OIDAR services under GST Laws – A Complicated Compliance
By: – Anuj Bansal
Goods and Services Tax – GST
Dated:- 4-8-2017
In today's ever booming digital world, we prefer online platforms for books, movies, music, data storage, advertising etc. With the increasing use of cloud based services it is all the more important to know the taxability of GST on Online Information Database Access and Retrieval Services (OIDAR).
Section 2(17) of IGST Act, 2017 defines OIDAR as 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 involving minimal human intervention and impossible to ensure in the absence of information technology. The definition is divided in two parts one is 'service is provided online via electronic network' and second important thing is, 'it is impossible to ensure in the absence of information technology'. It includes electronic services such
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tion under section 24(xi) of CGST Act, 2017. Such suppliers (or intermediaries) of OIDAR services shall take a single registration under the Simplified Registration Scheme in Form GST REG-10. In case such supplier has a representative in India then he shall pay IGST on former's behalf and if does not have any representative in India, then such supplier can appoint a person in India and he will be liable for payment of such tax in India. 'Notification No. 2/2017 – Integrated Tax, dated 19th June 2017' has notified Principal Commissioner of Central Tax, Bengaluru (West) to grant registration in such cases.
As we know, for any supply to be taxable under GST, the place of supply should be in India. Thus, following cases are possible for deciding taxability of OIDAR services:
Location of Supplier of service
Location of recipient of service
Taxability
Forward Charge/ Reverse Charge
India
India
Yes
Forward Charge
Outside India
India
Recipient: Registered Person
Recipient: Non Tax
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delivery.
* The general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.
Now the question is how to identify the receivers and suppliers of OIDAR services in India and who are receiving such services within India and who are supplying such services from abroad? Let's answer one by one. Sec 13(12) of IGST Act, states that place of supply of online information and database access or retrieval services shall be the location of the recipient of services. In order to check whether the person receiving such services is a person of Indian origin and is located in taxable territory, any two of the following non contradictory conditions should be satisfied, namely-
* Location of address of recipient provided by him through internet is in the taxable territory;
* 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 be
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