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Most finance teams at non-resident digital businesses selling into India have sorted their payment compliance. They have a payment provider with a PA-CB Import licence, understand how INR collections work, and know that funds settle in foreign currency overseas.
The GST registration is a different story.
PA-CB compliance and GST compliance are two separate obligations under Indian law. One licenses a payment provider to collect INR on your behalf. The other governs what your business owes the Indian tax authority on that revenue. Sorting the first does not touch the second. The Directorate General of GST Intelligence (DGGI) has been making this clear through enforcement notices.
574 platforms registered for OIDAR GST only after notices arrived. By that point, the liability already included two years of back taxes plus interest.
What OIDAR Is and Who It Applies To
OIDAR stands for Online Information Database Access or Retrieval. The GST framework under the Integrated Goods and Services Tax Act applies to foreign companies delivering digital services to Indian consumers.
If your platform sells any of the following to consumers in India, OIDAR applies:
- SaaS products and software subscriptions
- Edtech courses and digital learning content
- Online gaming and in-app purchases
- AI tools and productivity software
- Streaming, media, and digital content
- Database access and digital information services
Entity structure is not the determining factor. A foreign company with no Indian subsidiary, no Indian bank account, and no Indian employees is still liable if Indian consumers are paying for its digital services.
The tax rate is 18% IGST on all B2C transactions.
Why PA-CB Compliance Does Not Cover This
This is where most platforms have a gap, and it is a costly one.
PA-CB Import is a payment aggregator licence issued by the Reserve Bank of India. It authorises a payment provider to collect INR from Indian consumers on behalf of a foreign merchant and to remit the proceeds in foreign currency overseas. Having the right payment provider means your collections are RBI-compliant.
PA-CB compliance covers how you collect money. OIDAR covers what you owe on that money. Different regulators, different frameworks, no overlap.
A platform that is fully PA-CB compliant but unregistered for OIDAR is collecting payments legally while a GST liability builds in the background. PA-CB compliance carries no weight with the DGGI.
What Non-Compliance Actually Costs
The liability compounds fast. Under Section 50 of the CGST Act, interest accrues at 18% per annum from the date the obligation began, not from the date of the notice. Here is what two years of non-compliance look like across India’s revenue bands:
| Annual India Revenue | GST Owed (18%) | Interest (18% p.a. x 2yr) | Total Exposure (2 yrs) | Penalties |
|---|---|---|---|---|
| Rs. 20L to Rs. 1Cr (~$20,914 to $104,570) | Rs. 3.6L to Rs. 18L | Rs. 1.3L to Rs. 6.5L | Rs. 4.9L to Rs. 24.5L | Discretionary |
| Rs. 1Cr to Rs. 10Cr (~$104,570 to $1,045,697) | Rs. 18L to Rs. 1.8Cr | Rs. 6.5L to Rs. 65L | Rs. 24.5L to Rs. 2.45Cr | Discretionary |
| Above Rs. 10Cr (~$1,045,697+) | Rs. 1.8Cr+ | Rs. 65L+ | Rs. 2.45Cr+ | Discretionary |
Based on 18% IGST (IGST Act) + 18% p.a. interest (Section 50, CGST Act). Penalties under Section 122 CGST Act are additional and discretionary. USD conversions at $1 = Rs. 95.63.
Penalties under Section 122 of the CGST Act sit atop this. They are at the tax officer’s discretion and are not capped.
How Enforcement Works
The DGGI does not issue warnings. There is no pre-notice communication, no grace period for voluntary disclosure. The enforcement notice is the first thing a non-compliant platform receives.
Once a notice lands, the platform has to respond within the stipulated timeframe, appoint a fiscal representative if it does not already have one, file back returns for the non-compliant period, and clear the full liability, including interest, before penalties are calculated.
For a finance team that was not tracking this, the operational disruption alone is considerable, separate from the financial exposure.
Getting Compliant: 5 Steps
Registration under OIDAR is not complicated once you know what is needed. Most platforms get through it in three to six weeks, depending on how quickly documents are ready and how responsive the fiscal representative is.
Step 1: Appoint a fiscal representative in India. A chartered accountant firm or a registered tax advisory in India files GST on your behalf. This is a legal requirement. Your overseas finance team or legal counsel cannot substitute for this.
Timeline: 1 to 3 days.
Step 2: Compile your registration documents. Certificate of incorporation, proof of principal place of business, authorised signatory ID, and bank account details. The GSTN portal is strict on document formats and will reject submissions that do not meet the specifications.
Timeline: 3 to 5 days.
Step 3: File Form REG-09 on the GSTN portal. Your fiscal representative submits the non-resident taxable person registration. This is not something you file directly.
Timeline: 3 to 7 working days for portal processing.
Step 4: Receive your GSTIN and begin monthly filing. Once issued, GSTR-5A must be filed by the 20th of each month. Your fiscal representative handles the filing. 18% IGST applies on all B2C transactions from the date your liability started.
Step 5: Set up compliant payment collection. Accept INR via UPI, RuPay, and netbanking. Settle in your preferred foreign currency with no Indian entity required. Your payment provider must hold a PA-CB Import licence from the RBI.
GST and Payment Collection Can Run at the Same Time
A common assumption is that GST registration must be completed before a platform can start collecting from Indian consumers. It does not.
Payment collection through a PA-CB compliant provider and OIDAR registration are independent processes. Both can run at the same time. Waiting for GST to be fully resolved before going live means leaving India revenue on the table for no reason.
What matters is that both are actually in motion. A platform that collects without a PA-CB-compliant provider has an RBI problem. A platform with compliant payments but no OIDAR registration has a DGGI problem. Neither is a conversation any finance team wants to have after the fact.
Where to go from here
Whether your GST registration is sorted or still in progress, you can start collecting from Indian consumers today.
Cashfree Payments holds an RBI PA-CB Import licence, which enables INR collections through local payment methods and settlement in your preferred foreign currency, with no Indian entity required. If you need an OIDAR specialist advisor as well, we can connect you with one.
