OIDAR Services under GST Act

Online Information Database Access and Retrieval services, often abbreviated as OIDAR, is a specific category of services under the Goods and Services Tax (GST) framework in India. OIDAR services are provided through the internet and are received by the recipient online, typically without any physical interaction with the supplier.

These services are considered digital services, and they have specific rules and tax implications under GST. OIDAR services are subject to GST in India.

A detailed explanation of OIDAR services and examples to illustrate the concept:

1. OIDAR Definition under IGST Act:

The OIDAR services are defined under the Integrated Goods and Services Tax (IGST) Act. OIDAR services typically include services that are delivered over the internet and are automatically processed without the direct involvement of the service provider. These services include things like downloadable software, digital books, e-learning, streaming of music and movies, etc. The IGST Act provides a legal framework for the taxation of such services.

2. Non-taxable Online Recipient Definition under IGST Act:

The IGST Act defines a “non-taxable online recipient” as a person who is not registered under the GST (Goods and Services Tax) regime and who receives OIDAR services for non-business purposes. In other words, individuals or government entities that do not have GST registration and are using these services for non-commercial purposes fall under this category.

3. Proviso to Sl. No. 10 of Notification 9/2017-ITR as amended by Notification 12/2023-ITR:

Notifications are issued under the GST regime to provide specific rules and regulations. The proviso to Sl. No. 10 of Notification 9/2017-ITR (which deals with the reverse charge mechanism for OIDAR services) has been amended by Notification 12/2023-ITR. This means that there have been changes to the way OIDAR services are taxed under the GST rules.

4. No. 1 of Notification No. 10/2017-ITR:

Sl. No. 1 of Notification No. 10/2017-ITR likely specifies the services or categories of services to which the reverse charge mechanism applies. Reverse charge means that the recipient of the service is liable to pay the tax instead of the Foreign Service provider.

5. Section 14 of IGST Act 2017:

Section 14 of the IGST Act deals with the place of supply of goods and services. It provides rules for determining the location where GST is payable. In the context of OIDAR services, the place of supply is a crucial factor in determining whether GST is applicable in India.

6. What are OIDAR services?

OIDAR services encompass various online services that provide access to or retrieval of data or information, including databases, electronic documents, software, music, images, text, and other digital content. These services are typically automated and are delivered over the internet.

7. Key Characteristics:

• Online Delivery: OIDAR services are provided and received over the internet, and there is no physical interface between the service provider and the recipient.
• Automated: These services are often automated and do not require direct human intervention in the delivery process.
• Access and Retrieval: OIDAR services involve the provision of access to data or the retrieval of specific information.

8. Examples of OIDAR Services:

• Subscription-Based Databases: A company provides online access to its database of market research reports for a monthly fee. Subscribers can log in, search for reports, and download them.
• Online Training Courses: An e-learning platform offers various online courses. Learners can access the courses, view videos, download materials, and take quizzes entirely online.
• Streaming Services: Music and video streaming services that provide access to their content online are considered OIDAR services.
• Cloud-Based Software: SaaS (Software as a Service) providers that offer software access via the internet fall under OIDAR.
• E-books and E-magazines: Platforms selling and delivering digital books and magazines are examples of OIDAR services.

9. GST Implications for OIDAR Services:

OIDAR services are subject to GST in India. The supplier (the company or individual providing the services) is responsible for collecting and remitting GST. However, there are special provisions for the registration and compliance requirements for OIDAR service providers:

• OIDAR service providers need to register for GST in India, regardless of their turnover.
• They must file GST returns and collect tax from their customers, who are often located in different states or countries.
• The place of supply and GST rates can vary based on the location of the supplier and recipient.

10. Place of Supply Rules for OIDAR Services:

The GST rules for determining the place of supply for OIDAR services depend on whether the recipient is a registered person or not:

• If the recipient is a registered person, the place of supply is the location of the recipient.
• If the recipient is an unregistered person, the place of supply is the location where the supplier is located.

11. Tax Collection at Source (TCS):

In the case of OIDAR services supplied by foreign companies to unregistered individuals in India, tax is collected at source (TCS) by the payment gateway operator or an authorized representative of the foreign supplier.

It’s essential for OIDAR service providers to understand the specific GST provisions that apply to their services, including registration, compliance, and tax collection requirements, to ensure compliance with the law. Additionally, the GST landscape can change, so staying updated with the latest regulations is crucial for OIDAR service providers.