23 Sept 2024
Online Information and Database Access or Retrieval (OIDAR) covers online services with or without a physical user interface and is subject to an 18% tax slab.
OIDAR services were GST-exempt until an amendment took effect in October 2023, which made foreign companies liable to pay the tax. The revised law mandated that companies were liable to pay GST irrespective of the level of human intervention in rendering their digital services.
As per the law, foreign organisations must register in India and pay GST to offer their services to Indians. The Directorate General of GST Intelligence (DGGI) issued tax evasion notices for the period between 2017 and 2023 to 70 foreign companies for providing OIDAR services in India. These companies include Meta, Netflix, Spotify, and Google across subscription-based services, advertising, online gaming, and edtech.
The companies argue that their services involve human intervention and can be delivered offline, which was GST-exempt before the amendment. Online training and exam platforms say their services are not covered under OIDAR. They will soon file the case in the high court.