OIDAR Services in GST: Examples, Registration Process, TDS, and ITC

Table of contents:

• What is OIDAR in GST?
• Scope of OIDAR Services under GST
• GST Registration for OIDAR Service Providers
• Is Amazon Classified as an OIDAR Service Provider?
• Real-World Examples of OIDAR Services
• TDS on OIDAR Services
• Availability of Input Tax Credit (ITC)
• Conclusion

With the digital world expanding rapidly, new-age services are transforming how we access information, entertainment, and even essential software. This evolution has led to the introduction of OIDAR (Online Information and Database Access or Retrieval Services) under GST (Goods and Services Tax) to better regulate digital transactions.

Governments globally are catching up with these digital trends, aiming to bring tax compliance into the online marketplace. In this guide, we’ll dive deep into OIDAR and its impact under GST, explaining what it means for service providers, consumers, and businesses in India.

Let’s get started with the basics.

What is OIDAR in GST?

OIDAR is an abbreviation for Online Information and Database Access or Retrieval Services. This category under GST covers a range of digital services that are accessed or used online. Think of services like streaming platforms, online courses, and software as a service (SaaS)—these all fall within the OIDAR definition.

The concept was introduced to ensure digital services provided by foreign companies comply with Indian tax laws. By bringing OIDAR under GST, India aims to create a level playing field, ensuring that overseas digital service providers are taxed similarly to domestic businesses.

Scope of OIDAR Services in GST

OIDAR services include online platforms that provide data retrieval, streaming, downloading, and access to digital content.

Let’s look at some key categories:

• Streaming Services: Platforms like Netflix, Amazon Prime, and Spotify that provide audio or video content on demand.
• Software and Digital Downloads: This includes software providers like Adobe or Microsoft that offer products as digital downloads.
• Online Education Platforms: Services like Coursera or Udemy that provide educational content and training online.
• Advertising Services: Digital advertising space offered through online portals, which enables targeted advertisements.

Below we have a table published on read-world examples which clarify this in detail.

GST Registration for OIDAR Service Providers

To comply with GST, foreign service providers offering OIDAR services must register in India. This applies to companies without a physical presence in the country that sell digital services to consumers in India. The  GST registration process is simplified yet essential:

1. Identify as an OIDAR Provider: Foreign businesses offering OIDAR services should first determine if they fall under GST’s purview.
2. Appoint a GST Representative: Since foreign providers may not have a base in India, they are required to appoint a representative for tax compliance.
3. Register through GST Portal: The registration is done via the GST portal, ensuring compliance for foreign providers serving Indian consumers.

The registration step helps India track these digital transactions, ensuring tax revenue from foreign businesses operating within Indian borders.

Step-by-Step Guide for OIDAR Registration (Foreign Service Providers) under GST

1. Determine Eligibility for OIDAR Registration
   • Verify if your services fall under OIDAR as defined by GST (Online Information and Database Access or Retrieval Services).
   • This includes services like streaming, e-learning, software downloads, and other automated digital services provided online to Indian consumers.
2. Visit the GST Portal
   • Go to the official GST portal at www.gst.gov.in.
   • This portal handles all registration processes, submissions, and filing requirements for GST compliance.
3. Choose the Non-Resident Taxable Person (NRTP) Option
   • Since you are a foreign entity without a physical presence in India, select the Non-Resident Taxable Person (NRTP) category.
   • OIDAR services provided from outside India are required to register under this category.
4. Appoint an Authorised Signatory in India
   • Appoint a representative or an Authorised Signatory in India to act on your behalf for GST compliance and communication.
   • The representative will handle GST filings, reporting, and any queries related to your registration.
5. Fill Out the Registration Application (Form GST REG-10)
   • Complete Form GST REG-10, the application specifically designated for non-resident OIDAR service providers.
   • Enter all required details, such as your business name, address, type of services provided, and information about your appointed representative.
6. Upload Necessary Documents
   • Attach essential documents for registration, including:
     • Proof of Business (e.g., Certificate of Incorporation or Business Registration Certificate).
     • Proof of Authorised Signatory in India.
     • Bank Account Details (for remittance and transactions).
     • Any other documents required by the GST authorities.
7. Submit the Application and Pay the Registration Fee
   • Once your application form is filled and all documents are attached, submit the application.
   • A small registration fee may apply, which must be paid online.
8. Wait for Verification and Approval
   • GST authorities will review your application and documents for compliance.
   • If all information is accurate, your registration will be approved, and you will receive a unique GSTIN (Goods and Services Tax Identification Number).
9. Receive GSTIN and Begin Complying with GST
   • Once you receive your GSTIN, you are officially registered and must comply with GST filing and tax remittance on all taxable OIDAR services provided to Indian consumers.
   • Ensure regular filing as required by the GST compliance framework to avoid penalties.

Following these steps helps foreign OIDAR service providers meet Indian GST requirements, ensuring seamless and compliant operations in the Indian digital market.

Must read: GSTR-5 Return: Filing Process, Due Dates & Compliance Guide (2024)

How to Verify an OIDAR Service Provider’s GST Number

If you’re dealing with a digital service provider, verifying their GST number can ensure you’re working with a registered, compliant entity. Here’s a simple process:

• Visit the GST portal (https://gst.gov.in).
• Enter the GSTIN (Goods and Services Tax Identification Number) provided by the service provider.
• Verify the number to ensure it’s valid and registered.

This process helps consumers and businesses alike in ensuring compliance and transparency in their transactions.

Is Amazon Classified as an OIDAR Service Provider?

Yes, Amazon does provide certain OIDAR services under GST. However, it’s crucial to understand that only specific services Amazon offers, like its Prime Video streaming service, fall under this category.

Amazon’s e-commerce operations and physical product sales aren’t considered OIDAR because they don’t meet the criteria of automated, digital, and minimal human intervention services.

Understanding these distinctions can help consumers and businesses distinguish between different offerings of large platforms like Amazon, enhancing tax clarity.

Real-World Examples of OIDAR Services

To better understand OIDAR, let’s look at a few examples:

Type of OIDAR Service	Description	Examples
Streaming Services	Digital platforms that provide audio, video, or media content on demand.	Netflix, Amazon Prime Video, Spotify
Software as a Service (SaaS)	Online software accessible through the internet without needing downloads.	Adobe Creative Cloud, Microsoft 365, Google Workspace
Digital Downloads	Services offering one-time downloadable software or content.	iTunes, Steam, Google Play Store
E-Learning Platforms	Websites or apps providing online courses, tutorials, and educational content.	Coursera, Udemy, LinkedIn Learning
E-books and Publications	Platforms for buying or accessing digital books, articles, or journals.	Kindle, Scribd, JSTOR
Online Gaming Services	Services that offer digital games or in-game content accessible online.	Xbox Live, PlayStation Network, Epic Games
Advertising Services	Digital advertising solutions provided over the internet.	Google Ads, Facebook Ads
Database Access and Retrieval	Online platforms that allow users to retrieve and access large data sets.	LexisNexis, Bloomberg Terminal

This table categorizes popular OIDAR services with descriptions and real-life examples for easy reference.

TDS on OIDAR Services: Understanding Tax Deduction at Source

Tax Deduction at Source (TDS) is applicable to OIDAR services when certain conditions are met. Here’s a quick breakdown:

• When TDS Applies: If a business entity in India purchases OIDAR services, they are required to deduct TDS.
• Rate of Deduction: TDS on these services may vary depending on the nature of the service and the tax treaty with the foreign country.
• Compliance Requirements: Businesses must file TDS on OIDAR services as per GST norms, ensuring accurate reporting.

This TDS mechanism is another layer that helps the government monitor transactions with foreign digital service providers, adding accountability.

Availability of Input Tax Credit (ITC) on OIDAR Services

For businesses that use OIDAR services as part of their operations, Input Tax Credit (ITC) can offer significant benefits. Here’s how it works:

• When ITC is Allowed: Businesses registered under GST and using OIDAR services for business purposes can claim ITC on the GST paid.
• Exceptions to ITC: Certain services may not be eligible for ITC if they are used for personal consumption.
• Filing for ITC: Businesses can file for ITC through the GST portal, following standard compliance steps.

This ITC availability helps businesses offset their GST costs, making it a valuable component of GST compliance.

Conclusion: Navigating OIDAR in a Digital World

OIDAR under GST is an essential framework for understanding digital service taxes in India. From streaming services to online education, the scope of OIDAR covers a vast digital landscape. Whether you’re a business, a foreign service provider, or a consumer, knowing the OIDAR regulations can help you stay compliant and informed.

As digital services continue to evolve,staying updated on tax obligations like OIDAR under GST is crucial. Embrace the clarity it brings and keep exploring the impact of tax regulations in a fast-paced digital world.

Disclaimer: *This is for information only. All are requested to visit the official GST portal or consult with a GST practitioner, CA or relevant professional for more details on the GST registration process and more.