Seeks to amend notification No. 25/2012-ST dated 20th June , 2016 so as to withdraw exemption from service tax for services provided by a person in non-taxable territory to Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.

No Service Tax exemption on Services received from a provider of service located in a non- taxable territory on online information and database access or retrieval services received by Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession; 

a) Amendment in Place of Provision of Service Rules, 2012

Central Government vide Notification No. 46/2016-ST., Dated: November 09 2016 has amended Place of Provision of Service Rules to provide that in case of online information and database  access or retrieval services the place of provision of service would be location of the service receiver. Accordingly, proviso to Rule 3 has been amended and Point ‘b’ of Rule 9 has been deleted to this effect.

b) Amendment in Mega Exemption Notification

Entry 34 of Mega Exemption Notification provides exemption to services provided by a person in non-taxable territory to Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory

Central Government vide Notification No. 47/2016-ST., Dated: November 09 2016 has amended entry 34 of the Mega Exemption Notification No. 25/2012 -ST, dated 20.06.2012 to provide that the exemption shall not apply to online information and database access or retrieval services received by persons specified above.

c) Amendment in Service Tax Rules, 1994

Central Government vide Notification No. 48/2016-Service Tax dt. 09-11-2016 has amended Service Tax Rules, 1994 to prescribe that the person located in non-taxable territory providing OIDAR services to ‘non-assesse online recipient’, as defined therein, is liable to pay service tax.

Further, following definitions have been provided:

i) “non-assesse online recipient” means Government, a local authority, a governmental authority or an individual receiving OIDAR services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory

ii) “online information and database access or retrieval (OIDAR) services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as:

  • advertising on the internet;
  • providing cloud services;
  • provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;
  • providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
  • online supplies of digital content (movies, television shows, music, etc.);
  • digital data storage; and
  • online gaming;

iii) Proviso(s) added in the definition of Person Liable for Paying Service Tax

  • When an intermediary located in the non-taxable territory including an electronic platform, arranges or facilitates provision of cross border B2C OIDAR service but does not provide the main service on his account, the intermediary shall be deemed to be receiving such services from the service provider in non-taxable territory and providing such services to the non-assesse online recipient except when such intermediary satisfies all the specified conditions.
  • When the service provider in non-taxable territory is represented for any purpose in taxable territory by a person, then such person is deemed to be the person liable for paying Service tax.
  • If the service provider in non-taxable territory does not have a physical presence or does not have a representative for any purpose in the taxable territory, the service provider may appoint a person in the taxable territory for the purpose of paying Service tax and such person shall be liable for paying Service tax.
  • A person receiving OIDAR services shall be deemed to be a non-assesse online recipient, if such person does not have Service tax registration under the Service Tax Rules

iv) New proviso inserted in Rule 4(1) of the Service Tax Rules prescribing registration requirement/procedure of person located in non-taxable territory liable for paying Service tax in the case of OIDAR services.

v) New proviso inserted in Rule 4A(1) of the Service Tax Rules prescribing invoicing details in case of OIDAR services provided or agreed to be provided in taxable territory by a person located in the non-taxable territory.

vi) Amendment in Rule 7(1): Return form ST-3C has been inserted.

vii) An application for registration in form ST-1A is to be made by a person located in non­taxable territory providing OIDAR services within a period of thirty days from the date on which the service tax is levied or the person located in non-taxable territory has commenced supply of taxable services in the taxable territory in India and the registration shall be deemed to be granted in form ST-2A from the date of receipt of the application.

d) Amendment in Reverse Charge Notification

Central Government vide Notification No. 49/2016-Service Tax dt. 09-11-2016 has amended Reverse Charge Notification No. 30/2012- ST, dated the 20th June, 2016 to put compliance liability of service tax payment and procedure on to the service provider located in the non­taxable territory with respect to online information and database access or retrieval services provided in the taxable territory to ‘non-assesse online recipient’.

e) In all the Notifications issued, the definition of OIDAR services as provided in Service Tax Rules, 1994 would apply mutatis mutandis.

f) Clarifications on Issues pertaining OIDAR services

Central Government vide Circular No. 202/12/2016-ST, dt. 09-11-2016 has provided a list of 46 issues and clarifications thereto in respect of various aspects pertaining to the taxation of OIDAR services. Detailed circular may be viewed at http://www.idtc.icai.org!latest-circular.html

With effect of these Notifications! Circular cross border B2C OIDAR services provided by a foreign service provider to a person in India will become taxable from December 1, 2016 onwards, which includes webpage hosting, online maintenance of programmes, remote systems administration, data warehousing, cloud storage and downloading of games, music, distance teaching, and supply of images, text and information and making available of databases, etc.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
NEW DELHI

Notification No. 47/2016-ST, Dated: November 9, 2016

G.S.R. 1056 (E) In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20thJune, 2012, namely:-

In the said notification,-

(a) in the opening paragraph, in entry 34, after clause (c), the following proviso shall be inserted, namely,-

“Provided that the exemption shall not apply to online information and database access or retrieval services received by persons specified in clause (a);”;

(b) in paragraph 2, after clause (xaa), the following clause shall be inserted, namely: –

‘(xab) “online information and database access or retrieval services” has the same meaning as assigned to it in clause (ccd) of sub-rule 1 of rule 2 of the Service Tax Rules, 1994;’.

2. This notification shall come into force on the 1st day of December, 2016.

[F. No. 354/149/2016-TRU]

(Anurag Sehgal)
Under Secretary to the Govt. of India

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012-Service Tax, dated the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20th June, 2012 and last amended vide notification number 40/2016-Service Tax, dated the 6th September, 2016 vide number G.S.R. 857(E), dated the 6th September, 2016.

Relevant Posts

Title Notification No. Date
46 FAQs on service tax on cross border B2C OIDAR online services Circular No. 202/12/2016-Service Tax 09/11/2016
Service Tax Payment & Compliance Liability for online service provided from non-taxable territory Notification No. 49/2016-Service Tax 09/11/2016
Service Tax on Online Services provided by person located in non-taxable territory Notification No. 48/2016-Service Tax 09/11/2016
Withdrawal of ST Exemption on online information & database access or retrieval services Notification No. 47/2016-Service Tax 09/11/2016
Amendment in place of provision of ‘online information & database access or retrieval services’ Notification No. 46/2016-Service Tax 09/11/2016

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Category : Service Tax (3413)
Type : Notifications (16076) Notifications/Circulars (32598)

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