I have 2 queries
1. If person registered under GST is using social media( e.g Instagram posts, whatsapp etc) FREE OF COST for generating customer traffic for a business outside India.vIs gst applicable on this? If yes, how to determine value of supply ?
2. Similarly, if OIDAR services received FREE OF COST, from outside India by a registered Indian recipient for business outside India, is gst applicable on such OIDAR services? If yes, what will be the value of supply?
Here are the detailed legal solutions to the two queries posted on the forum page under the Indian GST framework.
No GST is applicable.
Under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017, a transaction must involve consideration to be qualified as a "supply," unless it falls under Schedule I of the Act.
Schedule I Exception: Schedule I covers activities made without consideration, but only between related persons or between distinct persons (different registrations of the same legal entity) when made in the course or furtherance of business.
The Reality: Since platforms like Instagram and WhatsApp provide basic accounts and organic posting features free of cost to the general public, there is no transaction of supply between you and a related/distinct person.
Since this is a non-taxable, free-of-cost activity that does not qualify as a supply, the question of determining the value of supply does not arise.
No GST is applicable.
To evaluate this, we look at the import of services under GST:
With Consideration: Section 7(1)(b) of the CGST Act states that the import of services for a consideration, whether or not in the course or furtherance of business, is treated as a supply. Here, because it is "free of cost," this clause does not apply.
Without Consideration (Schedule I): Paragraph 4 of Schedule I states that the import of services by a taxable person from a related person or from any of their other establishments outside India, in the course or furtherance of business, is treated as a supply even without consideration.
📌 The Verdict: If you receive free OIDAR services from an unrelated foreign entity, it is not a supply, and no GST applies. However, if the service is received from a related entity or foreign branch, it is treated as an import of service (supply). Even so, since the business operation itself is entirely outside India, the ultimate place of supply rules and export/exempt dynamics would mean no effective tax liability arises in India.
If the service is received from a related person (making it a deemed supply under Schedule I), the value must be determined using Rule 28 of the CGST Rules, 2017:
The value will be the Open Market Value (OMV) of such services.
If the OMV is not available, it is determined based on the value of services of like kind and quality.
Proviso Benefit: If the Indian recipient is eligible for full Input Tax Credit (ITC), the value declared in the invoice (even if nil/zero) shall be deemed to be the open market value.
Social Media Traffic (Free): Not a supply due to lack of consideration. No GST applies.
Free OIDAR Services: No GST applies if received from an unrelated entity. If received from a related entity or foreign branch, it qualifies as a supply valued at Open Market Value, but typically carries no effective Indian tax impact if the actual business deployment is entirely outside India.
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