Online Information Database Access & Retrieval (OIDAR) Services
We live in an age of rapidly evolving technology from day to day life to all types of business. Business takes different forms with new technology day by day; like ordering food on line, on line entertainment, online shopping, online game, Online Education.
Meaning of Online Information Database Access and Retrieval Services
It is a Category of service where services provided through internet and received by recipient online through Internet.
Ex: Download of E-book online by making payment is a receipt of OIDAR services by consumer.
As Per IGST Act OIDAR means services which is provided through Information Technology over internet.
- Online Gaming
- Online supply of Movies, television shows
- Advertising on Internet
- Service of digital data storing
Differences between OIDAR Services and Normal services
Online Information Data Base Access and retrieval Services provided from non- taxable territory are different from same services provided within taxable territory because if service provider is in taxable territory then he comes under the purview of GST and GST will be charged but if service provider belongs to non-taxable territory then it is outside from the GST and secondly, compliance verification mechanism becomes difficult, So Government has plans to come out with a simplified scheme of registration for such service providers located outside India.
Taxability of OIDAR Services
Place of supply is very much important for determining the taxability of a particular services.
As per Place of supply rules if both the supplier and recipient of OIDAR services located in India then place of supply would be location of recipient of such service.
When supplier is located outside India but receiver is located in India then place of supply would be India and it will fall under purview of GST hence, would be taxable.
But Question is who is liable for paying such tax i.e. Supplier is located outside India and recipient is located in India so service will be taxable (as per place of supply rules)
There can be 2 scenarios
- When supplier is located outside India and recipient is business entity (i.e. Registered Person under GST)
In this situation Reverse charge provisions will be applicable and recipient of service will be liable for paying GST as well as for other compliances.
- When supplier is located outside India and recipient is individual (Not Registered under GST)
In this situation since place of supply is India i.e. location of Recipient is in India so GST will be applicable, problem is who is liable to Pay GST because since Supplier is located in Non-taxable Territory hence GST is not applicable on him and Recipient is located in India but not Registered under GST again GST is not applicable so who will pay tax?
So, Government covers this situation in IGST Act.
As per IGST Act, on online information and database access or retrieval services by any person located in Non-taxable territory and received by a person located in taxable territory but not liable for registration (Non-taxable Online Recipient*) supplier of services located in Non-taxable territory shall be the person liable for paying Integrated tax (IGST because it is type of Import hence, treated as inter- state supply) on such supply of services.
* Meaning of Non-Taxable Online Recipient
“Non-Taxable Online Recipient” means any government 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.
How Supplier/entity located outside india will follow provisions of IGST Act and pay IGST
Supplier located outside India will follow provision through below mention way:
a) The supplier of online information and database access or retrieval services shall, for payment of IGST take a single registration in Form GST REG-10.
Supplier will take registration at principal commissioner of central tax, Bengaluru west who has been designated for grant of Registration in such cases.
b) If there is any person in India who is representing such overseas supplier for any purpose (related to GST or not) that person (representative of India) shall get registered under GST and will pay IGST on behalf of such supplier.
c) When such overseas supplier does not have any representative for any purpose in India, then first he have to appoint a representative in India who shall get registered and will be liable for Payment of IGST on behalf of such overseas supplier.
Return Filling by overseas OIDAR Service Provider
Every registered person providing online information and data base access or retrieval 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.
Examples of what could be or could not be OIDAR services
The inclusive part of the definition of OIDAR services is only indicative and not exhaustive. To determine if a particular service is an OIDAR service, the following test can be applied:
Whether Provision of service mediated by information technology over the internet or an electronic network
Whether it is Automated and impossible to ensure in the absence of information technology
PDF document manually emailed by provider
PDF document automatically emailed by provider’ s system
PDF document automatically downloaded from site
Stock photographs available for automatic download
Online course consisting of pre-recorded videos and downloadable PDFs
Online course consisting of pre-recorded videos and downloadable PDFs plus support from a live tutor
Individually commissioned content sent in digital form e.g., photographs, reports, medical results
Examples of OIDAR Service Indicative List of OIDAR Services
Indicative List of OIDAR Services
1) Website supply, web-hosting, distance maintenance of programmes and equipment
- Website hosting and webpage hosting
- Automated, online and distance maintenance of programmes
- Remote systems administration
- Online data warehousing where specific data is stored and retrieved electronically
- Online supply of on-demand disc space
2) Supply of software and updating thereof
- Accessing or downloading software (including procurement/accountancy programmes and anti-virus Software)plus updates
- Software to block banner adverts, otherwise known as Banner blockers
- Download drivers, such as software that interfaces computers with peripheral equipment (such as printers)
- Online automated installation of filters on websites
- Online automated installation of firewalls
3) Supply of images, text and information and making available of databases
- Accessing or downloading desktop themes
- Accessing or downloading photographic or pictorial images or screensavers
- The digitized content of books and other electronic publications
- Subscription to online newspapers and journals
- Weblogs and website statistics
- Online news, traffic information and weather reports
- Online information generated automatically by software from specific data input by the customer, such as legal and financial data, (in particular, data such as continually updated stock market data, in real time)
- The provision of advertising space including banner ads on a website/web page
- Use of search engines and Internet directories
4) Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events
Accessing or downloading of music on to computers and mobile phones
- Accessing or downloading of jingles, excerpts, ringtones, or other sounds
- Accessing or downloading of films
- Downloading of games on to computers and mobile phones
- Accessing automated online games which are dependent on the Internet, or other similar electronic networks, where players are geographically remote from one another
5) Supply of distance teaching
- Automated distance teaching dependent on the Internet or similar electronic network to function and the supply of which requires limited or no human intervention. These include virtual classrooms, except where the Internet or similar electronic network is used as a tool simply for communication between the teacher and student
- Workbooks completed by pupils online and marked automatically, without human intervention