By Onkar Sharma and Rishabh Prasad

Over the past decade, Internet and Information Technology have emerged as a prominent medium for the supply of goods and services. Concurrently, non-resident and foreign suppliers of such services were brought under the levy of GST (and even under the pre-GST regime) as “online information and database access or retrieval” services (“OIDAR Services”). Further, the compliance and tax liability was exported to non-resident service providers. However, the contours of the levy has seen substantial changes, primarily in the definition and its operation to online recipients of such services.

Before 1 October 2023, OIDAR services were defined as services delivered over the internet which are “essentially automated and involve minimum human intervention”. Further, where the recipients of OIDAR Services deployed these services towards commerce, industry or profession then these could not be taxed. However, the amendments effective from 1 October 2023, have significantly expanded the definition to include any services mediated by information technology over internet, impossible to ensure in the absence of information technology. Further, the end use exception for online recipients of OIDAR Services has also been removed.

On the heels of these amendment, the GST Department has initiated various proceedings against foreign service providers, for their past OIDAR non-compliance since 2017.........

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