When it comes to providing online service on YouTube platform, there are generally 4 type of scenarios will come in to picture:
-Using of YouTube Platform by YouTuber
-Income earned by YouTuber
-Income earned by YouTube from Advertisement Companies
-Income from Premium Subscription provided by YouTube
We will discuss each case in detail:
Page Contents
1. Using of YouTube platform by YouTuber
In this scenario, YouTube provides a platform to the Content Creator (YouTuber) to use their platform and upload the videos. In this case, YouTube is acting as a Service Provider and Content Creator is acting as a Service Recipient.
Now, we need to examine the place of supply which is governed by section 13 of IGST Act, 2017 and as per section 13(12) of IGST Act, 2017, the place of supply of online information and database access or retrieval (OIDAR) services shall be the location of the recipient of services.
The definition of OIDAR services is covered by Sec. 2(17) of IGST Act, 2017 which will cover the above service provided by YouTube to the Content Creator.
We can summarize this transaction as below:
a. Location of Service provider i.e. YouTube is out of India;
b. Location of service recipient i.e. Content Creator is in India; and
c. Place of supply of service i.e. place of Content Creator is in India;
Now, if we go into the definition of Import of Service which is defined u/s 2(11) of IGST Act, 2017 which says that
‘‘import of services” means the supply of any service, where:
i. the supplier of service is located outside India; (YouTube in this case)
ii. the recipient of service is located in India; and (Content Creator in this case)
iii. the place of supply of service is in India; (Location of Content Creator in this case)
Now, we can conclude that the above transaction falls within the ambit of Import of Service and Reverse Charge Mechanism (RCM) is applicable as per Sec. 5(3) of IGST Act, 2017. Accordingly, the Service Recipient who is Content Creator in this case will have to discharge the GST liability under RCM.
However, since YouTube does not charge any amount from Content Creator to use YouTube platform and upload videos, hence, no GST liability will come for Content Creator in this case.
2. Income earned by YouTuber
In this scenario, YouTube plays the advertisements in between the videos uploaded by the Content Creator (YouTuber) and earns the revenue from these advertisements. YouTube shares a portion of this revenue with the Content Creator. In this case, Content Creator is acting as a Service Provider and YouTube is acting as a Service Recipient.
Now, we need to again examine the place of supply which is governed by section 13 of IGST Act, 2017 and as per Sec. 13(12) of IGST Act, 2017, The place of supply of online information and database access or retrieval (OIDAR) services shall be the location of the recipient of services.
The definition of OIDAR services is covered by Sec. 2(17) of IGST Act, 2017 which will cover the above service provided by Content Creator to the YouTube.
We can summarize this transaction as below:
a. Location of Service provider i.e. Content Creator is in India;
b. Location of service recipient i.e. YouTube is out of India; and
c. Place of supply of service i.e. place of YouTube is out of India;
Now, if we go into the definition of Export of Service which is defined u/s 2(6) of IGST Act, 2017 which says that
“export of services” means the supply of any service when:
i. the supplier of service is located in India; (Content Creator in this case)
ii. the recipient of service is located outside India; (YouTube in this case)
iii. the place of supply of service is outside India; (Location of YouTube in this case)
iv. the payment for such service has been received by the supplier of service in convertible foreign exchange; and (Content Creator receives payment in Forex)
v. the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; (Not applicable in this case)
Now, we can conclude that the above transaction falls within the ambit of Export of Service and there is no GST since it is covered under Zero Rated Supply as per section 16 of IGST Act, 2017. Accordingly, the Service Provider i.e. Content Creator will have to file Letter of Undertaking (LUT) with the jurisdictional GST commissioner and need to satisfy other attached conditions, so he will not be required to pay any GST.
Note: The Content Creator is eligible to claim refund of GST paid on purchases of inputs and input services used to provide these services as per section 16(3) of IGST Act, 2017.
3. Income earned by YouTube by Advertisement Companies
In this scenario, YouTube provides a platform to the advertisement companies to play their adds in between the videos uploaded by the Content Creator (YouTuber). In this case, YouTube is acting as a Service Provider and advertisement companies are acting as a Service Recipient.
Now, as per the discussion in Case 1, we can easily conclude that the above transaction falls within the ambit of Import of Service and Reverse Charge Mechanism (RCM) is applicable as per Sec. 5(3) of IGST Act, 2017. Accordingly, the Service Recipient who is advertisement companies in this case will have to discharge the GST liability under RCM.
4. Premium Subscription provided by YouTube
In this scenario, YouTube provides premium subscription facility to an individual who can watch videos without advertisements by making certain payment to the YouTube. In this case, YouTube is acting as a Service Provider and the Individual is acting as a Service Recipient.
Now, as per the discussion in Case 1, we can easily conclude that the above transaction falls within the ambit of Import of Service and Reverse Charge Mechanism (RCM) is applicable as per Sec. 5(3) of IGST Act, 2017. Accordingly, the Service Recipient who is Individual in this case will have to discharge the GST liability under RCM.
However, there is a twist in this case since the Individual is a non-taxable online recipient, hence, YouTube will have to discharge GST liability as per section 14 of IGST Act, 2017.
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