate often available only if the vendor holds a TRC and Form 10F.
The PE question: s.9(1)(i) of the Income-tax Act 1961 and the DTAA Article 5 test whether your AI services create a permanent establishment in a market where you sell remotely. The VDA question: if the product touches tokens or crypto, s.2(47A) and s.115BBH impose a flat 30% on transfers, so the characterisation of every flow decides the rate.
- • OIDAR — s.2(17) IGST Act 2017, reverse charge on B2B import, 20th of following month
- • TDS on non-residents — s.195 read with s.9(1)(vi)/(vii), treaty rate needs TRC + Form 10F
- • TDS on residents — s.194J at 2% on fees for technical services (other than professional services) and royalty; 10% on professional services — Finance Act 2023, w.e.f. 1 April 2023
- • PE — s.9(1)(i) IT Act 1961 + DTAA Article 5, tested on actual footprint
- • VDA — s.2(47A) definition; 30% flat tax under s.115BBH on transfers
Why the advisory comes before the filings
Most AI-company tax failures are classification failures: a subscription treated as a normal business expense when it is an OIDAR import; an overseas licence treated as fully exempt when TDS under s.195 should have been deducted; a token sale booked as revenue when s.115BBH imposes 30%. Each misclassification shows up years later in an assessment, with interest from the original due date.
The advisory fixes the classification up front. We issue a written opinion with citations that your auditor can rely on and that you can attach to the connected filings — GSTR-3B reverse-charge entries, 26Q, and 15CA/15CB — so the paper trail matches the opinion from the first invoice.
- • Misclassified OIDAR import → reverse-charge IGST + 18% interest under s.50 CGST
- • Missed s.195 TDS → assessee in default, s.201(1A) interest, s.271C penalty
- • Wrong token characterisation → 30% s.115BBH instead of business rate
- • PE not tested → exposure in the foreign jurisdiction, double taxation
Government fees
Fee breakdown
| Item | Fee | Notes |
|---|---|---|
| Professional opinion | Discuss with us | Professional fee for the advisory; no government fee for the opinion itself. |
| Connected filing (GST/TDS/15CA) | As per portal schedule | Applies only if the advisory concludes in a filing we execute for you. |
Timeline
Typical turnaround
Typical timeline usually means a 1–3 weeks per opinion turnaround, assuming documents are complete and any board or shareholder approvals are already in place.
Priced per opinion or per tax-issue review — advisory scope, not a portal filing.
Related services
Keep the company moving
15% global minimum tax applicability (€750M threshold) and Indian QDMTT readiness.
30% tax on VDA transfers under s.115BBH, s.194S TDS, and token income characterisation.
Foreign remittance compliance under s.195 read with Rule 37BB — which part, when, and whether 15CB is needed.
Section-wise TDS rates, quarterly 26Q/24Q filing, and TRACES corrections.
FAQ
Frequently asked questions
Do I pay GST on foreign AI tools like OpenAI or cloud services?
What TDS applies when I pay a foreign software vendor?
Can using AI tools create a permanent establishment for my company?
How is income from tokens or crypto taxed?
What is the deadline impact if I get the GST or TDS treatment wrong?
How long does an AI tax opinion take?
Canonical reference: https://www.pvtltd.co/services/ai-tax-advisory
Get started
Ready to move this filing forward?
We can help with the filing, the legal mapping, and the follow-up work that keeps the company compliant after submission.