OIDAR Services in GST

  • Blog|GST & Customs|
  • 830 Views
  • |
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 5 January, 2021
OIDAR in Brief:
 

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. 

In order to classify the service into OIDARs, the services should necessarily be mediated by information technology over internet and nature of such supply should involve minimal human intervention. Now what level of human intervention will be considered for correct classification of OIDAR needs to be analysed on case-to-case basis.

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

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Comments are closed.

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied