GSTR on OIDAR Services

Online Information Database Access and Retrieval services (OIDAR) is a category of services provided through the medium of the internet, and received by the recipient online without having any physical interface with the supplier of such services

This document covers

Impact Of GST On OIDAR
Examples of OIDAR Services
Criteria to determine an OIDAR Service
Why OIDAR requires a treatment different from other services?
Taxability of OIDAR Services in GST
Frequently Asked Questions about GST On OIDAR

1. Impact Of GST On OIDAR

Example: Download of an e-book online for a payment would amount to receipt of OIDAR services by the consumers.

2. Examples of OIDAR Services

Advertising on the internet (Eg. Ads in Google).
Providing cloud services (Eg. Amazon Cloud).
Provisions of e-books, movie, music, software and other intangibles through telecommunication networks or internet (Eg. Amazon Kindle, HP Drivers etc).
Providing data or information, retrievable or otherwise, to any person in electronic form through a computer network.
Online supplies of digital content like movies, television shows, music and the like (Eg. Hotstar, Amazon Prime).
Digital Data Storage.
Online Gaming.

3. Criteria to determine an OIDAR Service

A service should be classified as OIDAR service only if the following two conditions are satisfied

Services whose delivery is mediated by information technology over the internet/electronic network and,
Services are automated and impossible to ensure in the absence of internet technology.

4. Why OIDAR requires a treatment different from other services?

A Similar service like OIDAR Service provided by an Indian Service Provider from the taxable territory to recipients in India is taxable.
Such services received by a registered entity in India from a location outside taxable territory are also taxable under reverse charge.

But the overseas suppliers of such services would have an unfair advantage if the services provided are left out from tax and the compliance mechanism become difficult as the service provider is located in Overseas. Hence the government has come out with a simplified scheme of GST Registration.

5. Taxability of OIDAR Services in GST.

The Place of Supply should be in India for any supply to be taxable in India,

If both the supplier and recipient of such OIDAR service is located in India, the place of supply would be the location of the recipient of service and the transaction is chargeable to tax.
If the supplier of OIDAR service is located outside India and the recipient is located in India, the place of supply in India and the transaction is chargeable to GST.

6. Frequently Asked Questions about GST On OIDAR

1.Who is the person liable to pay tax in respect of OIDAR services received by non-taxable online recipient ?

The supplier of OIDAR services located in non-taxable territory shall be the person liable to pay IGST on supply of such services.

2.Who is non-taxable online recipient ?

Non-Taxable online recipient means any government, local authority, governmental authority, an individual or any other person not registered and receiving OIDAR services in relation to any purpose other than commerce, industry or any other business or profession located in taxable territory.

3.How would the supplier of OIDAR services located outside India comply with the responsibilities entrusted under GST ?

The supplier of OIDAR service should comply with GST as follows

The Supplier (or intermediary) of OIDAR services should take single GST registration for payment of IGST
If there is a person representing overseas supplier in taxable territory for any purpose, then such representative in India should pay IGST on behalf of overseas supplier
If the overseas supplier has no physical presence or representative in the taxable territory, then he may appoint a person in the taxable territory for the purpose of payment of IGST.

4.What is the place of supply of OIDAR Service ?

The place of supply of OIDAR services is location of recipient of services.

5.What are the conditions to be satisfied by the service recipient is deemed to be located in the taxable territory ?

It is difficult to determine the location of the recipient in case of OIDAR services. The service recipient is deemed to be located in taxable territory on satisfying any of the 2 conditions

The Recipient gives an Indian address through Internet.
The payment is settled by an Indian credit card /debit card/other card.
The recipient has Indian billing address.
The computer used by the recipient has Indian IP address.
The recipient uses an Indian bank account for payment.
The country code of the subscriber identity module card used by the recipient of service is of India.
The recipient receives the service through an Indian fixed land line.