GST invoice format for a software development company
A software company's invoice must make clear whether it is supplying a service or a product. Custom development, built to a client's specification, is a service under SAC 998314 at 18%. Subscriptions and access to online software fall under services such as 998315 or online content codes, also at 18%. Each line should name the module, sprint or milestone, the licence or seat count for subscriptions, and the billing period, with export invoices to overseas clients issued under LUT without IGST.
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Sample prices are illustrative. Check the GST rate for your exact item or service before billing.
Extra fields a software company invoice needs
Project and milestone
Fixed-price projects are paid on milestones such as requirement sign-off, UAT and go-live. The milestone name on the invoice links the bill to the contract and to the client's acceptance email.
Sprint or timesheet reference
For time-and-material work, a sprint number or timesheet ID with hours by role lets the client's project manager approve the bill quickly against their own tracking tool.
Subscription term and seats
SaaS invoices should state the plan, number of user seats and the start and end of the term, so renewals and upgrades can be pro-rated on later invoices.
Intellectual property clause
State whether code ownership transfers to the client on payment. This changes nothing in GST rate terms for custom development, but clients ask for it in audits of software capitalisation.
Client location and currency
Export invoices need the client's foreign address, the invoice currency and the LUT number; domestic invoices need the client's GSTIN and state for IGST versus CGST plus SGST.
Change request number
Work beyond scope is billed against approved change requests. A CR number on each extra line avoids disputes over unapproved work.
Standard GST invoice fields
Rule 46 of the CGST Rules applies to every tax invoice, including this one:
✓Supplier name, address and GSTIN
✓Consecutive invoice number (max 16 characters, unique for the year)
Software is not always a service. Packaged software supplied on a physical medium is goods; a perpetual licence for off-the-shelf software has historically been treated as a supply of service in GST schedules; and software developed to a client's order is a service under SAC 998314. For a development company, almost everything is service at 18%. The point is to avoid copying a product reseller's HSN code into a development invoice, which misstates the nature of supply in your GSTR-1 summary.
Export of software services
Development for overseas clients is the largest export line for Indian software firms. With an LUT filed for the year, the invoice states the supply is for export without payment of IGST, carries the foreign currency value and the exchange rate, and is reported as a zero-rated supply. Firms that pay IGST on exports instead can claim a refund, but the LUT route avoids blocking working capital. Keep FIRC or bank realisation records against each invoice number.
Advance and milestone invoices
Clients often pay a mobilisation advance. Issue a receipt voucher and pay GST on the advance when it is received, then adjust it against the milestone invoice. Where a contract says payment is due on a milestone, the invoice must be raised by that date even if the client delays acceptance, so build the date logic into your billing calendar.
Startups below the threshold
A development studio with turnover under ₹20 lakh need not register, even when its clients are abroad. Once registered, though, every domestic invoice carries 18%, and composition is not open to a company whose clients are mostly in other states or overseas, because the services composition scheme bars inter-state supplies.
Licence keys and app-store income
A software company that sells its own product through app stores or its website receives payments routed through platform operators. Where an Indian customer buys directly from your site, you invoice and charge 18% as normal. Where a foreign app store sells to end users and pays you a net amount, the transaction with the store is usually an export of services to the platform, documented with an invoice to the store under LUT. Keep the platform's monthly payout statement as the source of your invoice values, and reconcile the gross sale, platform commission and net payout so the zero-rated turnover in your return matches the bank receipts.
Common billing mistakes
✕Billing an overseas client with IGST because no LUT was filed for the current financial year.
✕Using a goods HSN for custom development copied from a software reseller's template.
✕Raising milestone invoices only after client sign-off, months after the contractual due date, and paying GST late.
✕Not separating approved change requests, so the client disputes the whole invoice instead of one line.
Software Company GST invoice: FAQ
What is the GST rate on software development?
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Custom software development under SAC 998314 is taxed at 18%. Support and maintenance under 998313 and hosting under 998315 are also 18%.
Is GST charged on software exported to a US client?
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No IGST is charged when the supply qualifies as export and you have an LUT. The invoice is zero-rated and must mention the LUT.
How should a SaaS subscription be invoiced?
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State the plan, seats and subscription period on each invoice, charge 18% GST to Indian customers, and raise the invoice at the start of each billing cycle.
Can I bill a client in hours?
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Yes. Use hours or person-days as the quantity with the rate per hour, and attach or reference the approved timesheet so the client can verify it.
Do I charge GST on a free trial that converts?
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No tax arises during a genuinely free trial. GST at 18% applies from the first paid billing period, on the invoice raised when the subscription converts.