OIDAR SERVICES-Forward charge or Reverse Charge?

This is a great and nuanced GST query, Balamani. Let’s break it down based on the OIDAR (Online Information and Database Access or Retrieval) services provisions under the GST Law in India.

💡 Summary Answer:

If the OIDAR service provider has a physical presence or fixed establishment in India and is issuing invoices in INR, then the forward charge mechanism applies — not reverse charge — even if they mention an overseas address on the receipt.

Let’s dig deeper 👇

🧾 What the Law Says: OIDAR & RCM

🔹 OIDAR services under GST:

Defined in Section 2(17) of the IGST Act as services delivered over the internet (like cloud storage, software downloads, etc.), with minimal human intervention.

🔹 When RCM applies:

As per Notification No. 10/2017 – IGST (Rate):

If an OIDAR service is supplied by a person located in a non-taxable territory and received by a non-taxable online recipient (NTOR) (which includes even registered persons in some cases), RCM applies.

👉 So, if the supplier is located outside India, and has no physical presence in India, then RCM applies.

🔍 Your Case: Key Factors

✅ Conclusion:

If the supplier is registered in India, billing in INR, and has a presence/subsidiary in India, the transaction is treated as a domestic supply, and forward charge applies.

• In this case, supplier should charge GST, collect it, and remit it.

• You (the recipient) do not need to pay GST under reverse charge.

⚠️ Caution – Overseas Address on Invoice?

That alone does not determine the tax liability. What matters is:

• Whether the supplier is registered in India

• Whether the billing and collection is handled in India

• Whether the supply is made through the Indian subsidiary

If all that is yes, RCM doesn't apply, even if the invoice mentions a foreign HQ.

✅ What You Should Do:

1. Ask the supplier:

   • Are you registered under GST in India?

   • Can you share your GSTIN?

   • Why is your invoice showing an overseas address despite being a domestic transaction?

2. Check if they charged GST in past invoices:

   • If yes → forward charge applies

   • If no → you might need to evaluate whether RCM applies (only if their Indian presence is not registered for GST)

3. Keep documentation: Credit card statements, GST invoices (if any), and correspondence, for audit trail.