Added Value Tax on OIDAR Services

What is OIDAR:

OIDAR is “Online Information Database Access and Retrieval” services (henceforth referred to as OIDAR) are a category of services delivered via the internet and received by the recipient online without a physical interface with the service provider. as an example, a consumer who downloads an e-book for a fee would be considered to possess received OIDAR services.

The IGST Act defines OIDAR as services which’s delivery is mediated through information generation over the net or a digital network, and whose nature renders their supply basically automatic, requiring minimum human intervention, and not possible to make sure inside the absence of statistics generation. This definition includes electronic services such as:

Indicative List of OIDAR Services:

1. Website supply, web hosting, remote program and equipment maintenance:

2. The provision of software and its update:

3. Providing images, text, and data and making databases accessible:

4. Supply of music, games, and films, including games of chance and gambling games, also as broadcasts of artistic, cultural, political, sporting, scientific, and entertainment events:

5. Provision of distance education:

OIDAR Service Test:

The inclusive portion of the OIDAR service definition is simply indicative and is not exhaustive. the subsequent test can be used to determine whether a specific service is an OIDAR service.

ServiceWhether Provision of service mediated by information technology over the internet or an electronic networkWhether it is Automated and impossible to ensure in the absence of information technologyOIDAR Service
Pdf document manually emailed by providerYesNoNo
Pdf document automatically emailed by provider’s systemYesYesYes
Pdf document automatically downloaded from siteYesYesYes
Stock photographs available for automatic downloadYesYesYes
Online course consisting of pre-recorded videos and downloadable pdfsYesYesYes
Online course consisting of pre-recorded videos and downloadable pdfs plus support from a live tutorYesNoNo
Individually commissioned content sent in digital form Ex: photographs, reports, medical resultsYesNoNo

Registration of OIDAR:

For the payment of integrated tax, the provider (or intermediary) of online information and database access or retrieval services must obtain one registration under the Simplified Registration Scheme on Form GST REG-10. In such instances, the supplier must register with the Principal Commissioner of Central Tax, Bengaluru West, who has been designated to grant registration.

If there’s a representative in the taxable territory (India) for an overseas supplier, that representative must register and pay the integrated tax on the supplier’s behalf.

If the overseas supplier doesn’t have a physical presence or a representative in the taxable territory for any reason, he may appoint an individual in the taxable territory for the purpose of paying integrated tax, which person will be responsible for the payment of such tax.

Who may be a Non-Taxable Online Recipient:

A “non-taxable online recipient” is any government, agency, governmental authority, individual, or other non-registered person located in the taxable territory who receives online information and database access or retrieval services for a purpose aside from commerce, industry, or other business or profession.

Who will pay GST:

In cases where the supplier of a service is found outside of India and the receiver is a business entity (registered entity) located in India, the reverse charge mechanism is going to be triggered, and therefore the receiver in India who is a registered entity with GST will be liable to pay GST under reverse charge and comply with all applicable regulations.

The supplier of services located in a non-taxable territory is responsible for paying integrated tax on the supply of online information and database access or retrieval services received by a non-taxable online recipient.

If an intermediary located outside of India arranges or facilitates the availability of such a service to a non-taxable online receiver in India, the intermediary is taken into account to be the supplier of such a service, unless the intermediary meets the subsequent conditions:

Returns on GST Paid by OIDAR:

According to rule e 64 of the CGST Rules, 2017, every registered one that provides online information & database access or retrieval services from abroad to a person in India who is not a registered person shall file a return in FORM GSTR-5A on or before the 20th day of the month of the next the calendar month or part of the month.

Only the service provider (or his representative) providing OIDAR services from outside India to a non-taxable online recipient in India is required to file Form GSTR-5A. Other categories of OIDAR service providers (such as those providing OIDAR services from India) are going to be required to file the standard returns (GSTR-1 & GSTR-3B) for registered persons.

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