In the world of online services, it’s essential to know about OIDAR (Online Information and Database Access or Retrieval) services. These are services you get online, like accessing information or databases, and they pose special challenges in terms of taxes. With technology changing how services reach us, OIDAR services have become a big part of the digital world, leading to specific rules in GST. In this article we will get to know about OIDAR services in GST Act.
Meaning of OIDAR Services
OIDAR services are services that are provided via the internet, allowing the recipient to access the service online without any face-to-face contact with the provider. OIDAR full form under GST is Online Information and Database Access or Retrieval. The objective of incorporating OIDAR services into the GST is to ensure that domestic service providers are on equal footing with regards to pricing.
If an online service provider lacks a physical presence in India, they are required to designate an agent responsible for making tax payments. Moreover, if an online recipient who is exempt from taxes receives online services from a jurisdiction that is also exempt from taxes, the supplier in that jurisdiction is obligated to settle the tax as stipulated in Section 14 of the Integrated Goods and Services Tax (IGST) Act.
TDS on OIDAR services will also be applied.
Instances of OIDAR services
Some instances of OIDAR Services are:
- Obtaining or acquiring software and applications through downloading or accessing.
- Offering services in the cloud.
- Offering online gaming services but does not include online money gaming as per Section 2 of CGST Act, 2017
- Providing digital material such as e-books, music, films, and pictures.
- Offering courses for education, training, and certification through online platforms.
- Offering web hosting services and remotely overseeing the maintenance of software and hardware.
- Providing ad space on the internet.
- Offering EDI services.
- Delivering search-engine related services.
- Offering services for storing digital data.
GST rate for OIDAR services and the HSN code for OIDAR services
The rate of IGST for the purchase of digital services in India is 18%. So, the OIDAR service GST Rate is 18% this rate is applicable to service providers of Online Information Database Access and Retrieval (OIDAR), whether they are based in India or outside India. Nevertheless, online sale of e-books is the only scenario that does not fall under this rule. It is eligible for a discounted rate of 5%.
OIDAR falls under the category of Telecommunications, broadcasting, and information supply services, labelled as HSN code 9984 in the GST Tariff.
Which individuals or entities are required to register for GST when providing OIDAR services?
It is obligatory for all organizations, regardless of their revenue, that offer OIDAR services in India to register under GST for OIDAR registration. Hence, service providers in the OIDAR sector, including those situated outside India, must acquire GST registration if they offer services to Indian residents. If the provider of an online service is situated in a region without tax obligations, and the recipient is also not subjected to online tax payments (NTOR), an intermediary who offers services on behalf of the provider is required to register and settle the Goods and Services Tax (GST).
Additionally, in case the provider of the Online Information and Database Access or Retrieval (OIDAR) service operates from a jurisdiction that is not subject to taxation, and the recipient of the service is a taxable entity in India, the provider needs to appoint a representative situated in India. This representative will be responsible for the registration and payment of taxes on behalf of the provider.
GST Registration process in case of OIDAR
This is a comprehensive step that outlines the sequential process for registering for the OIDAR GST.
- Access the GST portal and select ‘Services’ from the top menu. Then, click on ‘Registration’.
- Choose ‘New Registration’ and select ‘Taxpayer’ as the preferred taxpayer type. GST registration for OIDAR services
- Please provide your essential information such as your full name, PAN number, email address, and phone number, registration information and GST registration details
- An OTP will be sent to both your mobile phone and email. Please provide the OTP for verification of your information.
- After the verification process, you will be sent an Application Reference Number (ARN) on both your email and mobile device. To proceed with the registration process, simply select the ‘ARN’ link. Once the ARN application is validated successfully, you will be redirected to a page where you can enter your OTP. Please input both the email and mobile one-time passwords. The system displays a Temporary Reference Number (TRN) that consists of 15 digits.
- Choose the ‘PROCEED choice’. If you prefer to use TRN for logging in, you can do so by going to Services, then Registration, and selecting New Registration. From there, choose the option for Temporary Reference Number (TRN). Please input the number that was generated into the TRN field. Please input the captcha text and continue. The page for ‘OTP Verification’ is displayed. The one-time password will be sent to both your mobile phone and email address. The page titled ‘My Saved Application’ is displayed then save it.
- Complete the GST registration form by filling the necessary information such as your business particulars, bank account information, and details about the authorized signatory.
Section 14 of IGST Act
Special arrangement for the settlement of tax obligations by a provider offering online information and database access or retrieval services. The amendment added a new section, section 14A, to the IGST Act. This section addresses the provision of online money gaming services by a person located outside of India to a person located within India.
It includes a requirement for a single registration under the Simplified Registration Scheme, the payment of Integrated Tax on these supplies, and the ability to block public access to any information related to the supply of online money gaming services if the supplier fails to comply with registration and tax payment requirements as specified in the Information Technology Act, 2000
Submission process and method for individuals offering Online Information Database Access and Retrieval (OIDAR) services.
Form and manner of filing the return by persons providing online information and access to databases or search services and by persons offering online gambling for money to a person in India from a location outside India. Any registered person who either offers online gambling for money from a location outside India to a resident of India or provides online access to information and databases or search services to an exempt online recipient referred to in Section 14 of CGST Act, 2017 from a location outside India of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) or a registered person who is not an exempt online recipient shall file a return in FORM GSTR-5A not later than the twentieth day of the month following the calendar month “.
This notification seeks to bring into force Rule 64 of the CGST Rules requiring any registered person who supplies OIDAR services from a place outside India to a person in India who is not a registered person to make a declaration on or before 20 must be filed in Form GSTR-5A of GSTR Return on the day of the month following the calendar month or any part thereof.
Exemptions related to the provision of services under the Integrated Goods and Services Tax (IGST) Act.
- Services received in connection with any purpose other than trade or industry from a service provider established in a non-taxable area from the Central Government, a State Government, a Union Territory, a local authority, a government agency, or any person or. any other person: Company or Occupation are exempt from taxes.
- A corporation registered under Section 12AA of the Income Tax Act, 1961 (43 of 1961) for the purpose of carrying on charitable activities is exempt under GST from paying taxes.
- A method of providing online educational magazines or a periodical to an educational institution other than an institution that provides services in the following areas that is preschool education and education up to higher secondary level or equivalent educational institutions; or training in a recognized vocational training course or to a person established in a non-taxable territory, these are exempt.
OIDAR Services exemption, the exemption will not apply to OIDAR services received by any of the persons specified above as per new amendment.
Conclusion
In conclusion, the taxation landscape within the GST framework for OIDAR services brings a unique set of challenges and considerations. As our digital interactions continue to evolve, the need for a clear understanding of how GST applies to online services becomes increasingly vital. Simplifying these complexities not only ensures compliance but also fosters a tax environment that keeps pace with the dynamic nature of the digital economy.
