Section 14 of IGST Act 2017: Special Provision for Tax Payment by OIDAR Services Supplier

Provisions under Section 14 of the Integrated Goods and Services Tax (IGST) Act, 2017 relating to “Special provision for payment of tax by a supplier of online information and database access or retrieval (OIDAR) services”, are as under:

Section 14 of IGST Act 2017: Special provision for payment of tax by a supplier of online information and database access or retrieval (OIDAR) services (CHAPTER V – PLACE OF SUPPLY OF GOODS OR SERVICES OR BOTH)

(1) On supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services:

Provided that in the case of supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a nontaxable online recipient, an intermediary located in the non-taxable territory, who arranges or facilitates the supply of such services, shall be deemed to be the recipient of such services from the supplier of services in non-taxable territory and supplying such services to the non-taxable online recipient except when such intermediary satisfies the following conditions, namely:–

(a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;

(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge which is that the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services;

(c) the intermediary involved in the supply does not authorise delivery; and

(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.

(2) The supplier of online information and database access or retrieval services referred to in sub-section (1) shall, for payment of integrated tax, take a single registration under the Simplified Registration Scheme to be notified by the Government:

Provided that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay integrated tax on behalf of the supplier:

Provided further that if such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.

Amendments History:

NA

Commentary on Section 14 of the IGST Act

Section 14 of the Integrated Goods and Services Tax (IGST) Act, 2017 addresses the special provision for payment of tax by a supplier of online information and database access or retrieval (OIDAR) services. The section can be broken down into two subsections:

Section 14(1) of the IGST Act

Section 14(1) specifies that if the OIDAR services are supplied by a person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of the services will be liable for paying integrated tax. However, if an intermediary located in a non-taxable territory arranges or facilitates the supply of these services, they will be deemed the recipient of the services, provided they meet certain conditions. These conditions include:

a) The invoice or customer’s bill must clearly identify the service and its supplier.

b) The intermediary doesn’t authorize the charge to the customer or participate in processing the payment.

c) The intermediary doesn’t authorize delivery.

d) The general terms and conditions of the supply are set by the supplier of services, not the intermediary.

Section 14(2) of the IGST Act

Section 14(2) outlines that the supplier of OIDAR services, as mentioned in subsection (1), should register under the Simplified Registration Scheme notified by the Government for the payment of integrated tax. The registration process has two provisos:

a) If a person in the taxable territory represents the supplier for any purpose, they should register and pay integrated tax on behalf of the supplier.

b) If the supplier doesn’t have a physical presence or representative in the taxable territory, they can appoint a person in the taxable territory to pay integrated tax, making that person liable for the tax payment.

In summary, Section 14 of the IGST Act, 2017 deals with the tax liability and registration requirements for suppliers of OIDAR services, intermediaries and their representatives in the taxable territory. This section aims to ensure that the appropriate tax is collected from OIDAR service suppliers, even if they’re located in non-taxable territories.

Related Posts:

GST Requirement of Dynamic QR Code in Invoice, Exclusions and Deadline Extensions by CBIC [Updates/ Notifications on implementation of Sixth proviso of CGST Rule 46 on QR code in Tax Invoice and excluded class of registered persons referred to Section 14 of the IGST Act]

—–

Note: The IGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended through IGST Extension to J&K Act 2017, IGST (Amendment) Act 2018. Finance Act 2019, Finance Act 2020, Finance Act 2021, Finance Act, 2022 and Finance Act, 2023, including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective IGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.