Online Information and Database Access or Retrieval

OIDAR Services – GST Implications on Digital Services in India

The rapid growth of digital platforms, online tools, and cross-border digital transactions has significantly changed how taxation works in India. Traditional tax rules were not designed for services delivered instantly over the internet, especially when providers are located outside India.

To address this gap, India has introduced specific tax provisions under GST and the Income-tax Act to regulate Online Information and Database Access or Retrieval (OIDAR) services. These rules are aimed at ensuring tax compliance by both Indian and overseas digital service providers.

Understanding OIDAR taxation is now critical for businesses offering software, digital content, cloud services, online platforms, and other technology-driven services to Indian users.

What Are OIDAR Services?

OIDAR services refer to services that are:

  • Delivered over the internet or electronic networks

  • Dependent on information technology

  • Supplied with minimal or no human intervention

Examples include digital products and services that can be accessed online without direct human involvement at the time of delivery.

Cross-Border Digital Services and Tax Challenges

When digital services are provided by non-resident service providers to customers in India, tax compliance becomes more complex. These services may include:

  • Online advertising

  • Software and app subscriptions

  • Streaming platforms

  • Cloud computing and data storage

  • Access to databases or digital content

Indian tax authorities closely examine such transactions to determine GST liability, especially when services are supplied to unregistered users in India.

To address revenue leakage, India has strengthened enforcement under both GST law and Equalization Levy provisions, requiring overseas digital businesses to reassess their India tax positions.

GST vs Equalization Levy – Key Difference

While both GST and Equalization Levy apply to digital transactions, they operate under different laws and serve different purposes:

  • GST applies to the supply of services within the GST framework, including cross-border OIDAR services

  • Equalization Levy applies under the Income-tax Act to certain digital services provided by non-resident operators, mainly online advertising and e-commerce transactions

In several cases, digital services may require evaluation under both regimes, making it essential to align GST positions with Equalization Levy compliance to avoid disputes.

Updated Definition of OIDAR (Effective 1 October 2023)

From 1 October 2023, India expanded the scope of OIDAR services. The earlier requirement that services be “essentially automated with minimal human intervention” has been removed.

Now, any service delivered through information technology or electronic networks, and dependent on such technology, can qualify as an OIDAR service.

This change significantly broadens the tax net and impacts a wide range of technology-based businesses, especially overseas service providers.

GST Registration for OIDAR Service Providers

Indian OIDAR Providers

Indian businesses supplying OIDAR services must register under GST through the regular GST registration process.

Overseas OIDAR Providers

Non-resident OIDAR service providers supplying services to unregistered recipients in India are required to:

  • Obtain GST registration using Form GST REG-10

  • File Form GSTR-5A on a monthly basis

  • Pay GST by the 20th of the following month

Failure to comply can result in notices, penalties, and even blocking of digital platforms in India.

Services Covered Under OIDAR

OIDAR services include, but are not limited to:

  • Website hosting and web-based services

  • Cloud computing and remote software access (SaaS)

  • Online advertising and digital marketing services

  • Supply of e-books, music, movies, games, and digital content

  • Online databases and information portals

  • Virtual learning platforms, automated courses, and assessments

The GST liability depends primarily on the location and registration status of the service recipient.

GST Liability on OIDAR Services

  • For B2C transactions (services to unregistered persons in India), GST liability rests with the foreign OIDAR service provider

  • For B2B transactions, GST may apply under the reverse charge mechanism, depending on facts and registration status

Each transaction must be evaluated carefully to determine the correct tax treatment.

Our OIDAR Services at N D Savla & Associates

We assist Indian and overseas digital service providers in navigating OIDAR-related GST and tax compliance with clarity and precision.

Our Services Include:

  • GST registration for Indian and overseas OIDAR service providers

  • Advisory on GST applicability and tax position under OIDAR

  • Assistance with GSTR-5A and other GST return filings

  • Review of Equalization Levy exposure and alignment with GST

  • Impact analysis of GST on digital business models

  • Compliance management and record maintenance

  • Representation before GST authorities for notices, audits, and assessments

  • Strategic advisory for cross-border digital transactions

Why N D Savla & Associates?

OIDAR taxation involves constant regulatory changes and heightened scrutiny from tax authorities. Our team combines GST expertise, international tax understanding, and practical compliance experience to help businesses stay compliant while minimizing risk.

Whether you are launching a digital platform or already serving Indian users from overseas, we ensure your OIDAR obligations are handled correctly and efficiently.