OIDAR Services Under GST

What are OIDAR Services?

The Online Information and Data Access or Retrieval (OIDAR) services are a set of services that are availed and delivered via electronic or internet mediums. These services involve very little or no physical interface between the consumer and the supplier. The advent of SAAS products and cloud technology has opened a wide range of OIDAR opportunities.

According to the IGST Act, some of the most prevalent OIDAR services are:

E-gaming services
Data storage services on digital or electronic platforms
Supply of digital content like music, movies and web series
Cloud service providers
Digital advertising platforms
E-books, software, movies and other intangibles through electronic or telecommunication network
Data retrieval services via a computer network

The Act has also clarified that internet or electronic network usage for any communication or service delivery by any individual or firm is not accounted as OIDAR service. Some of the wrongly assumed OIDAR services are:

Reservations made online for travel, accommodation, movie shows, etc.
Supplying goods for cases where the order and processing are done via an electronic medium
Online consultation charges of legal advisors, counsellors, etc.
Hard copy of books, academic journals, newsletters, etc.
Online educational courses, where digital content is given to the students
Repairing and servicing charges of electronic devices
Offline Advertisements in magazines, newspapers, TV, etc.

GST Applicability for OIDAR Services

Check out the table below to understand the applicability of OIDAR services under GST -

Location of Service Supplier	Location of Service Recipient	Taxability	Reverse Charge/ Forward Charge	Example
India	India	Yes	Forward Charge	Hotstar is a registered platform in India that allows Indian citizens to register themselves and enjoy entertainment services on the platform. Indian users pay the GST charges.
International	Registered Indian Recipient	Yes	Reverse Charge	The Indian Co. is a registered entity that asks BlueHost, a US-based entity, to render the web hosting services. GST is paid by the Indian Co.
International	Non-Taxable Indian Recipient	Yes	Forward Charge	Students who are subscribers of Netflix, an international platform, do not pay GST charges. Netflix has to pay GST charges as OIDAR services in GST.
India	International Recipient	Service Export charge applicable	Not Applicable	Hotstar is a registered platform in India that also allows foreigners to subscribe to its entertainment services. In such a case, GST on OIDAR services is not applicable as it is an export of services.
International	International Recipient	Not an OIDAR service under GST	Not Applicable	Netflix is an international platform offering entertainment services to foreigners as well. That is why OIDAR services under GST do not apply to it.

GST Filing in OIDAR Services

The OIDAR registration under GST is dependent upon the location of the service supplier. The location also determines the documentation, return filing date, and other procedures.

There are two categories in OIDAR registration under GST.

India-based OIDAR Services Supplier: The OIDAR service suppliers in India have a similar GST filing procedure, just like a normal taxpayer. The service supplier will have to submit forms like annual GST return, GSTR-1, GSTR-2, and GSTR-3.
International OIDAR Service Supplier - To file GST return in India, the international OIDAR service supplier should appoint staff as company representatives. The company representative should file GSTR -5A before the 20th of each month. Certain aspects that must be mandatorily covered in GSTR-5A are:
1. Supply details of Indian consumers like the recipient's location, tax rate, IGST, etc.
2. Calculated amounts of interest, penalties, or any additional charge
3. Details of late fees, due tax, interest, etc.

Reverse Charge for OIDAR Services

According to the CGST Act of 2017, the supplier of any goods and services is generally responsible for the collection of CGST and SGST amounts from the recipient and depositing them to the government. However, the CGST Act also has a section of ‘Reverse Charge’.

Reverse Charge is a concept under the CGST Act where the recipient is liable to pay GST charges to the government and not the supplier. OIDAR services are listed under the Reverse Charge, thus making the recipients responsible for tax payments.

Why do OIDAR Services Need to be Treated Differently From Other Services?

There are significant reasons to treat OIDAR services differently from other services -

Remote Setting: One of the prime reasons is that OIDAR services can be seamlessly rendered and managed from a remote setting. This means there is no geographical location barrier between the supplier and the recipient.
Unfair Tax Advantage: An India-based OIDAR service supplier is supplying services to Indian recipients, in such a scenario, the company will have to pay taxes. If the Indian recipient is registered under GST, the individual will have to pay taxes as a Reverse Charge. In both cases, Indians are paying the taxes, giving an unfair tax advantage to foreign players in the market and considering the operations are managed from a remote setting, it is difficult to comply with foreign service suppliers.

Therefore, a different registration mechanism enables a fair system that allows all Indian and international OIDAR service providers equal opportunity and chance to establish themselves in the market.

Conclusion

OIDAR service providers need to get OIDAR GST registration to enhance the credibility of their business. There are serious repercussions involved like hefty penalties, legal charges, etc., in case an entity or firm is eligible for registration but chooses not to register itself. Therefore, eligible entities should get OIDAR registration under GST.