OIDAR (Online Information and Database Access or Retrieval) Services

 

Q1. What are Online Information Database Access or Retrieval (OIDAR) services and how are they treated under GST?

OIDAR stands for Online Information Database Access or Retrieval services. According to Section 2(17) of the IGST Act, 2017, these are services whose delivery is mediated by information technology over the internet or an electronic network. The Simplified Registration Scheme for foreign OIDAR suppliers involves registration via GST REG-10. 

Finance Act 2023 (effective from October 1, 2023) : Removed the Paragraph ""essentially automated and involving minimal human intervention,"

The GST treatment of OIDAR services depends on the location of the supplier and recipient:

1. When OIDAR services are provided by a supplier located in a non-taxable territory to:

a) A non-taxable online recipient in India:

• The supplier located outside India is liable to pay IGST
• The supplier must register under the Simplified Registration Scheme
• If the supplier has a representative in India, the representative must register and pay IGST
• If there's no representative, the supplier must appoint a person in India for paying IGST
• Returns are filed in Form GSTR-5A

b) A registered person in India:

• The recipient is liable to pay tax under the reverse charge mechanism

2. When OIDAR services are provided by a supplier located in India:

• Normal GST rules apply
• The supplier charges GST at applicable rates
• Regular registration and compliance requirements apply

2. Who is considered a “non-taxable online recipient” under GST, especially in the context of OIDAR services? What are the implications for such recipients and foreign service providers?

Under Section 2(16) of the IGST Act, a "non-taxable online recipient" is defined as: “Any unregistered person receiving online information and database access or retrieval (OIDAR) services and located in taxable territory.”

A person registered under Section 24(vi) (i.e., tax deductors like government departments or local authorities for TDS) is still treated as unregistered for the purpose of OIDAR services and hence considered a non-taxable online recipient.