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OIDAR services under GST

What are OIDAR services?

As per section 2(17) of the IGST act.

 “online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,-

(i) advertising on the internet;

(ii) providing cloud services;

(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;

(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;

(v) online supplies of digital content (movies, television shows, music and the like);

(vi) digital data storage; and

(vii) online gaming;

In simple words, OIDAR services refer to services provided through the medium of internet without the physical interaction of the supplier and recipient of services. For example - web-hosting services provided by Amazon.

Taxability of OIDAR services in GST

To tax any supply under GST, the place of supply should be in India. As per section 13(12) of IGST act, “The place of supply of online information and database access or retrieval services shall be the location of the recipient of services”. For the purpose of OIDAR services, the recipient shall be deemed to be located in the taxable territory if any two of the following conditions are satisfied-

(a) the location of address presented by the recipient of services through internet is in the taxable territory;

(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of services settles payment has been issued in the taxable territory;

(c) the billing address of the recipient of services is in the taxable territory;

(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;

(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;

(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory;

(g) the location of the fixed landline through which the service is received by the recipient is in the taxable territory.

Who will pay tax?

  1. Supply of OIDAR services by a non-resident service provider (person located outside India) to an unregistered recipient, would be liable to tax in the hands of the supplier. The supplier would be responsible for collection and remittance of integrated tax to the Government of India;
  2. In case of Business-to-Business (B2B) transactions with respect to OIDAR, the recipient will be liable to pay tax under reverse charge mechanism.

GST registration provisions applicable to non-resident online services provider

Compulsory registration

Every non-resident online service provider providing services to the unregistered person in India is required to obtain compulsory registration under GST. Such service providers need to appoint an authorised signatory (Indian) in India possessing a valid PAN. That authorised person shall apply for registration on behalf of such non-resident online service provider.

Effective date of registration

Date of registration will be,

(i) date of commencement of online services in India If difference between 'Date of commencement of online services in India’ and “Date of ARN for application for registration” is less than or equal to 30 days or.

(ii) date of issue of registration certificate if the difference exceeds 30 days from the date of issue of certificate of registration.

(iii) In case the applicant is already providing online services in India prior to or as on appointed date, effective date of registration will be the 'Date of commencement of online services in India' specified in the form or the appointed Date, whichever is later.

Preconditions for registration

  • Their Authorized Signatory must have a valid Permanent Account Number (PAN)
  • Applicant has valid email address and mobile number
  • Applicant has the prescribed documents and information on all mandatory fields as required for registration.

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TaxGyata Team

TaxGyata Team