1. Introduction
Today, almost everything we do — from streaming movies to booking cabs — happens online. You might subscribe to Netflix, download an e-book, or buy software from a foreign website without even realizing you’re part of an international transaction.
But here’s a question — if the service provider is outside India and the user is in India, who pays GST?
That’s exactly what Section 13(12A) (OIDAR) and Section 14 (E-Commerce Operators) of the IGST Act deal with.
They make sure that even digital and online services don’t slip through the tax net, ensuring India receives its fair share of GST revenue.
2. What is OIDAR? (Definition)
OIDAR stands for Online Information and Database Access or Retrieval Services.
As per Section 2(17) of the IGST Act, these are services:
“Whose delivery is mediated by information technology over the internet and is essentially automated, involving minimal human intervention, and impossible to ensure in the absence of information technology.”
3. Examples of OIDAR Services
Let’s make it simple — if it’s fully online, automatic, and accessible from anywhere, it’s OIDAR.
Examples:
- Streaming services like Netflix, Amazon Prime, Spotify
- Online gaming subscriptions
- E-learning platforms (like Coursera, Udemy)
- Cloud storage (Google Drive, Dropbox)
- Downloadable e-books, movies, or music
- Digital advertising services
- Online dating or social networking subscriptions
- Software-as-a-Service (SaaS) tools like Canva or Zoom Pro
4. Why OIDAR Has Special GST Rules
Before GST, foreign digital companies were not taxed easily because:
- They had no physical presence in India,
- Users directly paid online via cards or wallets, and
- The supplier was outside Indian jurisdiction.
To plug this gap, the government introduced special rules under Section 13(12A) and Section 14 to ensure:
- Digital services consumed in India are taxed in India,
- Indian consumers and intermediaries comply with GST.
5. Section 13(12A) – Place of Supply for OIDAR Services
This section specifically deals with cross-border online services.
Legal Provision
“The place of supply of OIDAR services shall be the location of the recipient of services.”
So if a person in India uses an online service from a foreign supplier, the Place of Supply = India, and GST becomes payable in India.
6. Identifying the Recipient’s Location
As per Rule 9 of the IGST Rules, the recipient is considered located in India if any two or more of the following conditions are satisfied:
| Condition | Example |
| 1️⃣ Address in India | Billing address in India |
| 2️⃣ Payment in Indian currency | Credit card or UPI payment |
| 3️⃣ IP address in India | Logged in from Indian network |
| 4️⃣ SIM card registered in India | Using Indian mobile number |
| 5️⃣ Billing country India | Subscription linked to India |
| 6️⃣ Bank / card issued in India | Indian bank used for payment |
If two of these are true → recipient considered in India → GST applicable.
7. Example Scenarios
Example 1 – Streaming Subscription (Foreign Company to Indian User)
Mr. Raj in Delhi subscribes to Netflix (a US-based company).
- Supplier: USA
- Recipient: India
- PoS = India (recipient location)
- GST payable in India
Netflix must register under GST in India and pay IGST on its subscription charges.
Example 2 – Online Software Download
A company in Bengaluru downloads design software from a UK-based website.
- PoS = India
- Supplier outside India
- GST applies under reverse charge if recipient is a business.
Example 3 – E-Learning Course Purchased by Student
An Indian student buys an online course from a US university website.
- PoS = India (user located in India)
- Supplier outside India
- If recipient is unregistered individual, supplier must register and pay IGST.
Example 4 – Cloud Storage Service to Indian Business
Google Cloud (USA) provides storage to an Indian registered company.
- PoS = India
- Recipient registered → GST paid under reverse charge (RCM) by the Indian company.
Example 5 – Music App Subscription Outside India
A tourist in London uses an Indian mobile number to renew a Spotify India subscription.
- IP + SIM both linked to India → PoS = India
- GST applicable even though user temporarily abroad.
8. Who Pays GST for OIDAR?
Depends on recipient type 👇
| Recipient Type | Who Pays GST | Mode of Payment |
| Registered Business (B2B) | Recipient in India | Reverse Charge (RCM) |
| Unregistered Individual (B2C) | Supplier (foreign company) | Supplier registers in India and pays IGST |
Example – B2B vs B2C
| Case | Supplier | Recipient | PoS | GST Liability |
| 1 | Adobe (US) | XYZ Pvt. Ltd., Delhi | India | RCM by XYZ |
| 2 | Spotify (US) | Mr. Rohan (unregistered) | India | Supplier (Spotify) pays IGST |
9. How Foreign OIDAR Suppliers Follow GST Requirements
Foreign service providers (like Google, Apple, Netflix) who supply to Indian customers must:
- Register under Simplified GST Registration Scheme for Non-Residents
- File returns and pay IGST
- Appoint an authorized representative in India if needed
- Issue GST-compliant invoices
Latest CBIC Clarifications
| Circular / Notification | Key Update |
| Circular 209/3/2024-GST | Clarified compliance procedure for non-resident OIDAR suppliers |
| Notification 09/2024-IGST (Oct 2024) | Foreign suppliers serving Indian users must register even for small volumes |
| CBIC FAQ (Jan 2025) | IP and payment country used to confirm recipient’s location |
| GSTN Update (2025) | Simplified online portal for OIDAR registrations |
10. Section 14 – E-Commerce Operators under GST
E-commerce has exploded — from Amazon to Uber, from Zomato to Airbnb. Section 14 defines how GST applies when services are provided through electronic platforms.
Legal Provision
“Notwithstanding anything contained in Section 13(2), the place of supply for services supplied through an e-commerce operator shall be determined based on the location of the recipient, and the operator shall be liable to pay tax if the supplier is not located in the taxable territory.”
This ensures foreign or unregistered suppliers using platforms cannot avoid GST.
11. How It Works (Simplified)
Let’s understand it with two layers:
- The actual supplier provides the service through an app or website.
- The platform (e-commerce operator) facilitates or collects payment.
If the supplier is outside India → platform becomes liable to pay GST.
12. Examples Based on Real Cases
Example 1 – Hotel Booking via Foreign App
A customer in Delhi books a hotel in India through Booking.com (foreign operator).
- Supplier (hotel) in India
- Platform (Booking.com) outside India
- PoS = India (recipient in India)
- GST payable by Booking.com (e-commerce operator)
Example 2 – Cab Service via App
An unregistered driver provides cab rides via a registered e-commerce platform (e.g., Uber).
- Platform collects fare → Platform liable to pay GST
- Recipient location decides PoS
Example 3 – Foreign Marketplace Selling Online Courses
Udemy (based in the US) offers courses to Indian students via its platform.
- PoS = India
- Udemy must register and pay IGST
Example 4 – Restaurant Delivery Platform
Zomato and Swiggy collect payments from customers on behalf of restaurants.
- PoS = Location of customer (recipient)
- Operator (Swiggy/Zomato) liable under Section 9(5)
Example 5 – Ride Booking by Tourist in India
A foreign tourist books a cab via app in Delhi.
- PoS = Delhi
- GST payable by operator
13. Operator Liability (Section 9(5) + Section 14 Linkage)
Certain e-commerce sectors are notified where operator itself pays GST, not the actual service provider:
| Notified Service | Who Pays GST |
| Passenger transport (e.g., Uber, Ola) | Operator |
| Accommodation (e.g., Airbnb, Oyo) | Operator |
| Housekeeping (UrbanClap, etc.) | Operator |
| Restaurant delivery (Zomato, Swiggy) | Operator |
14. Comparison: OIDAR vs E-Commerce Rules
| Basis | OIDAR (Sec. 13(12A)) | E-Commerce (Sec. 14) |
| Nature of Service | Fully online, automated | Online platform facilitates physical/digital services |
| Supplier Location | Usually outside India | May be in or outside India |
| Recipient | Business or consumer | Consumer or business |
| PoS | Location of recipient | Location of recipient |
| GST Liability | Supplier / RCM / Operator | Operator (if notified) |
| Example | Netflix, Google Ads | Uber, Zomato, Booking.com |
15. Compliance Checklist
- Maintain user location logs (IP, billing address, payment mode)
- File GSTR-5A (for non-resident OIDAR suppliers)
- Appoint authorized representative if based abroad
- Mention PoS state code in every invoice
- Maintain records for 5 years for audit
17. Simplified Summary Table
| Category | Section | Place of Supply | GST Liability |
| OIDAR (to registered business) | 13(12A) | Recipient’s location | Recipient under RCM |
| OIDAR (to individual) | 13(12A) | Recipient’s location | Foreign supplier |
| E-Commerce platform (general) | 14 | Recipient’s location | Operator |
| E-Commerce (notified services) | 9(5) + 14 | Recipient’s location | Operator |
| Foreign OIDAR via app | 13(12A) | India | Supplier to register in India |
18. Common Mistakes to Avoid
- Ignoring PoS for small foreign subscriptions
- Assuming B2C OIDAR exempt — it’s not
- Not registering foreign supplier when serving Indian users
- Using supplier’s location instead of recipient’s for digital PoS
- Missing Section 9(5) operator liability
19. Key Takeaways
- OIDAR → Recipient’s location = Place of Supply
- If recipient unregistered → supplier (foreign company) must register in India
- If recipient registered → reverse charge (RCM) applies
- E-commerce operators liable for notified services (Uber, Zomato, etc.)
- GST ensures digital & cross-border services are taxed where consumed
20. Final Thoughts
Digital and platform-based economies have blurred global boundaries — but not for GST.
Whether you’re watching Netflix, booking a cab, or learning online, GST ensures the tax goes to the country (and State) where you actually enjoy the service.
In short:
“💻 OIDAR → Tax where the user is. 🛒 E-Commerce → Tax where the customer is. ”
These two sections (13(12A) & 14) make sure India doesn’t lose out on revenue from the fast-growing online and digital labour market.
