The Curious Case Of Online Information Database Access And Retrieval (OIDAR) Services From Goods And Services Tax Perspective

• Published date: 08 June 2021
• Subject Matter: Tax, Sales Taxes: VAT, GST, Tax Authorities
• Law Firm: Singh & Associates
• Author: Smita Singh and Kunal Batra

The advent of COVID-19 has augmented the usage of internet and related services many folds in India. Presently, e-commerce has become an essential sector since it involves minimal physical presence/human intervention. Such businesses are involved in dynamic transactions which makes it more complex for the purpose of taxability.

OIDAR was brought under indirect tax net in India in 2001 under the service tax laws. Initially, the scope of OIDAR services included online services, supply of software, supply of information in database, supply on music online via downloading, supply of distance learning, etc. In 2016, the scope of OIDAR services was extended to include electronic services. Under GST, online services have been brought within the ambit of OIDAR services which encompasses services whose delivery is mediated by information technology or an electronic network and the nature of which renders their supply essentially automated, involving minimal human intervention and impossible to ensure in the absence of information technology. Thus, services provided through medium of internet and received by the recipient online without having any physical interface would qualify as OIDAR services.

Registration

Online services have definitely diluted the territorial boundaries and accordingly OIDAR services can be provided from anywhere - within or outside India to recipients in India. OIDAR service providers having place of business in India can obtain GST Registration through the normal method by applying as through the GST common portal.

Further simplified procedure for registration has been prescribed under GST laws, wherein overseas companies providing OIDAR services from a place outside India to a non-taxable online recipient can take a single registration for the purpose of payment of integrated goods and services tax (IGST). However, where the overseas supplier has a representative in India, such person (i.e. representative in India) shall obtain registration for compliances under the GST laws.

In case the foreign OIDAR service provider does not have a physical presence or does not have a representative for any purpose in India, he may appoint a person in India for the purpose of paying IGST and such person shall be liable for payment of such taxes.

Place of Supply

The reason being that under GST, place of supply for OIDAR services is the location of the recipient in terms of Section 13(12) of the IGST Act. The place of supply is deemed to be in the...