FibotaLevy of GST on OIDAR Service Provider, Online GSTR 3B and 1 filing

Levy of GST on OIDAR Service Provider

 What is OIDAR Service?

According to section 2(17) of the IGST Act, 2017; ODIAR service means “Online information and database access or retrieval services” mean services whose delivery is mediated by information technology over the internet or an electronic network, nature of which renders their supply essentially automated, involving minimal human intervention & impossible to ensure in the absence of information technology and includes electronic services such as:

What will be place of supply in case of OIDAR Service is provided?

In case of OIDAR service as per section 13 of IGST Act, 2017; place of supply will be is determined based on location of recipient i.e. if receiver is situated in India then place of supply will be location of such recipient.

Whether it will attract forward charge or whether it will attract reverse charge?

In case of reverse charge, the person consuming service will be liable to pay tax to government and supplier will not collect any amount from him in form of tax. In case of forward charge supplier will collect the tax and from consumer and will deposit to the government; OIDAR service will attract the reverse charge liability; i.e. recipient of service will be liable to pay to tax on reverse charge basis. However, in case were the recipient is unregistered person then in that case again ODIAR service provider will be liable to pay tax under forward charge.

What will be threshold limit that will be applicable in case of registration of OIDAR service provider?

The person who is supplier of OIDAR service, if he is situated outside India and he is providing service to any recipient being non-taxable person (Non-taxable online recipient means Government, a local authority, a government authority, an individual or any person not registered under GST and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory) then in that case the supplier of such service is compulsory required to registered. Such OIDAR service supplier can take simplified registration by filling GST REG-01. In other case i.e. where service provider is located in India then he is required to obtain registration through normal process.

Points to be noted:

Two condition are simultaneously required to be fulfilled:

  • Person shall be unregistered
  • Service obtained has for any purpose other than commerce, industry or any other business or profession, located in taxable territory;

Otherwise recipient will be required to pay on reverse charge basis for such service obtained.

What are the returns that supplier of OIDAR service provider is required to provide?

OIDAR Service provider located in India then in that case he is required to furnish regular returns i.e. GSTR 1, GSTR 3B. However, if he is situated outside India then in that case, he is required to furnish Form GSTR-5A on or before the 20th of each month.

Whether OIDAR service provider is required to appoint representative?

All the supplier of OIDAR who are located outside India should appoint a representative in India for filing of GST returns and ensuring compliance under GST.

Whether OIDAR Service provider can opt for composition scheme?

Generally, as per section 10 of CGST Act 2017; only person dealing in goods or engaged in providing specific service can apply for composition scheme. OIDAR service is not one of the specified services as section 10 of CGST Act, 2017; However, there is new composition scheme which has been introduced by government which will allow the service provider to opt for composition scheme if their turnover during preceding financial year does not exceeds Rs. 50,00,000/- than they can opt for composition rate of 3% CGST + 3% SGST up to Rs. 50,00,000/- in current financial year. But one of the conditions that has been specified is that the supplier shall not be engaged in providing service through e-commerce platform and this will restrict supplier of OIDAR service from opting the composition scheme.

Illustration: Befilx is providing access to all the latest movies for this it charges an annual subscription charge from his customer @2,999/- per annum (including all taxes and GST @18%). What will be the tax treatment of such service? Who will be the person responsible to pay?

  • If the service is provided to individual or any person not registered under GST and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory) than in that case:

Place of supply will be Location of recipient as per section 13 of IGST Act, 2017;

Value of supply as per section 15 of CGST Act, 2017; will be transaction value i.e. Rs. 2,999/-Time of supply will be

  • Where invoice is issued within prescribed period under section 31(2);
  • Date of issue of Invoice; or (2) Date of receipt of payment; whichever is earlier
  • Where invoice is not issued within prescribed period under section 31(2)
  • Date of completion of provision of service; or (2) Date of receipt of payment; whichever is earlier.

The supplier will be required to pay GST on forward charge basis in this case. The amount of GST will be Rs. 457/- (treating amount inclusive of GST reverse calculation will be undertaken Rs. 2,999/118*18).

  • In all other cases

Place of supply will be Location of recipient as per section 13 of IGST Act, 2017;

Value of supply as per section 15 of CGST Act, 2017; will be transaction value i.e. Rs. 2,999/-

Time of supply will be

(a) the date of payment as entered in the books of account of the recipient or

(b)the date on which the payment is debited in his bank accountor

(c) the date immediately following 60 days from the date of issue of invoice or any other document, by whatever name called i.e. 61st day from the date of issuance of invoice by the supplier, whichever is earlier;

The recipient will be liable to pay GST on reverse charge basis in this case. The amount of GST will be Rs. 457/- (treating amount inclusive of GST reverse calculation will be undertaken Rs. 2,999/118*18)

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