Guide

GST on digital products in India: what to get right

Selling digital products in India means issuing documents someone else can file. The mechanics are not complicated, but the details are unforgiving — and most of them are about the invoice, not the tax rate.

This is a guide, not tax advice

Whether you must register, what rate applies to what you sell, and how you report it depend on your turnover, your state, and the nature of your supply. Those are questions for a chartered accountant. What follows is about the invoicing and record-keeping mechanics that software has to get right either way.

The invoice is the deliverable

Sequential numbering, no gaps: Invoice numbers must run in an unbroken series. A number generated from a timestamp or a random id is not a series, and it is the first thing that causes trouble at reconciliation time.
Tax shown as lines, not as a blended total: A single "tax" figure is not enough. The split has to be visible.
Buyer details captured at the point of sale: A B2B buyer needs their GSTIN on the invoice to claim input credit. Collecting it after the fact means reissuing the document.
Immutable once issued: An issued invoice does not get edited. A correction is a new document.

CGST and SGST, or IGST

For an intra-state supply — supplier and recipient in the same state — the tax splits into CGST and SGST. For an inter-state supply it is IGST instead. Both should be computed from the place of supply on the transaction, not assumed from an account setting, because a single seller will have both.

This is why the buyer’s state has to be part of the order record and not just a field on a profile that may have changed since.

Refunds are credit notes

A refund is not a deleted invoice or a negative line added to the original. It is a credit note referencing the original invoice, so the two reconcile as a pair and the original series stays intact.

The same is true of a partial refund and of a cancelled subscription cycle. If your records show a refund without a corresponding document, you will be reconstructing it later from payment-gateway exports.

Inclusive pricing and the number the buyer sees

For consumer sales, showing a GST-inclusive price is the kinder choice: the amount on the page is the amount debited. It also avoids the checkout abandonment that comes from a total growing on the last screen. The invoice still has to break the tax out as lines, which is a presentation difference rather than a pricing one.

What this platform generates

Sequentially numbered invoices with CGST, SGST or IGST lines as appropriate, credit notes for refunds against the original invoice, and a billing area where buyers can see their own orders, subscriptions and invoices. Prices shown to buyers are server-computed and GST-inclusive.

Common questions

Do I need to charge GST on digital products?

That depends on your registration status, turnover, and the nature of your supply — it is a question for your accountant. What software should guarantee regardless is a correctly numbered invoice with the right tax lines and credit notes for refunds.

Why does invoice numbering have to be sequential?

Because the series itself is part of the record. Gaps or non-sequential identifiers make the set hard to reconcile and hard to defend, which is why numbers generated from timestamps or random ids cause problems later.

How should a refund appear?

As a credit note referencing the original invoice, not as an edit to it. The original stays intact and the two documents reconcile as a pair.