OIDAR Services Under GST

What Is OIDAR Services Under GST?

Online Information and Database Access or Retrieval (OIDAR) services are digital services — cloud hosting, streaming, e-books, downloadable software, and similar offerings — delivered over the internet by a supplier located outside India to a recipient in India. Under section 2(17) of the Integrated Goods and Services Tax Act, 2017 (IGST Act), a foreign company that sells such services to Indian customers is treated as making a taxable supply in India even though it has no office, server, or employee here, and it must register for GST and pay tax on those sales itself, using a simplified scheme built for suppliers with no Indian establishment.

OIDAR is not a separate tax. It is a special charging mechanism inside the IGST Act that shifts the point of collection from the (often untraceable) Indian consumer to the overseas platform, so that GST is actually collected on cross-border digital sales rather than escaping the tax net entirely.

Legal Basis

Definition — Section 2(17) of the IGST Act, 2017

Section 2(17) defines OIDAR services as services "whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply impossible to ensure in the absence of information technology," and it lists illustrative categories: advertising on the internet; providing cloud services; e-books, movies, music, software and other intangibles supplied through telecommunication networks or the internet; data or information supplied electronically through a computer network; online supplies of digital content; digital data storage; and online gaming. That last category was narrowed by the Integrated Goods and Services Tax (Amendment) Act, 2023 (Act 31 of 2023) to exclude "online money gaming" as defined in section 2(80B) of the CGST Act, which is taxed instead under the separate section 14A regime for real-money gaming platforms. The amendment Act was brought into force on 1 October 2023 by Notification No. 02/2023 – Integrated Tax, dated 29 September 2023.

Until 1 October 2023, the definition also required that the supply be "essentially automated and involving minimal human intervention." Section 160 of the Finance Act, 2023 omitted that phrase, brought into force from 1 October 2023 by Notification No. 28/2023 – Central Tax dated 31 July 2023, so a service no longer escapes OIDAR classification merely because a human is involved somewhere in delivering it. This closed a common planning argument — that a service was "not automated enough" to qualify as OIDAR because a person reviewed or moderated the content — and widened the category to cover services that combine automation with some manual element, such as online coaching platforms or database services with human-curated content.

Who Counts as the Recipient — Section 2(16), "Non-Taxable Online Recipient"

Section 2(16) defines the person the supplier is selling to. Before the Finance Act, 2023, a "non-taxable online recipient" was limited to Government bodies, local authorities, governmental authorities, individuals, or other unregistered persons receiving OIDAR services for a purpose other than commerce, industry, or any other business or profession. This let an unregistered small business or professional buying OIDAR services for their work fall outside the definition, on the theory that a "business" recipient should self-account for tax instead.

Section 160 of the Finance Act, 2023, in force from 1 October 2023 under the same Notification No. 28/2023 – Central Tax, replaced this with a single, simpler test: a "non-taxable online recipient" is now any unregistered person receiving OIDAR services, located in the taxable territory — regardless of whether the services are used for business or personal purposes. An Explanation added at the same time provides that "unregistered person" includes a person registered solely under clause (vi) of section 24 of the CGST Act, that is, someone registered only as a TDS deductor. Because section 14's supplier-pays obligation is triggered whenever the recipient is a non-taxable online recipient, this amendment widens that obligation to every sale an overseas OIDAR supplier makes to an unregistered Indian buyer, closing the gap where an unregistered buyer could claim a business purpose to avoid supplier-side taxation (an outcome the buyer, being unregistered, could not or would not self-assess in any event).

Place of Supply — Section 13(12)

Section 13(12) deems the place of supply of OIDAR services to be the location of the recipient. Since an overseas supplier cannot always verify where a customer actually is, the Explanation to section 13(12) sets out seven indicators, and the recipient is treated as located in India if any two non-contradictory indicators point to India:

• The billing address the recipient provides is in India
• The card or payment instrument used to pay was issued in India
• The recipient's bank, or the account used for payment, is maintained in India
• The internet protocol (IP) address of the recipient's device is in India
• The recipient's country code (SIM/subscriber identity) is India's
• The location of the fixed landline through which the service is received is in India
• The address on record submitted by the recipient over the internet is in India

In practice, most OIDAR suppliers implement this as a two-factor check at checkout — typically billing address plus payment-instrument country or IP address — and retain the underlying data as evidence.

How Suppliers Pay Tax — Section 14

Section 14(1) makes the overseas OIDAR supplier itself liable to pay integrated tax on supplies to a non-taxable online recipient. Where an intermediary (an app store, marketplace, or payment aggregator) arranges the sale, that intermediary is deemed to be the supplier — and becomes liable for the tax — unless it satisfies all of four conditions: its invoice clearly identifies the actual overseas supplier; it does not collect or process the customer's payment; it does not authorise delivery of the service; and it does not set the supply's general terms and conditions. A marketplace that fails even one of these tests is treated as the supplier of record for GST purposes.

Section 14(2) requires the supplier to obtain a single GST registration under a Simplified Registration Scheme. If the supplier has a representative in India for any purpose, that representative must register and pay the tax on the supplier's behalf. If the supplier has no physical presence or representative in India at all, it may appoint a person in India solely to pay the tax on its behalf.

Registering as an OIDAR Supplier — Form GST REG-10

Rule 14 of the CGST Rules, 2017 requires a person supplying OIDAR services from outside India to a non-taxable online recipient — and, since Notification No. 51/2023 – Central Tax dated 29 September 2023 extended the rule, any person supplying online money gaming from outside India to a person in India — to apply electronically in Form GST REG-10 through the common portal; registration, once granted, is issued in Form GST REG-06. The form itself shows that an Indian Permanent Account Number (PAN) for the overseas entity is optional ("if any"), but it requires bank account details, the website URLs through which services are supplied, and the date the online service commenced in India. The Authorised Signatory named on the application must be a resident of India, and — unlike a standard registration — this is a single, India-wide registration rather than a state-by-state one.

Filing Returns — Form GSTR-5A

Rule 64 of the CGST Rules, 2017, as substituted by Notification No. 51/2023 – Central Tax with effect from 1 October 2023, requires every OIDAR registrant to file Form GSTR-5A on or before the 20th day of the month following the relevant calendar month (or part of a month).

The substituted rule widened what the return covers. It now applies to OIDAR supplied from outside India to a non-taxable online recipient or to a registered person other than a non-taxable online recipient, and to online money gaming supplied from outside India to a person in India. The form matches: Table 5 records supplies to non-taxable online recipients state-by-state with rate, taxable value, integrated tax and cess; Table 5B separately records supplies to registered persons in India on which those recipients pay tax on reverse charge, by GSTIN and taxable value; Tables 5A and 5C carry amendments to earlier months; Table 5D covers online money gaming. So an overseas supplier that sells to Indian businesses does not pay tax on those sales, but it still has to report them.

GST Rate

OIDAR services have no bespoke GST rate of their own; each supply carries the rate of its own service classification. In practice that lands at 18% integrated tax. Online content, cloud, telecommunications and information-supply services fall under heading 9984 of Notification No. 8/2017 – Integrated Tax (Rate), taxed at 18%, and anything not separately listed falls into the residuary entry at serial number 35, heading 9997, also 18%. The rate reset of 22 September 2025, made by Notification No. 15/2025 – Integrated Tax (Rate) dated 16 September 2025, left both entries at 18% while it moved many goods and some services to the new 5% and 40% slabs.

Why It Matters for a Foreign Company

Any overseas SaaS, streaming, e-book, e-learning, or cloud-storage business selling directly to Indian consumers or unregistered buyers needs to confront OIDAR the moment it has Indian customers — no Indian office, subsidiary, or Non-Resident Taxable Person registration is needed to trigger the obligation; the sale itself creates it. Two structuring points follow:

• B2B sales to GST-registered businesses are different, but not invisible. Because section 14 only applies when the recipient is a non-taxable online recipient (that is, unregistered), a sale to a GST-registered Indian business is an ordinary import of service and the registered recipient — not the overseas supplier — accounts for GST on reverse charge. The supplier still has to report those sales in Table 5B of GSTR-5A. Confirming the buyer's GST registration status at checkout is therefore a compliance control, not just a sales nicety.
• Selling through a marketplace does not automatically remove the obligation. If the marketplace does not meet all four conditions in section 14(1)'s proviso, the marketplace becomes the party liable to register and pay tax — but a supplier that assumes this shift has happened without checking the marketplace's actual invoicing and payment-handling practices is taking an unverified risk.

Common Mistakes

• Assuming "minimal human intervention" is still a live test. Section 160 of the Finance Act, 2023 removed this condition from section 2(17) with effect from 1 October 2023; a service with real human involvement in delivery can still be OIDAR.
• Leaving B2B sales out of GSTR-5A. Since Rule 64 was substituted on 1 October 2023, supplies to registered Indian persons are reported in Table 5B of the return even though the recipient, not the supplier, pays the tax.
• Treating every unregistered buyer's stated "business use" as a reason to skip supplier registration. Since 1 October 2023, an unregistered recipient is a non-taxable online recipient regardless of purpose — the recipient's registration status is what matters, not its stated intent.
• Registering state-by-state. OIDAR registration under Rule 14 and Form GST REG-10 is a single, centralised registration, not a multi-state one.
• Ignoring the two-of-seven place-of-supply test. Relying on a single signal (say, just the customer's stated address) without a second corroborating indicator under section 13(12) leaves the place-of-supply conclusion unsupported.
• Assuming an app-store sale removes all obligations. The intermediary deeming rule in section 14(1) has four specific conditions; failing to verify them against the marketplace's actual practice is a common gap.

Practical Example

A US-based company sells an online video-editing subscription directly from its own website to individual customers in India, with no marketplace involved. An Indian customer pays by an Indian-issued card and provides an Indian billing address — two of the seven indicators under section 13(12) — so the place of supply is India. The customer is an individual, not GST-registered, so it is a non-taxable online recipient under section 2(16). Under section 14(1), the US company itself — not the customer — is liable to pay integrated tax on the sale, at 18%. The company must obtain a single GST registration using Form GST REG-10 (with an India-resident Authorised Signatory), and it must file Form GSTR-5A every month by the 20th, reporting the taxable value and tax collected against each Indian state where its customers are billed.

Key Takeaways

• OIDAR services are internet-delivered digital services supplied from outside India to a recipient in India, defined in section 2(17) of the IGST Act, 2017
• Section 160 of the Finance Act, 2023, in force from 1 October 2023, removed the "essentially automated and minimal human intervention" test from the definition and widened "non-taxable online recipient" in section 2(16) to mean any unregistered person, regardless of purpose
• Place of supply is the recipient's location, established under section 13(12) by any two of seven non-contradictory indicators
• On sales to unregistered Indian recipients the overseas supplier — not the buyer — pays the tax under section 14, using a single Simplified Registration Scheme (Form GST REG-10) and monthly Form GSTR-5A returns due by the 20th; sales to registered Indian buyers go on reverse charge but are still reported in GSTR-5A
• OIDAR carries no bespoke rate; in practice it is taxed at 18% integrated tax, whether under heading 9984 or the residuary entry at serial number 35, heading 9997

Selling digital services into India and unsure whether OIDAR registration applies to your business? Beacon Filing helps foreign companies assess GST registration triggers and structure compliant India market entry.

Frequently Asked Questions

Does my company need an Indian PAN or a local office to register as an OIDAR supplier?

No. Form GST REG-10 lists a Permanent Account Number as optional ("if any") for the overseas entity, and section 14(2) is designed for suppliers with no physical presence in India — such a supplier may simply appoint a person in India to pay the tax on its behalf, rather than establishing an office.

What if I sell to a GST-registered Indian business instead of a consumer?

Section 14 applies only when the recipient is a "non-taxable online recipient" — an unregistered person. A sale to a GST-registered Indian business falls outside the supplier-pays rule; the registered recipient accounts for GST on the import of the service under reverse charge. The overseas supplier must still report the sale in Table 5B of its monthly GSTR-5A.

Did the 2023 changes affect the GST rate on OIDAR services?

No. Section 160 of the Finance Act, 2023 changed who counts as a taxable recipient (section 2(16)) and removed the automation test from the service definition (section 2(17)), both with effect from 1 October 2023. Neither touched the rate, which is 18% integrated tax. The September 2025 rate reset did not change it either.

I sell through an app store — is the app store liable for GST instead of me?

Only if it meets all four conditions in section 14(1)'s proviso: its invoice names you as the actual supplier, it neither collects nor processes the customer's payment, it does not authorise delivery, and it does not set the terms of supply. If it fails any of these, you remain the party liable to register and pay tax.

How do I determine whether my customer is "located" in India for GST purposes?

Section 13(12) requires any two of seven non-contradictory indicators — billing address, payment-instrument country, bank location, device IP address, SIM country code, fixed-line location, or the address the customer submits online — to point to India before the recipient is treated as located there.

See also: Goods and Services Tax (GST), Equalization Levy, and Non-Resident Taxable Person (NRTP). The Equalisation Levy, which taxed some of the same cross-border digital transactions, has been abolished in full.