GST chargeable on OIDAR services by foreign firms to individuals & Govt irrespective of any usage w.e.f. October 1, 2023

Categories: GST Law, Our Articles

The GST Council in its 50th meeting held on July 11, 2023 had decided to amend Rule 64 and FORM GSTR-5A of CGST Rules, 2017 so that OIDAR service providers can provide the details of supplies made to registered persons in India in the return under FORM GSTR-5A. The intention behind this amendment is to keep track of due payment of tax on a reverse charge basis by such registered persons in India in respect of supplies received from Online Information and Database Access or Retrieval (OIDAR) service providers.

Until now, services provided by OIDAR providers located abroad in non-taxable territories were exempt from taxation when received by the central government, state government, government authorities, or individuals for non-business purposes. However, this exemption has been eliminated, effective from October 1, 2023.

This change is in response to the Finance Act of 2023, which amended the Integrated Goods Services Tax Act, 2017 (“the IGST Act”) to expand the definition of “non-taxable online recipient.” As per the revised definition, a non-taxable online recipient now includes any unregistered individual or entity receiving OIDAR services within India’s taxable territory, regardless of the purpose for which they are received.

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