GST on OIDAR Services (Digital Imports)

Taxation of Online Information and Database Access or Retrieval (OIDAR) services is governed by Section 2(17) (definition of OIDAR) and Section 14 of the Integrated Goods and Services Tax (IGST) Act, 2017, read with the Simplified Registration Scheme under Rule 14 of the CGST Rules, 2017 (FORM GST REG-10) and the special monthly return prescribed under Rule 64 (FORM GSTR-5A).

Under Section 14 of the IGST Act, where OIDAR services are supplied by a person located in a non-taxable territory (outside India) to a "non-taxable online recipient" in India, it is the overseas supplier — not the Indian recipient — who is made liable to pay IGST, reversing the reverse-charge position that would otherwise apply, since an unregistered recipient has no mechanism to self-assess import of services. Where an intermediary arranges or facilitates such a supply on behalf of the overseas supplier, that intermediary is deemed to be the supplier unless prescribed conditions establishing it as a mere agent are satisfied.

The Finance Act, 2023 substantially widened this base with effect from 1 October 2023, by amending two definitions in the IGST Act: (a) the definition of OIDAR services was amended to remove the qualifying condition that the supply involve only "minimal human intervention," bringing a broader range of digital services within scope; and (b) the definition of "non-taxable online recipient" was expanded to cover any unregistered person receiving OIDAR services in India, regardless of whether they are received for business or non-business purposes. This removed the earlier exemption for OIDAR services supplied by an overseas person to government bodies, government authorities, or individuals for non-business use, making such inbound digital services from foreign suppliers taxable in India from that date.

Compliance mechanics: an overseas OIDAR supplier (or its intermediary, where deemed the supplier) must obtain a single, India-wide registration under the Simplified Registration Scheme by filing FORM GST REG-10 with the jurisdictional office of the Principal Commissioner of Central Tax, Bengaluru West, and must file a monthly return in FORM GSTR-5A on or before the 20th of the month following the relevant tax period, in place of the standard return filings that would otherwise apply to a registered person.

OIDAR services — online information and database access and retrieval — are the digital services supplied over the internet with minimal human intervention: software, e-books, streaming, cloud services, online gaming, web hosting. Under Section 14 of the IGST Act 2017, an OIDAR service supplied by a person located in a non-taxable territory to a recipient in India is treated as a supply in the course of inter-state trade, and the tax is collected by the supplier — a foreign OIDAR provider must register in India under Section 24 of the CGST Act 2017 and pay the IGST, with the GSTIN in a special format. Where the provider does not collect, the Indian recipient bears the tax under the reverse charge mechanism.

The OIDAR provisions are how India taxes the digital imports that have no physical presence at the border. The tax is on the supply of the service into India, collected at the point where the service is consumed — and for the business buying the software or the cloud capacity, the question is whether the GST is on the foreign supplier's invoice or on the business's own books.

The cost of an unhandled OIDAR position is the under-reported liability: Indian businesses buying OIDAR services from unregistered foreign providers hold the reverse charge liability themselves, and the non-payment builds a demand with interest under the Act. The reverse charge on OIDAR is one of the positions most often missed in the returns — and most easily found at audit.

This service is for Indian businesses buying digital services from abroad and foreign OIDAR providers selling into India. We map the services against the Section 14 tests, determine who bears the tax — the registered provider or the recipient under reverse charge — handle the registration where needed, and keep the OIDAR purchases compliant in the returns with the credit claimed where eligible.