ONLINE INFORMATION DATABASE ACCESS OR RETRIEVAL

BRIEF INTRODUCTION

In today’s world, with so much technological developments, businesses are nowhere restricted by geographical borders. The Internet is the most easy and affordable means for providing services abroad. To facilitate such services, there are several mechanisms, which are used in conjunction with business activities, to deliver services outside India. One of the examples is Amazon, who provides cloud-based services (AWS) from the United States, in India.

Online Information Database Access and Retrieval is a type of services offered via the means of internet and could be used by the customer/user without any physical contact with the service provider.

For a service to be termed as OIDAR service, the following two conditions must be satisfied -

1. First of all, the delivery of such service is provided only by means of the internet.
2. And secondly, such supply shall be fully automated, with minimal to almost nil human interference/intervention, and the delivery is possible only by the means of Information Technology.

SOME COMMONLY PROVIDED OIDAR SERVICES

1. Any sought of advertisement published over the internet.
2. Cloud computing services providers like Google Drive, JIO drive etc.
3. Supplying any e-books, movies, music, software and entertainment content via the internet.
4. Providing data or information, to any person, in electronic form through a computer network from a database created on the internet.
5. Online gaming platforms or streaming.

NON-OIDAR SERVICES

1. Supplies of goods involving placing of order and it’s processing electronically.
2. Any supply involving articles in the form of physical books, newsletters, newspapers or journals.
3. Services of lawyers and financial consultants provided to their clients through Email.
4. Services provided by the agents or third party, in booking the tickets for entertainment events, hotel accommodation or car hire etc.
5. Any type of educational or professional courses, provided by the teacher using the internet.
6. Physical repair services of computer equipment, done in offline mode.
7. Advertisements provided in newspapers, on posters and on television.

OIDAR UNDER GST ACT

Under the IGST act, OIDAR is described as the services whose distribution is managed by information technology over the internet or any electronic network and the essence of OIDAR is basically, automatic procurement, requiring minimal manual interference and difficult to provide service in the absence of information technology

OIDAR involves services such as:

1. Any sought of advertisement published over the internet.
2. Cloud computing services providers like Google Drive, JIO drive etc.
3. Supplying any e-books, movies, music, software and entertainment content via the internet.
4. Providing data or information, to any person, in electronic form through a computer network from a database created on the internet.
5. Online gaming platforms or streaming.

OIDAR meaning through an example -

LOCATION OF RECIPIENT

The location of the recipient shall deem to be India, where any two conditions, out the following prescribed conditions, are satisfied -   

1. The location of the address presented by the recipient through the internet is in India.
2. Any payment made for such service, involves credit card or debit card issued in India.
3. The billing address provided by the recipient at the time of placing order for such service is in India.
4. The IP address of the computer network used by the recipient for availing such service is in India.
5. The bank from which the recipient made the payment is maintained in India.
6. Country code of the subscriber identity module card used by the recipient is of India.
7. The location of the land line used by the recipient for getting the service is in India.

However, the government can notify any other service or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service. Such provisions are required to –

• Prevent the recipient from the aspect of double taxation.
• Prevent recipients from paying taxes, for a service, not taxable in India.
• Have uniform application of rules, all over India.

SERVICES BY A SERVICE PROVIDER OUTSIDE INDIA, TO A NON-TAX-PAYER IN INDIA

OIDAR SERVICES THROUGH AN INTERMEDIARY

In case, OIDAR services are provided through an intermediary and such intermediary is located outside India, and such services are provided to a non-taxable online recipient, then in such a case, the intermediary shall be deemed to be the recipient of such services.  

However, for the intermediary not to be deemed as the recipient, the following conditions need to be satisfied by them –

1. The invoice issued by the intermediary shall clearly define the service and its supplier in non-taxable territory.
2. Such an intermediary shall neither collect nor process payment in any manner nor be responsible for the payment between the non-taxable recipient and the supplier of such services.
3. The intermediary does not authorize any delivery relating to such services.
4. The general terms and conditions of the supply are set by the service provider and not by the intermediary.

COMPULSORY REGISTRATION UNDER GST

Under Section 24 of CGST Act, 2017, any person providing OIDAR services whether from India or outside India, to a person in India, is required to take compulsory registration under GST in India. Accordingly, they are required to file GSTR -5A for providing services to unregistered or non-taxable customers in India.

As per Rule 64 of CGST Rules, 2017, any registered person providing OIDAR services from a place outside India to an unregistered person in India, shall file a return in FORM-GSTR-5A, and the due date for filing such return is the 20th day of the month succeeding the month of providing such services. There are generally two types of recipients of OIDAR services –                       

A. TO A REGISTERED PERSON

As per the law, the registered persons obtaining service from outside India are liable to GST under the reverse charge mechanism. Thus, the government collects tax on these OIDAR Services through the Reverse charge mechanism. Every registered recipient of OIDAR Services is responsible to include such services in their turnover and pay GST on the amount of service received and also file the returns for the same.

B. TO UNREGISTERED OR NON-TAXABLE PERSONS

In providing services to non-taxable and unregistered persons, the place of such recipient is not known, thus, the supplier shall be liable to pay GST to the government and file a GSTR-5A return for the same.

DIFFERENT TREATMENTS OF OIDAR FOR DIFFERENT SUPPLIER

Being a service to be provided over the internet and with the use of information technology, it is very much evident that a person situated outside India can also provide service to locations outside India or even within India. The process of treatment of suppliers are as follows –

1. If the service is provided by an Indian Service Provider, to recipients in India, then such service would be taxable under forwarding charge mechanism, and the supplier will pay the taxes
2. But, in case the service is provided by a provider outside India, and the services are received by a registered entity in India, then GST would be payable under reverse charge mechanism, and the registered entity will pay the taxes.

Such different treatment was introduced so that the overseas suppliers of such services do not possess an unfair tax advantage. 

PLACE OF SUPPLY

The place of supply, as required to be determined under GST Act, shall be the location of the recipient of service, where any OIDAR service is provided.

NON-TAXABLE RECEIPT

A non-taxable recipient is one with the following features –

1. It is any local authority, government authority, person or some other body.
2. The said person enrols for an online service, for obtaining information on the Internet.
3. In some cases, they are provided with database access or retrieval services as well.
4. And they are situated in taxable territories i.e., in India.

GSTR 5A

• The GSTR-5A is a return containing information of the goods or services supplied by any person residing outside India to an unregistered person within India through Online Information and Database Access or Retrieval (OIDAR).
• This form could be filed by the OIDAR service providers, by signing in to the GST portal.

GSTR-5 vs. GSTR-5A

There is a very minute difference between the two. The main difference is that GSTR 5 is to be filed by the Non-resident Indians receiving the OIDAR services in India, while GSTR 5A, is to be filed by the non-resident service providers of OIDAR services. Both these forms are required to be submitted by the 20th day of the month following the month in which such service was provided.

MANDATORY COMPLIANCE FOR NON-RESIDENT OIDAR SERVICE PROVIDER

1. Such a provider is required to file the return even though there is no commercial transaction during any taxable period.
2. They need to compulsorily file GSTR 5A for their monthly services.
3. They are not eligible to claim input tax credit available in GSTR 5A, so the GSTR 5A electronic cash ledger is not kept for them.
4. The return can be filed, only after payment of taxes and some other dues remaining pending.
5. They are not allowed to file a return in the current year if their previous year return is pending.
6. They need to file GSTR 5A, even at the time of nil sales, to get their refund balance, if any.
7. They are required to take compulsory registration under GST in India.
8. They need to compulsorily have a correct user ID and password for a GST Portal account.
9. To have a DSC to authorize their return, they need to have a valid PAN-based signature.

DETAILS IN GSTR 5A

• Table 1: The Supplier's GSTIN
• Table 2: The details of the Registered Person, like their legal name or trade number.
• Table 3: Details of the Authorized Representative submitting a return on behalf of the supplier, in India.
• Table 4: The Period, i.e., month & year for which the return is submitted.
• Table 5: details of all the taxable outward supplies provided to Indian clients, including the place of supply information, tax rate, taxable value, integrated tax and cess, during the respective period.
• Table 5A: Any modification as required to be made, to the taxable outward supplies rendered in India for the corresponding period to non-taxable persons.
• Table 6: Amount of interest, penalty or some other amount, as calculated by the software, be paid.
• Table 7: final tax interest, late fees and all other sums payable and charged, during the period.

Once the form is completed and submitted on the portal, an acknowledgment mail be sent by the department, to the registered Email provided by the applicant, evidencing successful submission of GSTR 5A.

PENALTY FOR DEFAULT

Where the service provider, required to file Form GSTR-5A, makes any default in complying with the same, shall be punishable with a monetary penalty of Rs. 200 for per day of default, in case of default in filing a normal return, while Rs. 100 for per day of default, in case of NIL return.

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