OIDAR Services under GST: Section 14 of the IGST Act Explained

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Quick Analysis: Understand OIDAR in 2 Minutes

Think of it like a pizza delivered from abroad.

Suppose a pizza shop in Italy starts delivering pizzas to Indian customers using a drone. No Indian kitchen, no Indian staff. The pizza flies in directly from Rome. Now, someone has to pay GST on that pizza in India. The customer is a regular person with no GST registration. So the Italian pizza shop itself must register in India and pay the tax.

That is exactly what OIDAR does.

Replace the pizza with Netflix. Replace the Italian kitchen with Netflix’s servers in the USA. Replace the drone with the internet. An Indian user, not registered under GST, pays for a Netflix subscription. Netflix, being a foreign company supplying a digital service to an unregistered Indian, must pay IGST in India. It cannot say “I am sitting in America, India’s tax is not my problem.” The law reaches out and catches it.

Now, what if Netflix used a middleman?

Suppose Netflix ties up with a Singapore-based platform called StreamHub. Indian users buy Netflix via StreamHub. Now the question is: who pays the Indian GST, Netflix or StreamHub?

The answer depends on how deeply StreamHub is involved. If StreamHub collects the payment, controls the delivery, and sets its own terms, it is not just a passive link in the chain. It is an active participant. Therefore, the law says StreamHub is the actual supplier and must pay the GST.

However, if StreamHub only lists Netflix’s service on its website, displays Netflix’s own terms, never touches the money, and never controls what the user gets, then StreamHub is genuinely just a notice board. In that case, Netflix itself pays the IGST.

The four-condition test is the litmus test for the middleman.

Miss even one condition and the middleman becomes the taxpayer. Clear all four and the original supplier pays.

How does Netflix actually pay this tax?

It cannot walk into a GST office. So the law gives it a special Simplified Registration. One registration, centrally, for all of India. If Netflix has a local office or representative in India, that person files and pays. If not, Netflix appoints someone to do it.

Three things to lock in memory:

Foreign digital supplier + Indian unregistered user = foreign supplier pays IGST.
Middleman involved? Check the four conditions. Fail even one, and the middleman pays.
Foreign supplier registers via Simplified Registration Scheme. No need for 29 state-wise registrations.

The one-line memory hook:

“If the internet brings a foreign service to your doorstep and you have no GST number, the foreign company pays India’s tax. If a middleman is deeply involved, the middleman pays instead.”

Remember the Italian pizza drone. You are the Indian customer with no GST number. The pizza came from abroad via technology. Someone has to pay the Indian tax. The law makes sure that someone is never zero.

Provision summary

Section 14 of the IGST Act deals with a special and increasingly relevant situation: what happens when a foreign company supplies digital services to Indian users who are not registered under GST? Such services fall under the category of OIDAR, which stands for Online Information and Database Access or Retrieval services. The foreign supplier, even though located outside India, is liable to pay IGST on these supplies. The law also addresses the role of intermediaries and lays down four specific conditions under which an intermediary escapes tax liability. For compliance, the foreign supplier must register under the Simplified Registration Scheme in India. If a representative or appointed person exists in India, that person handles the tax payment on behalf of the foreign supplier. OIDAR services include advertising, cloud services, e-books, online gaming, digital content, and data storage, among others.

What are OIDAR Services?

OIDAR stands for Online Information and Database Access or Retrieval services. In simple terms, these are digital services that travel to you over the internet. Without the internet or electronic network, these services simply cannot exist.

Think about it this way. When you stream a movie on Netflix, download an e-book, store files on Google Drive, or play an online game, you are consuming OIDAR services. No physical delivery happens. No human interaction is needed. The service travels through technology, and technology alone.

The Legal Definition of OIDAR Services

OIDAR services means services whose delivery is mediated by information technology over the internet or an electronic network. The nature of these services makes it impossible to supply them without information technology.

The law specifically includes the following as OIDAR services:

S.no.	Type of OIDAR Service	Common Examples
1	Advertising on the internet	Google Ads, Facebook Ads, banner ads on websites
2	Cloud services	AWS, Microsoft Azure, Google Cloud
3	E-books, movies, music, software via internet	Kindle e-books, iTunes, Steam games
4	Data or information in electronic form	Online databases, research portals, news subscriptions
5	Online supply of digital content	Netflix, Amazon Prime, Spotify, YouTube Premium
6	Digital data storage	Google Drive, Dropbox, iCloud
7	Online gaming (excluding online money gaming)	PUBG Mobile, Clash of Clans, free-to-play games

Note: Online money gaming (where real money is at stake) is specifically excluded from OIDAR. It falls under a separate GST framework.

Who is a Non-Taxable Online Recipient?

The term non-taxable online recipient means any unregistered person located in the taxable territory (i.e., India) who receives OIDAR services.

In other words, if an ordinary Indian individual (not a GST-registered business) buys a Netflix subscription or downloads a Spotify Premium plan, that person is a non-taxable online recipient.

Important clarification: The law also treats a person registered solely for the purpose of deducting TDS under Section 51 of the CGST Act as an unregistered person for this purpose. So such a person also qualifies as a non-taxable online recipient.

Person	Qualifies as Non-Taxable Online Recipient?
Unregistered individual in India receiving OIDAR services	Yes
GST-registered business in India receiving OIDAR services	No (reverse charge applies separately)
Person registered only for TDS deduction (Sec. 51)	Yes
Foreign person receiving OIDAR services	No (outside taxable territory)

Who is a Non-Taxable Territory?

A non-taxable territory is any territory outside India. So a supplier located in the USA, UK, Singapore, or any other country is located in a non-taxable territory under Indian GST law.

Section 14(1): Who Pays the Tax?

This is the core provision. Let us understand the situation it addresses:

Situation: A foreign company (located outside India) supplies OIDAR services to an ordinary Indian user (unregistered, i.e., a non-taxable online recipient).

The Rule: In this situation, the foreign supplier itself is liable to pay IGST in India.

This is a significant departure from the normal rule. Normally, when a foreign supplier sells to a GST-registered Indian business, the Indian business pays tax under reverse charge. However, here the recipient is an unregistered person. Therefore, the law places the tax obligation directly on the foreign supplier.

The Intermediary Question: When Does the Middleman Pay?

Sometimes a foreign supplier does not sell directly to the Indian user. Instead, an intermediary (also located outside India) steps in to arrange or facilitate the supply. In such cases, the law deems the intermediary to be the actual recipient and supplier.

What does ‘deemed recipient and supplier’ mean?

It means the law treats the intermediary as if it bought the service from the foreign supplier and then sold it to the Indian user. As a result, the intermediary becomes liable to pay IGST, not the original supplier.

However, the intermediary escapes this deemed status if it satisfies all four of the following conditions:

Condition	What the Intermediary Must Prove
(a) Invoice identifies the real supplier	The invoice or receipt issued by the intermediary clearly names the actual service and the foreign supplier. The customer must know who the real supplier is.
(b) No role in payment processing	The intermediary does not authorise the charge, does not collect payment, and does not process payment in any manner. It has no role in the financial transaction between the customer and the supplier.
(c) No role in delivery authorisation	The intermediary does not authorise the delivery of the service. Delivery is controlled entirely by the foreign supplier.
(d) No control over terms and conditions	The general terms and conditions of the supply are set by the foreign supplier, not the intermediary.

Key takeaway: All four conditions must be satisfied together. Even if the intermediary fails on one count, it becomes the deemed supplier and bears the IGST liability.

Practical Example: Intermediary Liability

Example: A UK-based company, TechPlay Ltd., develops a gaming app. It sells the app through AppWorld, a marketplace based in Singapore. An Indian user (unregistered) buys the game for Rs. 500 through AppWorld.

Now let us check whether AppWorld (the intermediary) escapes deemed supplier status:

Condition	AppWorld’s Position	Satisfied?
(a) Invoice names TechPlay Ltd.	AppWorld’s receipt shows TechPlay as the supplier	Yes
(b) No role in payment	AppWorld collects payment from the Indian user on behalf of TechPlay	No
(c) No delivery authorisation	AppWorld triggers the download upon payment	No
(d) Terms set by TechPlay	TechPlay sets the service terms	Yes

Since AppWorld fails conditions (b) and (c), it does not satisfy all four. Therefore, AppWorld is treated as the deemed supplier. AppWorld pays IGST on the Rs. 500 transaction in India.

Contrast this: If AppWorld only listed TechPlay’s app, displayed TechPlay’s terms, did not collect payment, and did not control delivery, it would satisfy all four conditions. In that case, TechPlay itself would pay IGST.

Section 14(2): How Does the Foreign Supplier Register and Pay Tax?

A foreign supplier obviously cannot walk into a GST office in India. Therefore, the law provides a special registration route:

Scenario	Who Registers and Pays Tax
Foreign supplier has no presence in India	The foreign supplier itself registers under the Simplified Registration Scheme and pays IGST directly
Foreign supplier has a representative in India	That representative gets registered in India and pays IGST on behalf of the foreign supplier
Foreign supplier has no representative but appoints one	The appointed person in India gets registered and pays IGST on behalf of the foreign supplier

The Simplified Registration Scheme is a single, centralised registration (not state-wise) designed specifically for foreign OIDAR suppliers. It is simpler than the regular GST registration process.

Quick Comparison: OIDAR to a Registered vs. Unregistered Indian Recipient

Aspect	Supply to Unregistered Indian (Non-Taxable Online Recipient)	Supply to Registered Indian Business
Section applicable	Section 14, IGST Act	Normal IGST provisions + RCM
Who pays IGST?	Foreign supplier (or intermediary)	Indian registered recipient (under RCM)
Registration required	Simplified Registration Scheme	No new registration; RCM used
Governed by	Section 14	Section 5(3) / 5(4), IGST Act