Online Information and Database Access or Retrieval (OIDAR) services under GST refer to services delivered over the Internet without having any physical interface with the supplier of such services. E.g. downloading of an e-book online for a payment would amount to receipt of OIDAR services by the consumer downloading the e-book and making payment.
Such services are subject to specific rules and regulations under the GST regime in India.The inclusion of OIDAR services under GST aims to provide a level playing field for domestic service providers in terms of cost.
Examples of OIDAR services include:
advertising on the internet;
providing cloud services like Eg. Amazon Web Server
provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet; Eg. Spotify JioMusic
providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
online supplies of digital content (movies, television shows, music and the like); Eg. Amazon Prime , Netflix
Providing digital data storage service ; and
Providing online gaming service ; Eg MPL, Dream 11
How OIDAR SERVICES TAXABLE UNDER GST?
Know the basic concept of levy of GST that for any supply to be taxable under GST in India, the place of supply should be in India.
In case, both the supplier of OIDAR Service and the recipient of such service is in India, the place of supply would be the location of the recipient of service i.e. it would be governed by the default place of supply rules.
But in Cases,where the supplier of service is located outside India and the recipient is located in India than also the place of supply would be India and the transaction would be amenable to tax and tax would be payable by recipient.
However, if the recipient is non-taxable online recipient, than the supplier of service located in non-taxable territory will be liable to make payment of tax.
“Non-Taxable Online Recipient” is means any unregistered person receiving online information and database access or retrieval services located in taxable territory
Service Provider not having any place of business in India can register under GST as OIDAR Service Provider by filing Form Reg-10.
Lets Understand Different Scenario for payment of tax under OIDAR Service
When the Supplier is located outside India and Recipient located in India
Case 1: Recipient is Business entity registered person under GST
Tax liabilty : RCM get Triggered and GST will be liable to pay under reverse charge by the Business Entity registered entity under GST.
Case 2 :Recipient is an Individual or Unregistered Person or Non Taxable Online Recipient Tax liabilty : In this case IGST Act provides that on supply of online information and database access or retrieval services by any person located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services as it is difficult to ask an individual to get himself registered and pay. Service Provider need to hire an person to act on behalf in india and get himself registered under GST under OIDAR registration for payment of liability. Case 3 :Service via Intermediary located in non-taxable territory
if an intermediary located outside India arranges or facilitates supply of such service to a non-taxable online recipient in India, the intermediary would be treated as the supplier of the said service, except when the intermediary satisfies the following conditions.
(a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;
(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge which is that the intermediary neither collects or processes payment in any manner nor Online Information Data Base Access and Retrieval Services in GST is responsible for the payment between the non-taxable online recipient and the supplier of such services;
(c) the intermediary involved in the supply does not authorise delivery; and
(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.
Filing of Returns by a person providing OIDAR service to a Non-Taxable Online Recipient in India.
As per the Rule 64 of CGST Rules, 2017, every registered person providing online information and data base access or retrieval services from a place outside India to a person in India other than a registered person shall file return in FORM GSTR-5A on or before the twentieth day of the month succeeding the calendar month or part thereof. It is to be noted that GSTR-5A is required to be filed only by the service provider (or his representative) providing OIDAR services from outside India to a non-taxable online recipient in India.
Other categories of OIDAR service providers (like those supplying OIDAR services from India) will have to file regular returns (GSTR 1, 2, 3/3B) prescribed for general categories of registered persons.
Amendments of Finance Act,2023 and Implications
In effect, services that involve human interactions and are delivered over the internet or online medium would still qualify as OIDAR services. With this amendment, one could reasonably conclude that any service delivered over the Internet or electronic network is an OIDAR service. This is a mammoth change and brings within its ambit several additional services, subjecting them to GST. One classic example of such service is educational institution’s online programs. These programs were previously considered outside the OIDAR ambit because they involved regular human interactions. With the amendment these services should qualify as OIDAR and are thus subject to GST.
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