OIDAR, Online Information Database Access and Retrieval services play a crucial role in contributing to India’s digital economy under the Goods and Services Tax (GST), which has been effective since July 2017. A 2023 report by the Finance Ministry highlighted the explosive growth of e-commerce and digital services, emphasizing the importance of understanding OIDAR for tax compliance.
This guide outlines the classifications of OIDAR services, who can apply for this classification, and the relevant GST rates and codes.
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What is OIDAR Service Under GST?
An OIDAR service under GST is provided online where neither the recipient nor the provider is geographically close to each other. These services are typically rendered and consumed electronically, facilitating international commerce and reducing compliance requirements by eliminating the need for physical paperwork. This model supports the efficient supply and use of digital goods and services across various locations.
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Examples of OIDAR Service Under GST
OIDAR services are digital services that are delivered and used electronically, no matter where the service provider or user is located. Here are a few illustrations of OIDAR services:
- Software and Applications: These services include buying software or using applications online, such as Software as a Service (SaaS).
- Cloud Services: The provision of online storage, processing services, and solutions based on cloud technology.
- Online Gaming: The games played via the internet for recreation or professional purposes, for which one pays a subscription.
- Digital Content: The process of providing content such as e-books, music, and videos that are downloadable or streamable.
- Online Education and Training: The act of providing teaching, coaching, or certification programs via the Internet.
- Web Hosting and Remote Management: Internet services centered on the storage of data using specialist hardware.
- Marketing Through Websites: Providing digital advertising services that comprise selling space within websites, search engines, and social media.
- Search Engine Related Services: Madison Avenue searches the web for businesses and products. Such services comprise URL search engines and related online tools.
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The Indian government intends to incorporate all OIDAR services offered by various entities into the GST structure, irrespective of their taxability under local or international tax rules.
For foreign service providers without a physical presence in India, it is mandatory to appoint an agent to manage tax payments.
Additionally, if an online service recipient in India acquires services from a provider based in a non-taxable territory, the supplier must comply with tax obligations as outlined in Section 14 of the Integrated Goods and Services Tax (IGST) Act. This ensures that all OIDAR services are adequately taxed and regulated.
OIDAR Services GST Rate and OIDAR Services HSN Code
In India, the Integrated Goods and Services Tax (IGST) for OIDAR services is set at a fixed rate of 18% for both domestic and cross-border service providers. Nonetheless, in the OIDAR services category, e-books, which are online sales classified under HSN code 9984 (a subheading of telecommunications, broadcasting, and information supply), are charged a lower tax rate of 5%.
Also Read :- What Is an HSN Code for GST?
Who Can Apply for OIDAR Classification?
The OIDAR classification under the Goods and Services Tax applies to service providers offering digital or electronic services. Here’s who can apply:
- Foreign Suppliers: Any commercial activity that is provided by a person or business outside India and delivered through the Internet to a consumer located within India will need to apply to get registered under OIDAR. This is very important so that GST can be charged for the service being rendered to Indian customers.
- Online Service Providers: Companies or individuals engaged in providing digital content, online software, or other forms of cloud services are encouraged to seek OIDAR classification. This includes entities offering services through e-commerce platforms, distance education, and software engineering.
- Businesses with Digital Offerings: If your business is an online business offering services or digital goods content to clients worldwide, you need to consider OIDAR classification.
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How to Register for OIDAR Classification?
If you provide Online Information and Database Access or Retrieval (OIDAR) services and need to apply for GST registration, follow this straightforward guideline to ensure a smooth registration process:
- Go to the GST Portal. Click on the Services tab in the top menu and select Registration.
- Select New Registration and fill in the form.
- Fill in your basic information, including your business’s legal name, PAN (Permanent Account Number), email address, and mobile number. Here are few steps to download PAN Card by using name and date of birth.
- Complete the captcha code and click Proceed.
- Enter the OTP sent to your mobile phone and email in the respective fields.
- After verification, you will receive an Application Reference Number (ARN) via email and SMS.
- Click on the ARN link to proceed with the registration. You’ll be redirected to an OTP page where you need to enter OTPs received on both your mobile and email.
- Click on PROCEED, or to log in using the TRN, go to Services > Registration > New Registration. Select the Temporary Reference Number (TRN) option, enter the TRN, and proceed by entering the captcha text.
- On the My Saved Application page, click the Edit icon to fill out the GST registration form.
- Make sure all the details are correct and the necessary documents are uploaded properly. Submit the form.
- The GST department will process your application.
- You will receive an email and SMS notification once your registration is approved.
By following these steps, you can efficiently complete your OIDAR GST registration and ensure compliance with tax regulations.
Also Read :- How To Download GST Certificate Online By PAN & ARN No
Summary
OIDAR, which stands for Online Information and Database Access or Retrieval, defines any service supplied through electronic media of communication, regardless of the provider’s or consumer’s location. To offer these services, both foreign and local digital platforms must apply for classification as OIDAR. Filing an OIDAR GST return is required to ensure compliance with tax regulations for digital services offered to or from India.
FAQs
- What does OIDAR stand for?
OIDAR, or Online Information and Database Access or Retrieval Services, pertains to services offered on the Internet, where the provider and the client do not co-locate.
- What are the OIDAR services for which the customers will be paying?
OIDAR services include the delivery of digital content such as e-books, music, and videos, cloud computing, distance education, web hosting, computer gaming, and internet marketing.
- How can I check my TIN Number after getting registered for OIDAR GST?
Once the application is submitted, an Application Reference Number (ARN) and a Temporary Reference Number (TRN) will be given. These numbers can be used to check and confirm the registration via the GST portal.