Service tax Levy – Cross-border Online information and database access or retrieval service in INDIA

Published on: Feb 2017

The Central Board of Excise & Customs (CBEC) has issued Notification No. 46/2016-ST, 47/2016ST, 48/2016-ST and 49/2016-ST on November 9, 2016 making service of online information and database access or retrieval (OIDAR) provided by a person located outside India to a person located in India liable to service tax with effect from December 1, 2016.

The Notifications has the following effect:

1. Cross-border OIDAR services made taxable;
2. B2B OIDAR services to be taxable under Reverse charge mechanism;
3. B2C OIDAR service to be taxable under Forward charge;
4. Definition of OIDAR services expanded to include internet advertisements, cloud services, e-books, movies, music etc

Accordingly, Foreign Service Providers will have now various compliances under Service tax law in India.

The amendment seeks to bring level playing field to the domestic service providers. Further, the intention is to move towards consumption based tax (in-line with proposed GST regime which has a wide tax base to potentially cover all cross border services).

Find attached a detailed article on this subject compiled by our team.

We trust you would find this update useful.