This article will help you to understand about OIDAR Services and who will be responsible for paying taxes and related compliances.
Section 14 of the Integrated Goods and Services Tax (IGST) Act, 2017 relating to "Special provision for payment of tax by a supplier of online information and database access or retrieval (OIDAR) services", are as under:
1) On supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services:
Provided that in the case of supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a nontaxable online recipient, an intermediary located in the non-taxable territory, who arranges or facilitates the supply of such services, shall be deemed to be the recipient of such services from the supplier of services in non-taxable territory and supplying such services to the non-taxable online recipient except when such intermediary satisfies the following conditions, namely:–
(a) the invoice or customer's bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;
(b) the intermediary involved in the supply does not authorize the charge to the customer or take part in its charge which is that the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services;
(c) the intermediary involved in the supply does not authorize delivery; and
(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.
(2) The supplier of online information and database access or retrieval services referred to in sub-section (1) shall, for payment of integrated tax, take a single registration under the Simplified Registration Scheme to be notified by the Government:
Provided that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay integrated tax on behalf of the supplier:
Provided further that if such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
1. What is OIDAR Services?
- delivery of which is mediated by information technology(IT)
- supply of which has been automated
- supply of which requires minimum human intervention
- and supply of which is impossible without IT.
For eg.- Supply of e-books, e-magazines, e-software
- Services provided by way of cloud download (internet download)
- Supply of distant teaching (lecture stored over server)
Note: In general the use of internet or other electronic networks by parties to communicate with respect to transactions or to facilitate trading does not mean that a business is providing OIDAR Services.
2. What is Non-Taxable Online Recipient (NTOR)?
Non-Taxable Online Recipient means
- any Government, local authority, governmental authority,
- an individual or any other person not registered and
receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.
For eg.- Mr. ABC, a 12th class student, who has availed services of online gaming from apple stores or google play stores.
3. How would the entity located outside India comply with the responsibilities entrusted under GST?
The supplier (or intermediary) of online information and database access or retrieval services shall, for payment of integrated tax, take a single registration under the Simplified Registration Scheme in Form GST REG-10. The supplier shall take registration at Principal Commissioner of Central Tax, Bengaluru West who has been the designated for grant registration in such cases. In case there is a person in the taxable territory (India) representing such overseas supplier in the taxable territory for any purpose, such person (representative in India) shall get registered and pay integrated tax on behalf of the supplier: In case the overseas supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
4. Filing of Returns by a person providing OIDAR service
Every registered person providing OIDAR services from a place outside India to a person in India other than a registered person shall file return in FORM GSTR-5A on or before the twentieth day of the month succeeding the calendar month or part thereof.