CRM Costs, Price Drivers and 2026 Rules
CRM priced in US dollars: exchange rates, 18% GST, reverse charge and TDS under section 393
What a dollar-priced CRM really costs an Indian business — FX and card charges, IGST under reverse charge, OIDAR for unregistered buyers, and TDS under the Income-tax Act 2025.
A CRM priced in US dollars costs an Indian business the dollar price converted at the rate your bank or card actually applies, plus any forex markup, plus 18% GST — which, for a foreign supplier billing a registered business, you usually pay yourself under reverse charge and then claim back as input tax credit. On top of that, from 1 April 2026 the question of TDS on payments to a non-resident sits in section 393 of the Income-tax Act, 2025. None of this makes a dollar plan a bad choice, but it changes cash flow and the comparison with rupee-billed plans. This guide explains each layer; it is part of the CRM costs overview and is general information, not tax advice.
Layer 1: the exchange rate and payment charges
Dollar prices look stable but your rupee cost is not:
- Rate used. Cards and banks convert at their own rate, not the RBI reference rate, and usually add a forex markup (often a few percent on cards; check your card's schedule of charges).
- Rupee movement. A three-year plan is exposed to three years of exchange-rate moves.
- Annual prepayment fixes the dollar amount for the year but not the rupee amount at renewal.
Illustrative example. A plan costs $25 per user per month billed annually for 8 users: $25 × 8 × 12 = $2,400 a year. At an illustrative ₹88 per dollar that is ₹2,11,200. A 3% card markup adds ₹6,336, giving ₹2,17,536 before GST. If the rupee is at ₹92 at the next renewal, the same plan costs ₹2,20,800 before markup.
For budgeting, add an FX buffer of a few percent to dollar quotes in the TCO estimator, or ask whether the vendor offers rupee billing through an Indian entity or reseller, which removes the FX risk and usually puts GST on a normal tax invoice.
Layer 2: GST on CRM subscriptions
| Who bills you | GST position (general) | Input tax credit |
|---|---|---|
| Indian supplier (including an Indian entity of a global vendor) | 18% GST on the invoice: CGST + SGST within the state, IGST across states | Usually available to a registered business using it for business |
| Supplier outside India, you are GST-registered | Import of services: you pay IGST at 18% under reverse charge in GSTR-3B | Available, generally in the same return, after paying the tax in cash |
| Supplier outside India, you are not registered (or buy personally) | The service is an OIDAR supply to a non-taxable online recipient; the foreign supplier is required to register and charge GST | Not applicable |
SaaS remained at 18% after the GST rate rationalisation of 22 September 2025. Confirm the position for your supply on the CBIC GST site.
Worked example: reverse charge (illustrative)
A registered trading company pays $2,400 for a CRM billed from abroad, valued at ₹2,11,200. IGST under reverse charge = ₹2,11,200 × 18% = ₹38,016, paid in cash through GSTR-3B. If eligible, the company claims ₹38,016 as input tax credit in the same period, so the net GST cost is nil, but the cash is out for a while. If the business makes exempt supplies, part of the credit may have to be reversed and becomes a real cost.
Layer 3: TDS on payments for CRM software
From 1 April 2026, TDS on payments other than salary is consolidated in section 393 of the Income-tax Act, 2025, which replaced sections such as 194J and 195 of the 1961 Act. Sub-section (1) covers payments to residents; sub-section (2) covers payments to non-residents.
For residents, the table in section 393(1), as published by the Income Tax Department, provides 10% on fees for professional services and on royalty (other than film royalty) and 2% on fees for technical services, with a threshold of ₹50,000 a year per category. A higher rate applies where the payee has no valid PAN.
How a CRM payment is characterised decides whether TDS applies:
| Payment | Possible view | Comment |
|---|---|---|
| SaaS subscription from an Indian supplier | Service fee, royalty or business income | Depends on the contract; many businesses take advice once and document it |
| Implementation or customisation by an Indian partner | Fees for professional or technical services | Usually within section 393(1) if above the threshold |
| Subscription paid to a non-resident vendor | Section 393(2), subject to the tax treaty and the facts | The Supreme Court held in 2021 (Engineering Analysis Centre of Excellence) that payments for end-user software licences were not royalty under the relevant treaties; SaaS facts differ, so take advice |
Worked example: TDS on implementation (illustrative)
An Indian partner bills ₹1,20,000 for CRM setup plus ₹21,600 GST = ₹1,41,600. If treated as fees for technical services at 2%, TDS is generally calculated on the amount excluding GST when GST is shown separately: ₹1,20,000 × 2% = ₹2,400. You pay ₹1,39,200 and deposit ₹2,400. If treated as professional fees at 10%, TDS would be ₹12,000. Settle the treatment with your CA before the first payment.
Equalisation levy
The 2% equalisation levy on e-commerce supplies was withdrawn from 1 August 2024, and the 6% levy on online advertising from 1 April 2025. Confirm with your CA for any older period you are reconciling.
Comparing a dollar plan with a rupee plan
| Step | Dollar plan | Rupee plan |
|---|---|---|
| Annual price before tax | $ price × your bank or card rate + markup | ₹ price |
| GST | Reverse charge paid by you, credit claimed | On the invoice, credit claimed |
| Cash flow | GST paid in cash first | GST paid to supplier, credit via GSTR-2B |
| FX risk over 3 years | Yes | No |
| TDS question | Section 393(2) and treaty | Section 393(1) if characterised as fees or royalty |
Put both in the same three-year scenario, as in the TCO worked example, and model renewals with the uplift calculator.
FAQ
Can I claim GST credit on a CRM invoice from a foreign company?
If you paid IGST under reverse charge and use the service for taxable business supplies, generally yes. Keep the vendor invoice, payment proof and your GSTR-3B entry.
Does the vendor's GST number on an Indian invoice matter?
Yes. For credit to flow to you, the supplier must report the invoice so it appears in your GSTR-2B. Check that your GSTIN is on the invoice.
Is a CRM subscription an expense or an asset?
A SaaS subscription is generally a revenue expense for the period it covers; a multi-year prepayment is spread over the term in the books. Purchased licences are treated differently. Ask your CA.
Sources
- CBIC GST — reverse charge on imports of services, OIDAR, rates
- Income Tax Department — Income-tax Act, 2025 and section 393 tables
- e-Filing portal — TDS returns and certificates
- Reserve Bank of India — reference rates and foreign exchange rules
- GST Council — meeting recommendations
