Follow Us :

Dayal R Kundani

Date: 29/11/2016

Source: CBEC

Sub: Amendments in the provisions related to ‘Online information and database access or retrieval services’.

Circular No. 202/12/2016-Service Tax –  (09/11/2016) 

Notification No. 46/2016-S.T., dated 09.11.2016

 Notification No. 47/2016-S.T., dated 09.11.2016

 Notification No. 48/2016-S.T., dated 09.11.2016

 Notification No. 49/2016-S.T., dated 09.11.2016


The online information and database access or retrieval services were exempted under Reverse charge as per Place of provision rules i.e the services provided from outside India and received in India were non-taxable (Exempt) under service tax.

The said exemption has been withdrawn

Effective 01.12.2016 online service have been made taxable and liable for service tax under reverse charge for service received from outside India i.e, Service provided from a non-taxable territory (outside India ) and received in a taxable territory (In India)

The nature of services that would now be covered under online services that are provided from outside India and received in India and subject to service tax under Reverse Charge Mechanism and payable by recipient are as under:

(i) advertising on the internet;

(ii) providing cloud services;

(iii) provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;

(iv) providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;

(v) Online supplies of digital content (movies, television shows, music, etc.);

(vi) digital data storage; and

(vii) online gaming “

If the following two conditions are fulfilled it will be deemed to be services received under Online information and database access or retrieval services’.

(i) Provision of Service via Information Technology (using internet or other electronic network); and

(ii) Automatic delivery of such service, i.e., with minimal human intervention

The CBEC under its Circular F. No. 354/149/2016-TRU dated 09/11/2016  has provide a few examples which are elaborated below

services which gets covered:

(i) Website supply, web-hosting, distance maintenance of programmes and equipment;

(ii) Supply of software and updating thereof;

(iii) Supply of images, text and information and making available of databases;

(iv) supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events

(v) supply of distance teaching

services which do not get covered

(i) Supplies of goods, where the order and processing is done electronically

(ii) Supplies of physical books, newsletters, newspapers or journals

(iii) Services of lawyers and financial consultants who advise clients through email

(iv) Booking services or tickets to entertainment events, hotel accommodation or car hire

(v) Educational or professional courses, where the content is delivered by a teacher over the internet or an electronic network (in other words, using a remote link)

(vi) Offline physical repair services of computer equipment

(vii) Advertising services in newspapers, on posters and on television

The following table shall highlight the impact of changes

Sr. No. Service Provider Service Receiver Liability of ST Person liable to pay ST
1 Foreign provider Government/ Individual (personal use) Yes Service Provider
2 Foreign OIDAR provider Companies, Proprietor, Partnership etc. Yes Service Receiver
3 Indian OIDAR provider Any person in non-taxable territory No NA
4 Indian OIDAR provider Any person in taxable territory Yes Service Provider

( Author can be reached at

Click here to Read Other articles of Dayal R Kundani

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

One Comment

  1. Mansoor Ali says:

    What about the similar services provided from India to principal situated in non taxable territory? whether these services are taxable even after foreign currency earned?

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
April 2024