GST on OIDAR Services – Impact & Applicability | EZTax.in

Impact Of GST On OIDAR

Online Information Database Access and Retrieval services (OIDAR) is a category of services provided through the medium of the internet, and received by the recipient online without having any physical interface with the supplier of such services.

Example: Download of an e-book online for a payment would amount to receipt of OIDAR services by the consumers.

GST impact and applicability on OIDAR Services | EZTax.in
GST impact and applicability on OIDAR Services | EZTax.in

Examples of OIDAR Services

  • Advertising on the internet (Eg. Ads in Google).
  • Providing cloud services (Eg. Amazon Cloud).
  • Provisions of e-books, movie, music, software and other intangibles through telecommunication networks or internet (Eg. Amazon Kindle, HP Drivers etc).
  • Providing data or information, retrievable or otherwise, to any person in electronic form through a computer network.
  • Online supplies of digital content like movies, television shows, music and the like (Eg. Hotstar, Amazon Prime).
  • Digital Data Storage.
  • Online Gaming.

Criteria to determine an OIDAR Service

A service should be classified as OIDAR service only if the following two conditions are satisfied

  • Services whose delivery is mediated by information technology over the internet/electronic network and,
  • Services are automated and impossible to ensure in the absence of internet technology.

Why OIDAR requires a treatment different from other services?

  • A Similar service like OIDAR Service provided by an Indian Service Provider from the taxable territory to recipients in India is taxable.
  • Such services received by a registered entity in India from a location outside taxable territory are also taxable under reverse charge.

But the overseas suppliers of such services would have an unfair advantage if the services provided are left out from tax and the compliance mechanism become difficult as the service provider is located in Overseas. Hence the government has come out with a simplified scheme of GST Registration.

Taxability of OIDAR Services in GST.

The Place of Supply should be in India for any supply to be taxable in India,

  • If both the supplier and recipient of such OIDAR service is located in India, the place of supply would be the location of the recipient of service and the transaction is chargeable to tax.
  • If the supplier of OIDAR service is located outside India and the recipient is located in India, the place of supply in India and the transaction is chargeable to GST.

 

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