Meaning of OIDAR Services
Almost everyone uses the internet for one or other task in daily life, Be it watching videos on youtube, downloading E-books & other data from the internet, booking tickets and online shopping etc . Not all but some of such internet services are covered under OIDAR Services which is explained below.
OIDAR stands for Online Information and Database Access or Retrieval services. It means any service which is delivered using information technology or an electronic network and supply of which is impossible to execute without information technology, would be in the scope of OIDAR services u/s 2(17) of IGST Act,2017.
So, to constitute a service as OIDAR services following conditions must be fulfilled
- It must be supplied through the Information technology medium.
- It can not be supplied without information technology
- Its core nature should be Information & database access & retrieval in any form (website/books/pdf/videos/Music/distance courses etc.)
The Budget 2023 update brings a modification to the definition of OIDAR. The reference to “services essentially automated and involving minimal human intervention” is removed. Consequently, online information and database access or retrieval services now refer to services whose delivery is facilitated by information technology over the internet or an electronic network notified via Notification No.28/2023- Central Tax.
OIDAR services can include :
- Website : Website supply, web-hosting, automated, online and distance maintenance of programmes & remote systems administration
- Online Content: Supply of streaming services for music, movies, or TV shows.
- Software as a Service (SaaS): Supply of Cloud-based software applications accessed over the internet & their updation as well
- E-books and E-journals: Supply of Online libraries or platforms providing digital books or academic journals.
- Online Gaming: Supply of downloading & accessing of online Games through apps & internet
- Digital Advertising Services: Online advertising services delivered electronically.
- Digital data Storage through cloud : Supply of storage services through Cloud, online supply of on-demand disc space and online data warehousing where specific data is stored and retrieved electronically;
- Data & Information : Supply of data & other information retrieval services through the internet.
- Distance teaching : Supply of pre-recorded classes
Note 1. The above list is indicative only, It can include more services which fulfills the three criteria of OIDAR Services as explained above.
2.Online Games exclude online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017.
Examples of OIDAR Services
Streaming Services
- Netflix, Amazon Prime Video, Disney+ Hotstar
- Spotify, Apple Music, YouTube Music
Software-as-a-Service (SaaS) Platforms
- Canva Pro, Adobe Creative Cloud
- Microsoft 365 (Online version), Google Workspace
- Grammarly, Notion, Trello
Online Advertising Services
- Google Ads
- Facebook Ads / Instagram Ads
- LinkedIn Ads
- Twitter/X Ads
Cloud & Hosting Services
- Dropbox, Google Drive
- AWS, Azure (cloud-based tools)
- GoDaddy, Bluehost (web hosting)
Design & Development Tools
- Figma, Sketch, InVision
- Webflow, Wix (Online Website Builders)
- GitHub (paid developer tools)
E-Learning & Online Courses (Automated)
- Udemy, Coursera, Skillshare (if no live instructor)
- Duolingo Plus
- Pre-recorded training modules
Online Databases & Subscription Content
- JSTOR, Bloomberg Terminal (subscription-based data)
- Online journals, market research platforms
- Paid newspaper/magazine subscriptions (digital)
Online Payment Gateways / Tools (SaaS-based)
- PayPal (when charging for digital tools)
- Stripe, RazorpayX dashboards (paid add-ons)
Online Accounting / Management Software
- QuickBooks Online
- Zoho Books (when hosted outside India)
- Xero
Additionally, the following services are considered Non-OIDAR services:
- Supplies of goods processed electronically
- Supplies of physical books newsletters, newspapers, journals, legal and financial consultation through email,
- Booking services for entertainment events, hotel accommodation, or car hire,
- Educational or professional courses delivered by a teacher over the internet.
- Offline physical repair services of computer equipment and repair of software or hardware through the internet from a remote location
- Advertising services in newspapers, on posters, and television, as well as internet backbone services and internet access services (e.g., BSNL broadband)
- Hence, Online shopping from Amazon, Flipkart, Swiggy & Zomato ,Online Booking of train & flights ticket,Online Hotel Booking on Makemytrip/Goibibo are not OIDAR services because their core nature is not related to information & data access & retrieval services, even though they are mediated through internet.
Registration Requirement
General provisions : Like other services, in case of OIDAR services also , every person who is providing any taxable service, is liable to take GST Registration if he exceeds the threshold limit of Rs.20 lakhs (Rs.10 lakhs for special category states). Generally in case of interstate supply GST Registration is mandatory without any threshold but in case of interstate supply of services threshold exemption is available via Notification No.10/2017-IGST.
Special provision: As OIDAR services do not require any physical supply so Question arises who will register when either of the Provider or recipient of OIDAR services is located outside India because these services can be accessed from anywhere in the world.
Lets understand all these cases with the help of a table
| S. No. | Cases | Registration Requirement |
| 1 | Supplier & Recipient Both are in India | Then Normal provisions will apply & Supplier will take Registration for OIDAR Services. |
| 2 | Supplier is in India & Recipient outside India | As Supplier is in India he is required to take Registration (Export of Service) |
| 3 | Supplier is outside India & Recipient in India | We need to check whether recipient is Registered under GST or not |
| a. | If Recipient is registered | Then Recipient will pay the GST under Reverse charge u/s 5(3) of IGST Act read with Notification 10/2017 (IT rate) (Import of service) |
| b. | If Recipient is unregistered | In this case mandatory Registration u/s 24(xi) of CGST Act will be applicable,Then Supplier (located outside India) or his representative in India will apply for simplified registration in GST REG-10 & File GSTR-5A & pay tax u/s 14 of IGST Act. Notification |
| 4. | Both Outside India | Outside the purview of GST. |
Note : Unregistered Recipient will also include the TDS deductors registered solely in terms of clause (vi) of section 24 of the Central Goods and Services Tax Act, 2017 via Notification No.28/2023- Central Tax effective from 1 October,2023.
In other words if Supplier of OIDAR service is outside India & Recipient is NTOR (explained below) i.e. Non taxable online Recipient located in India, then Supplier is required to take simple Registration & pay GST under Forward Charge.
NTOR : NTOR (Non taxable online Recipient) refers to any unregistered person receiving OIDAR services located in the taxable territory (in India) and includes a person registered solely for deducting TDS u/s 51 of the CGST Act,2017.
Place of Supply
- Place of supply for OIDAR services shall always be the location of the recipient & if recipient’s address is not available then location of supplier u/s 12(2) of IGST Act, 2017.
- When either of the Provider or recipient of OIDAR services is located outside India. In such cases Section-13 (12) defines the place of supply for OIDAR services, which is the location of the recipient of services.
- As the nature of OIDAR services is that anyone can take this services from anywhere so How we will determine that recipient is located in India or outside India
The place of supply is deemed to be in the taxable territory (India) if any of the two following conditions are satisfied
a) the location of the address presented by the recipient through internet is present in the taxable territory
b) the credit card or debit credit or store card or smart card or any other card is used by the recipient to settle the payment is issued in the taxable territory
c) the billing address of the recipient is in the taxable territory
d) the IP address of the device used by the recipient of the services is in taxable territory
e) the bank account of the recipient is in the taxable territory
f) the country code of the subscriber identity module card used by the recipient is the taxable country
g) the location of the fixed line used by the recipient is locate in the taxable territory
If any two of the above conditions are satisfied, the location of the recipient will be deemed to be in India and if only one or no condition is satisfied then the location of recipient will be deemed to be outside India.
SAC code for OIDAR Services
For OIDAR (Online Information and Database Access or Retrieval) services in India, the specific Group is 99843. This code is used to classify services provided electronically or through digital means like streaming, downloading, or accessing digital content.The Rate of GST is 18%
However, there is an exception for online sale of e-books (digital form of printed books). This service is classified under HSN code 9984 (Telecommunications, broadcasting, and information supply services) of the GST Tariff and is subject to a reduced rate of 5%.Notification 13/2018 Central Tax (Rate) dated 26 July 2018
Periodic Compliance under GST
The taxpayers who are registered in India as OIDAR Services providers have to pay the taxes & file the regular returns like GSTR – 1, GSTR – 3B & Annual Return as applicable.
Non-resident OIDAR service providers are required to file periodic GST returns in India & do all other compliance under the GST Act.The overseas service providers who are registered as OIDAR service providers have to pay taxes & file a monthly return known as GSTR – 5A by 20th of the next month. In case if the overseas Supplier does not have any outward supplies during the month, the service provider has to file a nil return similar to other taxpayers. Delay in filling GSTR beyond the due date attracts Late Fee.
Overseas Suppliers who are registered u/s 24(xi) of CGST Act,2017 are not required to file Annual Return.
OIDAR Services through intermediary
Sometimes OIDAR products are not owned or belong to the portal or app where it is available for sale but some intermediaries facilitate entire transactions on purchase of such software/music or other OIDAR products. In such cases intermediaries will be treated as supplier of services to Non taxable online recipient u/s 14 (first proviso) of IGST Act,2017.
But if the intermediary satisfies the following conditions then it will not be considered as a Provider–
(a) The invoice issued by the intermediary clearly identifies the service and its supplier in non-taxable territory
(b) The intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services
(c) The intermediary does not authorise delivery
(d) The general terms and conditions of the supply are set by the service provider and not by the intermediary
Tax Collection at Source (TCS)
If the Supplier of OIDAR Services is providing service through an E-commerce platform (Like Fiverr, upwork etc.), then TCS TCS under GST i.e. tax is required to be collected at source u/s 52 by that E-commerce platform at 0.5% (0.25% CGST & 0.25% SGST or 0.5% IGST) on taxable Value, which he is collecting on behalf of supplier.
Input Tax Credit
Only registered taxpayers in taxable territory are eligible to claim credit . However, non-resident OIDAR service providers are not eligible to claim input tax credit as per the existing provisions.
Some Examples to understand the nature of OIDAR Services are given below.
Example 1
RRR Inc, located in the USA, offers online gaming services to unregistered customers in India. Will these services qualify as OIDAR?
Yes, providing online gaming services to customers located in India falls within the scope of OIDAR services. As per the definition, OIDAR includes online supplies of digital content, which encompasses online gaming services. The onus of GST compliance shall be on RRR Inc and RRR Inc will either have to register for GST in India or appoint an agent / intermediary to perform GST compliance services on their behalf.
Example 2
Facebook Inc, based in NY, provides advertising services to clients located in India. Does this qualify as an OIDAR service?
Yes, Facebook Inc rendering advertising services to clients located in India using the internet is considered as an OIDAR service. Advertising on the Internet is explicitly mentioned in the definition of OIDAR services. The onus of GST compliance shall be on the service recipients if they are registered under GST. In case they are not registered, the onus shall be on the overseas service provider.
Example 3
Wisdom Pvt Limited located in India offers ebook rentals to customers globally. Is this considered an OIDAR service?
Yes, offering e-book rentals to customers globally, including those in India, qualifies as an OIDAR service. The provision of e-books through telecommunication networks or the Internet is explicitly mentioned in the definition of OIDAR., the onus of GST compliance shall be on Wisdom Pvt. ltd. For overseas customers it will be treated as Export of Services.
Example 4
Spotify India Pvt. Ltd. provides online music streaming services to customers located in India. Is this service classified as OIDAR?
Yes, providing online music streaming services exclusively to customers in India falls within the scope of OIDAR services. Online supplies of digital content, such as music streaming, are explicitly mentioned in the OIDAR definition.
Example 5
XYZ Professional Institute located in Singapore provides online and residential diploma courses worldwide including India. Can these services be classified as OIDAR?
Yes, in the amended OIDAR framework, educational institutions providing online as well as residential courses which require human interaction fall in scope. The onus of GST compliance will be on the service recipients if they are registered under GST. In case they are not registered, the onus shall be on the overseas service provider.
