♣ Name of Parent Company – A Ltd., Dubai, United Arab Emirates

♣ Name of their Indian Establishment – B Ltd.  at Thane

♣ Application initially Developed & Managed by – Parent Company

♣ Service Provider – C Pvt. Ltd.

♣ Nature of Service – Enhancement & or changes to the Application

♣ Way of providing ServiceThese enhancements & or changes will be done by C Pvt. Ltd. staff by going to the office of B Ltd. and then deploying these enhancement & or changes on the production environment by remotely accessing their computers. The Application is mainly used in Dubai.

♣ Parent Company asked to raised Bill in their name with billing address of Dubai

♣ Amount will be paid by Parent Company in convertible foreign exchange

Issue under consideration:-

What is the nature of transaction and liability under GST if any ?

Legal Provisions:-

Conditions to be fulfilled to qualify as Export of Services under GST

As per IGST Act Section 2(6) “Export of services” means the supply of any service when, –

(i) the supplier of service is located in India;( C Pvt. Ltd. )

(ii) the recipient of service is located outside India;(A Ltd., Dubai )

(iii) the place of supply of service is outside India;(Dubai – Location of Recipient)

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange;

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person

Zero Rated Supply [Sec.16(1) IGST Act]

“zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) Export of goods or services or both; or

(b) Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

OIDAR (Online Information and Database Access or Retrieval) Services

Both the following conditions must be satisfied to be an OIDAR service. If one is not satisfied, the service is not OIDAR.

i. Delivery is mediated through internet.

ii. The supply is essentially automated involving minimal human intervention and impossible without information technology.

Examples of OIDAR services:

  1. Advertising on internet
  2. Providing cloud services (Google Drive)
  3. Provision of e-books, movie, music, software and other intangibles via internet (Hotstar, Amazon Prime Video)
  4. Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
  5. Online gaming (Steam)

Applicability of GST for OIDAR Services

Location of Supplier of service Location of recipient of service Taxability Forward Charge/ Reverse Charge
India Outside India No

(Export of service)


Place of supply for OIDAR

Receiver Place of supply
Any person Location of the recipient of services


On the basis of Facts and Legal provisions as mentioned above the following conclusions can be drawn:-

  • The service which C Pvt. Ltd is going to be provided will cover under OIDAR.
  • The C Pvt. Ltd. is fulfilling all the conditions to qualify the service as Export of Service
  • It will cover under Zero rated supply i.e. Supply without payment of IGST under a Bond or Letter of undertaking.

Disclosure – Views express above is personal and may differ person to person on the basis of knowledge and interpretation.

Author Bio

Qualification: Student - CA/CS/CMA
Company: CA Rajendra Y. Padhye
Location: Mumbai, Maharashtra, IN
Member Since: 02 Mar 2019 | Total Posts: 13

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