There are a special category of persons who are not required to file the basic returns in form GSTR 1, GSTR 2 and GSTR 3/GSTR3B. But, these persons are required to file a simplified return as may be prescribed. These persons include:
- Input Service Distributors (ISDs)
- Persons paying tax under Composition Scheme
- Non Resident Taxable Persons
- Persons deducting Tax at Source under Section 51
- Supplier of Online Information and Database Access or Retrieval Services (OIDARs)
- Persons collecting Tax at Source, that is an electronic commerce operator not acting as an agent under section 52
However, every other normal registered person is required to furnish details of:
- outward supplies of both goods and services in Form GSTR 1;
- inward supplies of goods and services in Form GSTR 2 and
- a monthly return of inward supplies, outward supplies, Input Tax Credit (ITC) availed, tax payable, tax paid etc in Form GSTR 3
This article however talks about treatment of GST in case of Online Information, Database Access and Retrieval (OIDAR) Services. So it is first important to know the meaning of OIDAR, OIDAR services and taxability of these services in order to understand Form GSTR-5A.
What is OIDAR?
Online Information, Database Access and Retrieval Services are the type of services offered through internet. Furthermore, these services are received by the recipients online without any face to face or physical interface with the supplier of these services.
Thus, two conditions need to be satisfied for any service to be an OIDAR service. These include:
- Providing services online, that is, over the Internet or an electronic network or
- Services provided need to be automated without any or minimal human intervention
So, let’s consider an example to better understand OIDAR services.
Say you download an e-book from a blog whose place of business is outside India, let’s say USA. Further, this e-book is availed by making a payment of some amount for the same. In this case, the-book in PDF format is downloaded automatically from a US based blog. This service would be taken as an OIDAR service and would be taxable under GST.
Thus, OIDAR services include:
- advertising on the internet;
- cloud services;
- offering e-books, movies, music, software and other intangibles through telecommunication networks or internet;
- providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
- Supplying online digital content (e.g. movies, television shows, music and the like);
digital data storage; and
- online gaming
Why Are OIDAR Service Providers Taxed Under GST?
One may wonder why are OIDAR services treated differently as against other services under GST. Well, OIDAR services are taxed differently under GST because of the nature of such services. These services are offered online from a location outside India, that is, outside the taxable territory of GST.
Say, a service provider registered in India offers services similar to OIDAR services to the recipients in India. So these services would be taxable like any other service under GST. This is because the supplier is an Indian service provider who falls under the taxable territory. Hence, such a service provider is liable to pay GST.
So, the OIDAR supplier located outside India and falling outside the taxable territory would get an advantage if such services are not taxed. Therefore, the government of India rolled out a simple procedure for registration and taxation of OIDAR service providers.
How Are OIDAR Service Providers Taxed Under GST?
Typically, GST is applicable on a particular supply if the place of such supply is in India. So, let’s revisit the concept of place of supply to understand how OIDAR service providers are taxed under GST. The concept of place of supply says that the location of the receiver of goods or services is taken as the place of supply under GST. This is the case when both the supplier as well as the recipient of such goods and services are located in India.
But, the supplier is located outside India in case of OIDAR services. Whereas the recipient of such services is located in India. So this transaction is also taxable under GST as the place of supply is India only.
How Are OIDAR Service Providers Taxed Under GSTPayment of GST In Case of OIDAR Services
There are two scenarios under which GST is payable in case of OIDAR services. So let us understand each of them to know who is liable to pay GST in each of the cases.
1. Services Provided To a Registered Recipient Located in India
This case pertains to the one where the supplier is located outside India.Whereas, the recipient of such services is a business entity registered in India. Thus, the supplier in this case is taken as the unregistered person as he falls outside the taxable territory. So , the recipient is liable to pay GST since the services are supplied to him by an unregistered supplier.
In other words, the concept of reverse charge mechanism stands applicable. As per this mechanism, a registered recipient is liable to pay GST if the goods and services are supplied to him by an unregistered supplier.
2. Services Provided to A Non-Taxable Online Recipient (Unregistered) Located in India
This relates to the case where the supplier of OIDAR services is located outside India. Furthermore, the recipient of such services is a non-taxable online recipient (unregistered entity) located in India.
Non-Taxable online recipient includes any:
- Local authority
- Governmental authority
- Individual consumer
- Any other person not registered under GST
Furthermore, these recipients receive OIDAR services for a purpose other than business or commerce.
Now, this transaction too is taxable under GST since the place of supply is in India. But the challenge lies in collecting taxes under such cases. This is because it is impossible to ask the individual consumer to register under GST for a one time transaction on the internet.
Therefore, the IGST Act says that supplier located in the non taxable territory would be liable to pay IGST in such cases. This means that the supplier is liable to pay GST where he is located outside India and offers services to an unregistered person in India.
Registration Of An OIDAR Supplier Offering Services to a Non-Taxable Online Recipient in India
The OIDAR supplier providing services to non-taxable online recipients located in India is required to take a single registration under the Simplified Registration Scheme. Thus, OIDAR supplier applies for such registration in Form GST REG-10.
However, there are cases where the OIDAR supplier has a representative in India. So, the representative of the OIDAR supplier in India takes registration in these situations. Furthermore, he pays IGST on behalf of the OIDAR supplier.
But there can be situations where the OIDAR supplier does not have a representative in India. So in these situations, he is required to appoint a person in the taxable territory, that is India. This person is appointed to pay IGST on behalf of the OIDAR supplier.
Return Filed By OIDAR Supplier Providing Services To Non-Taxable Online Recipient in India
This relates to the case where an OIDAR supplier located outside India provides OIDAR services to a person other than the registered person in India. So, in this case, the OIDAR supplier is required to get registered and file returns in Form GSTR-5A.
Furthermore, this return is required to be filed on or before the 20th of the month succeeding the calendar month for which tax is payable. Thus, it is important to note that Form GSTR-5A is used to file return only by the overseas service provider offering OIDAR services to a non-taxable recipient in India.
The other type of OIDAR service providers include the ones located in India and offering OIDAR services to recipients in India. These service providers are required to file regular returns in GSTR 1, GSTR 2 and GSTR 3/3B. This is because OIDAR service providers located in India fall in the taxable territory. Furthermore, they are like any other registered taxpayers under GST.
Components of Form GSTR – 5A
Following is the information relating to the supplies made by OIDAR service provider located outside India to non-taxable recipients in India. This information forms part of the Form GSTR-5A.
- Goods and Services Tax Identification Number (GSTIN) of the supplier.
- (a) Legal name of the registered person
(b) Trade name if any
- Name of the authorized representative in India filing the return on behalf of the OIDAR service provider
- Taxable outward supplies made to consumers in India. This section includes information such as:
- Place of supply
- Rate of tax
- Taxable value
- Amount of Integrated Tax
- 5(A) Amendments to taxable outward supplies to non-taxable persons in India. This section includes the changes made to the taxable outward supplies made to the non-taxable persons in India. This includes information such as:
- Month for which the amendment is to be made
- Place of supply
- Rate of tax
- Taxable value
- Amount of integrated tax
- Calculation of interest, penalty or any other amount.
- Tax, interest, late fees and any other amount payable and paid
In the end, the return is verified by an authorized signatory. This authorized signatory must be a resident in India having a valid PAN number and who acts on behalf of the Non – Resident Taxable Person.