Accounting for a SaaS or software business
If you sell software to customers outside India, that is an export of services and it is zero-rated under GST. Zero-rated is not the same as exempt, and getting the benefit depends on paperwork most founders do not know they need. The other thing that catches software businesses is timing: an annual plan collected in January is not January's revenue, and books that treat it that way show a profit that is not there.
Where this gets specific
The things a general accounting page will not tell you.
Exports are zero-rated, with conditions. You can export without paying IGST by filing a letter of undertaking, which is renewed each financial year. Let it lapse and you are paying tax you should not be paying, then claiming it back.
Payment has to arrive, and be evidenced. Export benefits depend on receiving the money in foreign currency within the permitted period, with bank documentation to show it.
Where your customer belongs decides the tax. An Indian customer is a normal taxable supply. A foreign customer is an export. Getting the place of supply wrong is the most common GST error in Indian software.
Paying foreign vendors can require withholding. Payments abroad for software, hosting or services can attract withholding tax and reporting forms before the money leaves. This is checked before payment, not after.
Annual plans are collected before they are earned. Revenue is recognised across the period you deliver, not on the day the card is charged. Books that ignore this overstate profit and then understate it later.
ESOPs create a tax event for your team. There are payroll withholding consequences when options are exercised. Employees find out the hard way if nobody plans it.
What we do about it
What we take over.
We keep your LUT current. Filed and renewed each year, so your exports stay zero-rated without you thinking about it.
Export documentation, kept in order. Invoices, bank realisation evidence and the trail that supports a zero-rated position if it is ever questioned.
Revenue recognised properly. Annual and multi-month plans spread across the period they cover, so your profit and loss statement is worth reading.
Foreign payments checked before they go. Withholding and reporting handled at the right time, which is before the payment, not at year end.
The rest of it. Books, GST, TDS, income tax, ROC and notices. One fixed fee.
Zero-rated is a benefit you qualify for, not a status you have. The paperwork is the qualification.
Questions
What people in your position ask.
Do I charge GST to customers outside India?
Selling software services to a customer outside India is an export and is zero-rated, so you do not charge Indian GST on it, provided the conditions for an export are met and you have filed a letter of undertaking. If they are not met, it is treated as a normal taxable supply and the tax becomes yours to pay. The conditions are the whole answer here, not the rate.
What is an LUT and do I need one?
A letter of undertaking is what lets you export without paying IGST upfront and reclaiming it later. It is filed on the GST portal and it has to be renewed every financial year. Exporters who forget the renewal end up paying tax on exports for months and then spending longer getting it back. We track the renewal.
My customers pay through Stripe or Paddle. Does that change anything?
It changes the evidence trail and sometimes who the supply is legally made to, which affects how the transaction is treated. It is a question worth answering properly at the start rather than discovering at your first assessment. Tell us how you collect and we will tell you where you stand.
We are pre-revenue. Is there anything to do?
Yes, and doing it now costs less than fixing it later. A company with no revenue still owes an audit, annual ROC filings and an income tax return, and TDS starts the month you pay your first salary. Clean books from month one also make your first due diligence a week instead of a month.
By kind of business
Not quite you?
- D2C and ecommerce
Marketplace TCS, returns, and settlements that never match your sales.
- Agencies and studios
Contractor TDS, pass-through costs, and retainers billed ahead of the work.
- Consultants and professionals
Presumptive taxation, and the TDS your clients already deducted.
- Creators and influencers
Gifted products are income. Barter is taxable. Platform income is an export.