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Scope widens for GST levy on online database services

Feb 3, 2023

The Budget proposals have widened the scope of Online Information Database Access and Retrieval services (OIDAR) for the purpose of GST levy.

The nature of OIDAR services are such that it can be provided online from a remote location outside India. It is proposed that OIDAR services will be liable to goods and services tax (GST) irrespective of whether these services are automated or whether there is any human intervention involved. This in turn, could result in a higher cost for consumers in India.
Sanket Desai, indirect tax partner at EY-India illustrates, “A fully automated web-based learning with pre-recorded content and no human intervention was always covered as an OIDAR service. There was an ambiguity on whether a web-based learning, say, coupled with a module for questions and answers with the trainer would qualify as OIDAR service. With this amendment, this service could be regarded as OIDAR even if it involves some human intervention.”

“Further, OIDAR services provided to an unregistered person, whether for business purposes or not, would be taxable. If an overseas company provides an OIDAR service to an unregistered individual in India, the overseas company should be liable to pay GST under forward charge and not the individual under reverse charge,” adds Desai.

[The Times of India]

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