GST on internet services

Internet access, broadband, and leased-line services in India attract 18% GST, classified under HSN/SAC 998414 "Telecommunications services". The rate is split as CGST 9% + SGST 9% for intra-state service (which covers almost all home broadband, the ISP and the customer are in the same state), or IGST 18% when a business customer in one state gets a leased line from an ISP registered in another state.

ITC eligibility for businesses

A GST-registered business can claim the 18% GST on internet bills as input tax credit if the service is used in the course of business, per Section 16 of the CGST Act. This is one of the few clean B2B ITC claims, internet is nearly always business-necessary. Requirements:

• ISP invoice must show your business GSTIN and be raised in your company name (not the individual's).
• Installation address must match a registered place of business.
• The service must be in active use (not disconnected).
• ISP has filed their GSTR-1 with the invoice correctly, visible in your GSTR-2B.

Personal / household internet is not ITC-eligible; the GST is just a final consumer tax.

Work-from-home reimbursement

Many Indian IT companies reimburse employee home-internet expenses during WFH arrangements. Tax treatment:

• Reimbursement against actual bills (the common model), not a taxable perquisite under Rule 3, since it's a reimbursement for actual business expenditure.
• Flat internet allowance without bill, taxable as part of salary.
• Bill must be in the employee's name (since the household contract is personal), with a split between work and personal use if the company's policy requires it.

Business connection vs home connection

ISPs distinguish between "home" and "business" plans with different SLAs, pricing, and static-IP availability. For ITC claim purposes, what matters is:

• The plan name, often irrelevant for ITC; the invoice fields matter, not the plan label.
• The GSTIN and installation address on the invoice, must match your registered place of business.
• The billing name, your company name, not an individual employee.

Static IP and leased lines

Static IP addresses and dedicated leased lines carry GST at the same 18%. An additional service charge (usually ₹500-2000/month for static IP) is billed as a separate line with its own GST. Leased lines often bill inter-state if the ISP's billing office is in a different state, IGST applies in that case.

What the invoice must contain

• ISP's name, address, and GSTIN
• Invoice number unique within the ISP's FY
• Date of issue
• Customer name, address, GSTIN (for business connections)
• Plan description with speed, data limit, validity
• Service period covered
• Base plan charge
• Add-ons (OTT, IPTV, static IP)
• Discounts and refunds
• Total GST split as CGST + SGST (intra-state) or IGST (inter-state)
• Grand total and due date

Common mistakes

• Claiming ITC on a home connection billed to the individual's name. Not allowed.
• Using the wrong state code when the ISP and the installation address are in different states. Applies for leased lines.
• Missing GSTIN on a claimed business-expense invoice. Blocks ITC.
• Bundling OTT (separate GST) into the main plan line. Splits should be visible.