Summary : An overseas digital-service provider cannot decide Indian GST merely from the customer’s statement that a purchase is “business use.” Since the 2023 amendments, a non-taxable online recipient for the cross-border OIDAR rule is an unregistered person located in taxable territory; the earlier business-purpose limitation was removed. At the same time, the statutory definition of online information and database access or retrieval services no longer contains the former “essentially automated and minimal human intervention” wording, so contracts, delivery architecture and the current definition must be read together rather than tested against an obsolete checklist. When a person outside India supplies OIDAR to an unregistered person in India, section 14 of the IGST Act generally makes the overseas supplier liable for integrated tax under the special forward-charge mechanism. A foreign platform or intermediary may itself be treated as recipient and supplier unless all four statutory independence conditions are satisfied. The compliance file should connect customer registration status, location evidence, service description, invoice State, consideration and tax to the simplified registration, payment and monthly GSTR-5A. The return is ordinarily due by the twentieth day of the succeeding month. This guide focuses on evidence and control design for 2026 transactions and does not treat every remotely delivered professional service as OIDAR.
- The 2023 Amendments Changed Both Sides of the OIDAR Test
- Recipient Status Determines the Cross-Border Collection Route
- Unregistered Indian recipient
- Registered Indian recipient
- Platforms Must Pass Four Conditions to Avoid Deemed-Supplier Status
- Simplified GST Registration Must Be Supported by an India File
- Invoice State and Recipient Evidence Need Transaction-Level Controls
- GSTR-5A and Payment Reconciliation for Each Calendar Month
- Operational Review Before the Next Billing Cycle
- Frequently Asked Questions
- Does business use by an unregistered Indian customer remove the overseas supplier’s OIDAR liability?
- Is minimal human intervention still written in the current OIDAR definition?
- Who pays GST when the Indian customer supplies a valid GSTIN?
- When is a foreign marketplace treated as the supplier?
- What recipient address is needed on an invoice to an unregistered online customer?
- When is GSTR-5A ordinarily due?
- Is every service delivered by video call or email an OIDAR service?
- Key Takeaways
The 2023 Amendments Changed Both Sides of the OIDAR Test
The current analysis begins with the amended definitions in section 2 of the Integrated Goods and Services Tax Act, 2017. A “non-taxable online recipient” is a person not registered under GST who receives OIDAR services and is located in taxable territory. The former words limiting the category to receipt for purposes other than commerce, industry, business or profession were removed. Consequently, an unregistered Indian business customer is not outside the special rule merely because it uses the subscription for commercial activity. Registration status and location evidence are now central controls.
The OIDAR definition was also amended by deleting the former phrase that described delivery as essentially automated and involving minimal human intervention. The remaining statutory question is whether delivery is mediated by information technology over the internet or an electronic network and is impossible to ensure in the absence of information technology. The listed examples include internet advertising, cloud services, electronic content, electronically supplied information, digital content, digital data storage and online gaming. A service should be classified from the actual promise and delivery process, not from a label on the invoice.
| Classification question | Current control | Evidence to retain |
|---|---|---|
| Is the customer GST-registered? | Obtain and validate GSTIN; do not rely only on a checkbox | GSTIN, validation result and account history |
| Is the recipient located in India? | Apply the statutory location indicators and resolve conflicts | Billing data, payment instrument, IP or device data and declarations |
| Is the service OIDAR? | Map the contractual promise to the current section 2(17) definition | Terms, product workflow and technology note |
| Who controls the platform sale? | Test all four section 14 intermediary conditions | Invoice, payment, delivery and platform terms |
Recipient Status Determines the Cross-Border Collection Route
Unregistered Indian recipient
Where the supplier is located in a non-taxable territory, the recipient is an unregistered person in India and the service is OIDAR, section 14 generally places liability on the overseas supplier. This is a forward-charge collection model. The supplier should charge integrated tax at the rate applicable to the service, report the transaction through the special registration and retain evidence that supports both location and customer status. A consumer account later converted to a valid GST-registered business account should be controlled prospectively and any correction should follow the operative GST document and return rules.
Registered Indian recipient
A registered recipient is not a non-taxable online recipient. The transaction then requires the ordinary import-of-services and reverse-charge analysis, including the recipient’s GST registration, place of supply and any exceptions. The overseas supplier should not simply collect IGST under the OIDAR simplified scheme for a customer whose valid registration makes the special section 14 recipient definition inapplicable. Customer master data therefore needs version history, validation dates and a rule for invoices raised while the GSTIN is absent, invalid or pending verification.
Platforms Must Pass Four Conditions to Avoid Deemed-Supplier Status
An intermediary outside India that arranges or facilitates the OIDAR supply is deemed to receive and resupply the service unless four conditions are cumulatively met. The customer invoice must clearly identify the underlying service and its supplier. The intermediary must not authorise the charge or take part in payment processing. It must not authorise delivery. Finally, the intermediary must not set the general terms and conditions of the supply. Failure of any condition can shift the section 14 position to the platform. A contract recital that the platform is “only an agent” cannot override contradictory checkout, payment or delivery facts.
The legal review should be performed for each commercial model. A marketplace may act differently for direct subscriptions, app-store purchases, reseller bundles and enterprise contracts. Finance should preserve screen captures and payment-flow documentation for the model actually used during the tax period. If the platform is treated as supplier, the underlying vendor should avoid duplicate collection by reconciling platform reports, tax invoices and settlement statements.
Simplified GST Registration Must Be Supported by an India File
Section 14 requires a single registration under the simplified scheme for the liable overseas supplier. The current CGST registration framework and portal process should be checked immediately before filing because form labels and digital steps have changed over time. The applicant should align its legal name, foreign tax identifier, authorised signatory, contact details, business address, bank or payment information and product description. If it has a representative in India, that person may be required to register and pay on its behalf; if there is no physical presence or representative, the supplier may appoint a person in India for payment purposes.
Registration is not a substitute for a permanent-establishment, fixed-establishment or wider Indian-law review. A foreign group with personnel, premises or dependent operational capability in India may have facts beyond the simplified OIDAR model. The registration memo should explicitly state which entity supplies the service, where the contracting and delivery functions sit, whether any Indian entity represents the supplier and why the chosen route matches those facts.
Invoice State and Recipient Evidence Need Transaction-Level Controls
For taxable online services supplied to an unregistered recipient, the current invoice rule requires the name of the recipient’s State, irrespective of value; that State is deemed to be the address on record for the relevant place-of-supply rule. The supplier should not populate a default State for every customer. It should collect a credible location field, test it against available indicators and route conflicts for review. A blank or obviously inconsistent State can affect destination-based allocation even if the total IGST collected is correct.
The IGST Act contains indicators for determining whether the recipient of OIDAR is located in taxable territory, including internet-protocol address, payment instrument, billing address, bank location and other prescribed signals. The control objective is not to accumulate data without purpose; it is to apply the statutory rule consistently, retain the minimum defensible evidence and document how conflicting indicators were resolved. Privacy, retention and security obligations must be addressed alongside tax evidence.
GSTR-5A and Payment Reconciliation for Each Calendar Month
Rule 64 requires a registered overseas OIDAR provider covered by the special framework to furnish FORM GSTR-5A on or before the twentieth day of the month succeeding the calendar month or part thereof. Any officially notified extension for a particular period must be verified rather than assumed. The return process should reconcile gross collections, refunds, credit adjustments, currency conversion, taxable value, tax, customer State and platform transactions to the general ledger and payment records.
A useful close file contains the customer-status extract, location-evidence report, invoice register, exchange-rate support, tax calculation, payment proof, GSTR-5A acknowledgement and a bridge from revenue to the return. Late filing or payment can create interest, fee and enforcement exposure. Zero activity should be supported by sales and platform records. Corrections should be made through the form and period mechanism then available on the portal and should remain traceable to the original transaction.
Operational Review Before the Next Billing Cycle
- Refresh GSTIN validation and preserve the date on which customer status was tested.
- Review new products against the current OIDAR definition before launch in India.
- Reperform the platform intermediary test whenever payment, delivery or terms change.
- Require a recipient State and resolve conflicting Indian-location indicators before invoicing.
- Reconcile direct and marketplace collections separately, then combine them in the return control.
- Calendar the twentieth-day GSTR-5A deadline and verify any period-specific notification.
Frequently Asked Questions
Does business use by an unregistered Indian customer remove the overseas supplier’s OIDAR liability?
No. The earlier business-purpose limitation in the non-taxable-online-recipient definition was removed. An unregistered recipient located in taxable territory may fall within section 14 even when the service is used for business.
Is minimal human intervention still written in the current OIDAR definition?
No. That wording was deleted by the 2023 amendment. Classification must use the current statutory text and the actual technology-mediated delivery.
Who pays GST when the Indian customer supplies a valid GSTIN?
The special non-taxable-online-recipient rule does not apply to a registered recipient. The Indian recipient and supplier should apply the ordinary import-of-services and reverse-charge framework to the facts.
When is a foreign marketplace treated as the supplier?
It is deemed to receive and resupply the OIDAR service unless all four statutory conditions covering supplier identification, charge/payment, delivery and general terms are satisfied.
What recipient address is needed on an invoice to an unregistered online customer?
The supplier must record the recipient’s State for the covered online-service invoice; under the current rule that State is deemed the address on record for the specified place-of-supply purpose.
When is GSTR-5A ordinarily due?
Rule 64 states the twentieth day of the month succeeding the calendar month or part thereof, subject to any officially notified extension for the period.
Is every service delivered by video call or email an OIDAR service?
No. The contractual promise and delivery mechanics must fit the current statutory definition. A technology-enabled human professional service is not classified merely from the communication channel.
Key Takeaways
- Use the amended recipient and OIDAR definitions; older business-use and minimal-intervention tests can misstate the result.
- Validate GST registration and Indian location at transaction level.
- Test every platform model against all four section 14 intermediary conditions.
- Collect the recipient State and reconcile invoices, payments and GSTR-5A monthly.
- Verify the live portal process and any period-specific extension before filing.
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Disclaimer: This article is a general educational summary of the cross-border online information and database access or retrieval service provisions of the Integrated Goods and Services Tax Act, 2017, the Central Goods and Services Tax Rules, 2017 and official material available as checked on 11 November 2026. It does not classify any particular software, cloud arrangement, advertising service, database, online game, digital content, marketplace, professional service or mixed supply. Classification depends on the current statutory text, contractual promise, technology architecture, human involvement, supplier and recipient locations, customer registration status, platform role, payment flow and contemporaneous evidence. The 2023 amendments materially changed the definitions, while portal forms, registration steps, invoice rules, rates, return utilities and administrative practice may be amended again. A customer-supplied GSTIN or address should be validated; a platform label does not settle deemed-supplier status; and an Indian representative, fixed establishment or group entity can change the analysis. Privacy, foreign-exchange, equalisation-levy history, direct-tax nexus, consumer-law and contractual issues are outside the limited GST discussion and may also require review. Businesses should verify the current consolidated legislation, notifications, portal guidance and facts immediately before registration, invoicing, payment, return filing or correction, and obtain advice from qualified Indian GST and legal professionals. TaxGuru accepts no responsibility or liability for any tax, interest, late fee, penalty, registration failure, wrong place-of-supply allocation, duplicate collection, denied adjustment, data-protection issue or commercial loss arising from reliance on this article, incomplete facts, system settings or subsequent legal and portal changes.
