The lawmakers of goods and services tax have subsumed OIDAR services under GST law. The expanded form of OIDAR is Online Information and Database Access or Retrieval. OIDAR services are those services provided via the internet as a medium.
The two eligibility criteria for OIDAR to get qualified as a service are-
- Performing of delivery should take place through the internet
- It is an automated supply that requires less involvement of human and information technology is a must-have thing for it
Over the last decade, SAAS[1] based products and cloud technologies have observed accelerated extension in India. This phenomenal growth is the reason behind the introduction of more and more services by Indian as well as Non-Resident Taxable Persons.
Since digitalization has captivated the attention of the whole nation, the way of conducting the business in India is advancing. These businesses have a better illumination of the B2C segment with access to ultra-high-speed Internet. Cross border transactions have brought many complications in the transactions taking place into these rapidly-thriving industries. Taking these complexities into consideration, the government has propagated various provisions with regard to taxation laws and GST law for the overseas transactions taking place, thereby bringing the reduction in the complications that foreign suppliers have faced in the past.
Despite being catering to the problems encountered by foreign taxpayers, these registration schemes have increased the compliance load of foreign taxpayers. Even though the department has released the clarifications, vaguenesses still exist until now concerning the OIDAR interpretation. By case to case analysis, accurate classification of online information and database access or retrieval service becomes a possibility.
Examples of OIDAR Services
- Online gaming
- Rendering cloud-based services like Google Drive
- Online advertising service providers
- Digital data storage services
- Provision of software, music, movie, e-books, and various intangibles through the internet
- Supplies of digital content like music, daily soaps, movies, etc. through an online platform
- Remote system administration
- On-demand disk space online supply
- Anti-virus products
- Journals and online newspapers subscriptions
- Downloading or accessing of ringtones, jingles or other kinds of sounds
- Online weather reports
Examples of Non-OIDAR Services
- Services related to advertising on TVs, on posters and also in the newspapers
- Educational courses, where the teacher uses the internet as a medium to deliver the content
- Supplies of tangible goods or services via electronic means
- Hotel accommodation booking services and tickets
- Entertainment events booking services and tickets
- Physical repair services of equipment related to the computer through an offline mode
- Supplies of newspapers, journals or newsletters
Read our article:GST Taxpayers can file their GSTR-3B Returns in an easy way
OIDAR services under GST Applicability
Hinged on the supplier and recipient location, OIDAR services under GST might perhaps be liable or not liable as mentioned below through five cases-
- In the first case, if the suppliers, as well as the recipient both, are in India, then goods and service tax will be applicable. Moreover, payment of GST will be on the basis of forward charges.
- In the second case, if the supplier is living outside the geographical boundaries of India, and the recipient residing in India is registered for goods and service tax, then goods and service tax will be applicable. Furthermore, payment of goods and service tax will be on Reverse Charge Basis.
- In the third case, the recipient is living in India, but he has not got registered for goods and service tax, and the supplier is outside the boundaries of India, then GST will be applicable, and payment for goods and service tax will be on forward charge basis.
- When an unregistered, non-taxable person in India imports the OIDAR services, the supplier located outside India will make the payment for such tax (goods and service tax) on forward charge basis.
- In the fourth case, if the suppliers, as well as recipients both, are not available in India, then no GST will be applicable as it is out of the GST range.
- If the supplier is residing in India, but the recipient is unavailable in India, then in this fifth case, no GST will be applicable to the export service.
Is there any Requirement for an OIDAR Service Provider located outside India to Register under Goods and Service Tax?
Under the simplified registration scheme of goods and service tax, the supplier has to acquire a single GST registration if an OIDAR service provider is residing outside the boundaries of India and is rendering OIDAR services to an Indian person who is non-taxable as well as unregistered. However, there is no requirement for suppliers outside India to pay or register GST if a registered person or a company in India is taking the services.
A registered person living in India is receiving the OIDAR services from a service provider outside the Indian boundaries should pay IGST on reverse charge basis directly to the government, no external parties involved.
In the case of OIDAR services under GST, the place of supply would be the location of the recipient of services.
Winding Up
Through this article, you might have learned with regard to OIDAR services under GST that-
- No applicability of GST on the export of OIDAR services outside India.
- If a company in India is rendering OIDAR services under GST to another company in India, payment of GST will take place on a forward charge basis.
- If a company out of India is providing OIDAR service to a GST-registered company in India, the recipient would have to pay the GST on a reverse charge basis.
We, at Corpbiz, would back you in filing easy GST returns. Furthermore, we are here to make things easier for businesses within and outside of India.
Read our article:Elucidation on GST Refund Issues – Recent Updates
