The India Software Tax: forex, GST, and what SaaS really costs

Short summary

Indian businesses paying for USD-billed SaaS face two layers of cost: an unavoidable ~3.5% forex conversion premium and an 18% GST charge that is reclaimable for registered businesses but not for unregistered ones. The real premium is ~4% for GST-registered companies and ~22% for those who cannot reclaim GST, debunking the common claim of a flat 23% tax. Rupee-billed local tools skip the forex layer entirely, often making India-built products the cheapest true-cost option.

• •Forex conversion adds ~3.5% irreclaimable premium on USD-billed SaaS
• •GST-registered businesses reclaim 18% GST; unregistered buyers bear the full cost
• •Real premium is ~4% for registered, ~22% for unregistered — not a flat 23%

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