OIDAR Services in GST
- Blog|GST & Customs|
- 3 Min Read
- By Taxmann
- |
- Last Updated on 5 January, 2021
Latest from Taxmann
As the nation is moving towards digitization, mode of conducting business has changed. These businesses have deeper penetration in B2C segments with increasing speed of Internet. The transactions in these emerging industries are highly complex. Cross border transactions make it more complicated. Keeping in view these complexities, separate set of provisions has been promulgated in the erstwhile taxation laws and GST law for overseas transactions, thereby reducing the complications faced by the foreign suppliers. Though these registration schemes cater to the problems faced by foreign taxpayers, yet they have increased the compliance burden of the foreign suppliers. Despite clarifications released by department, ambiguities are still prevailing, so far as the interpretation of online information and database access or retrieval service (OIDAR) is concerned.
OIDAR Meaning:
The section 2(17) of the IGST Act, 2017 states that, “Online information and database access or retrieval services” mean services whose delivery is mediated by information technology over the internet or an electronic network, nature of which renders their supply essentially automated, involving minimal human intervention & impossible to ensure in the absence of information technology and includes electronic services such as, • Advertising on the internet; • Providing cloud services; • Provision of movie, software, e-books, music, and other intangibles through telecommunication networks or internet; • 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); • Digital data storage; and • Online gaming.
Key Points on OIDAR Services:
• For Business-to-business (B2B) overseas transactions where receiver is located in India, place of supply for OIDAR services will be the location of service recipient. These services will be taxable under reverse charge mechanism. • For Business-to-consumer (B2C) overseas transactions where receiver is located in India, the liability to discharge tax is on overseas suppliers. • There are difficulties in compliances where supplier of OIDAR services is located outside India and recipient of service is not registered in India. • If supplier and recipient are in India, then normal registration rules will apply and where supplier is located outside India and recipient is unregistered and located in India then such supplier has to take compulsory registration under simplified registration scheme. • Any OIDAR service provider supplying online information and database access or retrieval services from a place outside India to a non-taxable online recipient is required to obtain GST registration by filing GST REG-01.
What could be or could not be OIDAR service?
In one of the GST Filers prepared by National Academy of Customs, Indirect taxes & Narcotics has laid down certain tests in order to determine whether a service is an OIDAR service or not?
|
Service |
Whether Provision of service mediated by information technology over the internet or an electronic network?
|
Whether it is Automated and impossible to ensure in the absence of information technology? |
OIDAR Service |
|
PDF document manually e-mailed by provider
|
YES |
NO |
NO |
|
PDF document automatically e-mailed by providers’ system
|
YES |
YES |
YES |
|
PDA document automatically downloaded from site
|
YES |
YES |
YES |
|
Stock photographs available for automatic download
|
YES |
YES |
YES |
|
Online course consisting of pre-recorded videos and downloadable PDFs
|
YES |
YES |
YES |
|
Online course consisting of pre-recorded videos and downloadable PDFs plus support from a live tutor
|
YES |
NO |
NO |
|
Individually commissioned content sent in digital form, e.g., photographs, reports, medical results
|
YES |
NO |
NO |
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