• By ADMIN
• Posted 13 Feb, 2025
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OIDAR Services under GST

Online Information Database Access and Retrieval (OIDAR) services play a crucial role in the digital economy. Under the Goods and Services Tax (GST) regime in India, special provisions govern the taxation of OIDAR services, particularly when provided by a foreign supplier to an Indian recipient.

1. What is OIDAR Services?

OIDAR stands for Online Information Database Access and Retrieval services. As per Section 2(17) of the IGST Act, 2017, OIDAR services refer to services that are:

• Provided through the internet or an electronic network.
• Essentially automated and involve minimal human intervention.
• Impossible to ensure without information technology.

Examples of OIDAR Services:

• Online advertising services (Google Ads, Facebook Ads, etc.)
• Cloud storage services (Google Drive, Dropbox, etc.)
• Subscription-based digital content (Netflix, Spotify, etc.)
• E-learning platforms (Coursera, Udemy, etc.)
• Software as a Service (SaaS) platforms

2. Who Has to Pay Tax in this Case?

The responsibility to pay GST on OIDAR services depends on whether the recipient is a registered taxable person or a non-taxable online consumer:

(A) If the Recipient is a Registered Taxable Person (B2B Transactions):

• The recipient (business in India) is liable to pay GST under the Reverse Charge Mechanism (RCM).
• The Indian business must self-assess and pay the tax under RCM and claim Input Tax Credit (ITC) if eligible.

(B) If the Recipient is an Unregistered Individual (B2C Transactions):

• The foreign service provider (non-resident OIDAR service provider) is liable to pay GST.
• They must register under GST and discharge tax liability.

GST Registration Requirement for Foreign OIDAR Providers:

• Foreign service providers must obtain GST registration in India under Section 14 of the IGST Act.
• They must file returns and remit taxes accordingly.

3. What Form to be Used?

Foreign service providers supplying OIDAR services to Indian consumers must:

• Register under Form GST REG-10 (for non-resident taxable persons).
• File GST Returns in Form GSTR-5A (to report outward supplies and tax payments).

Important Compliance Forms:

4. Place of Supply for OIDAR Services

The place of supply determines taxability under GST. As per Section 13(12) of the IGST Act, the place of supply for OIDAR services is the location of the recipient.

Rules for Place of Supply:

1. If the recipient is a registered person: Place of supply is the recipient’s registered location.
2. If the recipient is an unregistered individual: The place of supply is determined based on:
   • Billing address of the recipient.
   • IP address or location of the device used for accessing the service.
   • Payment details (credit card issuing bank location).
   • Other business indicators (SIM card country, residence address, etc.).

Example:

• A U.S.-based SaaS company provides a software subscription to an individual in India. Since the individual is unregistered, the place of supply is India, and the U.S. company must register and pay GST in India.

5. Documentation Involved

Proper documentation is required to ensure compliance with GST regulations for OIDAR services. The key documents include:

6. Case Studies

Case Study 1: OIDAR Services and Reverse Charge Mechanism

Scenario: XYZ Pvt. Ltd., an Indian company, subscribes to an online design tool from a foreign provider (Figma). Since XYZ Pvt. Ltd. is a registered taxpayer, it must pay GST under Reverse Charge Mechanism and claim ITC.

Tax Treatment:

• GST is paid by XYZ Pvt. Ltd. under RCM.
• XYZ Pvt. Ltd. can claim ITC on the same amount.

Case Study 2: GST Compliance for a Foreign OIDAR Supplier

Scenario: A U.S.-based e-learning platform provides training courses to Indian students who are not registered under GST.

Tax Treatment:

• The U.S. provider must register under GST in India.
• They must file GSTR-5A and pay GST on services rendered.

Conclusion

OIDAR services under GST are subject to specific tax provisions due to the cross-border nature of digital transactions. The liability to pay tax depends on whether the recipient is registered or unregistered. Foreign OIDAR providers must comply with GST registration and return filing requirements. Understanding place of supply rules ensures proper tax compliance and avoids penalties.