Online Information and Database access or retrieval [OIDAR] services under GST

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Online Information and Database access or retrieval [OIDAR] services:

Online Information and Database access or retrieval [OIDAR] services under GST:

The IGST Act defines OIDAR to mean services under section 2(17) as service whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as, ––

(i) advertising on the internet;

(ii) providing cloud services;

(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;

(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;

(v) online supplies of digital content (movies, television shows, music and the like);

(vi) digital data storage; and

(vii) online gaming;

In simple words OIDAR services are services taken online from outside India. For example, a person subscribes NETFLIX is taking OIDAR service. We will discuss GST implication on such services.

Basically, there are two features of OIDAR services

  1. Delivery is mediated by information technology over internet or electronic network.
  2. The supply is essentially automated involving minimal human intervention and impossible without information technology.

Let’s have a look at few examples that are not OIDAR service:

  • Booking services or tickets to entertainment events, hotel accommodation or car hire
  • Supplies of goods, where the order and processing is done electronically
  • Advertising services in newspapers, on posters and on television
  • Offline physical repair services of computer equipment
  • Supplies of physical books, newsletters, newspapers or journals
  • Services of lawyers and financial consultants who advise clients through email
  • Educational or professional courses, where the content is delivered by a teacher over the internet through remote link.

For more clarity lets have examples as to what is OIDAR service

  • Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
  • Advertising on internet
  • Online gaming (Steam)
  • Providing cloud services
  • Provision of e-books, movie, music, software and other intangibles via internet (Amazon Prime Video, Hotstar)

Note that, services received from a provider of service in non- taxable territory by the following shall be exempt under GST:

  1. Central Government, State Government, Union territory, local authority, or governmental authority or
  2. An individual in relation to any purpose other than any purpose other than commerce, industry etc.
  3. An entity registered under 12AA of the Income Tax Act, 1961
  4. A person located in non-taxable territory.

The above exemption shall not apply if OIDAR service if received by the following:

  1. Central Government, State Government, Union territory, local authority, or governmental authority or
  2. An individual in relation to any purpose other than any purpose other than commerce, industry etc.
  3. An entity registered under 12AA of the Income Tax Act, 1961

Also the exemption shall not apply if service is by way of transportation of goods in vessel from outside India to India.

It means OIDAR services are taxable if it is received by Government, individual other than for business and charitable entity. Who is liable to pay tax? Let’s have a look at Reverse Charge Mechanism (RCM) to get the answer.

As per the RCM provision if any service is supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient (NTOR) the person liable to pay tax shall be any person located in the taxable territory.

IT means GST is to be paid by supplier located in non taxable territory if supply made to NTOR.

If OIDAR service is supplied through intermediary, intermediary is liable to pay GST.

“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 (OIDAR) services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory

In case service is supplied say for example to charitable trust GST is to be paid by charitable trust under RCM.


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