Advertisement through the various ad. Platforms like Google AdWords, Facebook, Quora etc is covered under GST as OIDAR (online information and database access or retrieval services).
What is an OIDAR service?
In order to identify OIDAR Services, all the 3 conditions must be satisfied:
1. Service should be mediated by information technology over the internet or an electronic network.
2. Such service must be automated i.e zero human intervention
3. And it is impossible to provide service in the absence of information technology
Apart from adverts on internet OIDAR also includes:
- Web Hosting a.k.a. Cloud services like AWS (amazon web services)
- Providing e-books, movie, music, software and other intangibles through telecommunication networks or internet (music by Gaana.com)
- Providing data or information, retrievable or otherwise, to any person in electronic form through a computer network (Website Analysis by crazyegg )
- Online supplies of digital content (movies, television shows, music and the like) example: Hotstar, Netflix
- Digital data storage
- Online gaming
Example of Services which are Non-OIDAR Services
- Online teacher
- E-Commerce for goods
- CA, Advocate or Doctor providing services through Internet
- Mechanics or plumber appointment through internet
Applicability of GST
|Location of recipient of service||Location of provider of service||Whether GST is payable ?||Who should pay GST?||Example|
|India||India||Yes||Service Provider||A Indian tech blogger provides advt. of a Local IT company on his website.
GST payable by the blogger
|Outside India||India||No, Export of service is exempted||NA||A Indian tech blogger provides advt. of a US based IT company on his website.
GST NOT payable.
|India (Registered under GST)||Outside India||Yes||Indian Service Recipient (RCM)||A registered person of India advertises on Quora (US).
GST is payable by the Indian registered person.
|India (Not registered under GST)||Outside India||Yes||Foreign Service Provider||An unregistered person of India advertises on Quora (US).
GST is payable by the foreign service provider. (explained below)
|Outside India||Outside India||No (GST rule no longer applies)||NA||Google Canada providing Advertisement service to Canadian Company
It is not taxable under India’s GST Law.
How to pay GST when a service recipient is unregistered and service provider is located outside India?
If the supplier is located outside India and the Indian recipient is unregistered, Foreign Service provider is liable to pay IGST on such supply.
But the problem is, how would such tax be paid if the service provider is located outside?
Such suppliers (or intermediary if available) shall take a single registration under the Simplified Registration Scheme in Form GST REG-10. Registration shall be taken at Principal Commissioner of Central Tax, Bengaluru West.
If there is a person representing such service provider in India, such person shall get registered and pay integrated tax on behalf of the supplier. [Section 14(2) IGST Act]
In case the overseas 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.
1. By Indian OIDAR service provider
Step 1: Declare PAN no., mobile number, e-mail address, State or Union territory in Part A of FORM GST REG-01. A temporary reference number shall be generated.
Step 2: Use the reference number to submit an application in Part B of FORM GST REG-01. An acknowledgement shall be issued in FORM GST REG-02
Step 3: Proper officer will examine the application and the accompanying documents and if the same are found to be in order, he will approve the grant of registration to the applicant within a period of three working days from the date of submission of the application. A certificate of registration will be issued in FORM GST REG-06
2. By Foreign OIDAR service provider providing service to Non-taxable recipient
Step 1: Submit an application for registration in FORM GST REG-10
Step 2: A certificate of registration will be issued in FORM GST REG-06, subject to few conditions and restrictions as may be notified.
1. A foreign OIDAR service provider providing service to a non-taxable person in India shall file return in FORM GSTR-5A on or before the 20th day of the month succeeding the calendar month or part thereof.
2. All other OIDAR service provider shall file GSTR 1 (monthly/Quarterly), GSTR 2 & GSTR 3 (dates not finalised), GSTR 3B (20th of next month up to March 2018)
Place of Supply For OIDAR Services
The place of supply of online information and database access or retrieval services shall be the location of the recipient of services. [Section 12(12) of IGST Act 2017]
Person receiving OIDAR services shall be deemed to be located in the taxable territory (India) if any two non-contradictory conditions are satisfied-
- The location of address given by the recipient of services through internet in India
- The credit card or debit card or any other card through which the recipient of services pays has been issued in India
- The billing address of the recipient of services is in India
- The IP address of the device used by the recipient of services is in India
- The bank of the recipient of services in which the account used for payment is maintained in India
- The country code of the subscriber identity module (SIM) card used by the recipient of services is India
- The location of the fixed landline through which the service is received by the recipient is in India.
GST Rate of OIDAR Service
There no prescribed rate for OIDAR services in GST and due to this it will be covered under “all other services not specified elsewhere” which is chargeable to 18% GST.
Intermediary between Foreign supplier and unregistered recipient
In the case of supply of OIDAR services by a foreign supplier to an unregistered recipient through a foreign intermediary, such intermediary will be considered as the recipient of such services. [Section 14(1) of IGST Act]
Example: An Indian Professor (Unregistered Recipient) advertises his online classes on Canadian Websites (Foreign Supplier) through Google Adwords-Canada (intermediary). In this case, Google Adwords of Canada shall be considered as the service Recipient and not the Indian Professor.
Exception: intermediary will not be considered as the service recipient if following conditions are satisfied-
- The invoice or customer’s bill issued by such intermediary clearly identifies the service and its supplier in non-taxable territory
- The intermediary neither collects or processes payment between the non-taxable online recipient and the supplier of such services
- The intermediary does not authorise delivery; and
- The general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services.
Q 1: I am a blogger, earning Rs.24 lakh annually through google ad sense, affiliate marketing. Should I pay GST?
Ans: Technically Yes, you should take registration and pay GST @ 18%.
Through notification no 10/2017 IT, Govt. has recently exempted inter-state service supplier if their turnover doesn’t exceed Rs.20 lakh (10 lakh for northeast states.)
Q 2: Google doesn’t disclose money paid by the Advertiser, So On what amount should I pay GST?
Ans: This particular case has not been clarified by the govt. I think whatever you receive from the Google (intermediary) should be considered as inclusive of 18% GST.
Example: Money received from google Rs.35,400 in Dec 2017.
IGST payable = Rs.5,400/- [(35400/118%)*18%]
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