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India GST on foreign digital services

Non-resident providers of digital or electronic services to Indian consumers become liable to its Integrated Goods and Services Tax (‘IGST’ or ‘GST) from 1 July 2017.  There is a simplified OIDAR registration process should be used. There is no obligation to appoint a Fiscal Representative. For B2B transactions, zero-rating reverse charge should be used. Marketplaces have a separate 2% Withholding GST regime

The current GST rate in India is 18% for most digital services. From April 2020, India has extended its non-resident equalisation levy to e-commerce sellers and marketplaces. VAT Calc’s global VAT and GST on digital services tracker keeps a live report on countries’ plans to tax electronic services to consumers.

What digital services are liable to Indian GST?

India classifies ‘Online information database access and retrieval’ (OIDAR) services as liable to GST. This would include income from the following type of services:

Website hosting and data storage

  • Images
  • E-books, journals and newspapers
  • Advertising
  • Search engines
  • Automated e-learning
  • Cloud, SaaS and downloaded software
  • Download or streaming media
  • Gambling and games of chance

Determining if IGST is due

India requires providers to determine if the place of supply of the digital services is India. This is based on the residency of the consumer and/or where they access the service. Providers may rely on the following examples of information:

  • Billing address
  • IP address of the device uses
  • SIM card location
  • Country code telephone line
  • Address of payment method (bank, credit card etc)

GST registration – OIDAR for digital services

Simplified OIDAR registration may be completed online, and there is no requirement for the regular non-resident Permanent Account Number application. Registration for IGST is made with the Commissioner of Central Tax directly or via an agent.

Full invoices are only required for supplies exceeding INR 200. There is no obligation to appoint a local tax agent. Once registered, summary form GSTR-5A returns are generally filed on a monthly basis for OIDAR registered businesses. This return should be filed with the GST due by the 20th of the following month.

Marketplace Withholding 1% Tax Deducted at Source

E-commerce operators of marketplaces and similar electronic platforms are obliged to withhold 1% Tax Deducted at Source – a type of withholding income tax – on payments made via them to their third-party providers (or sellers of good). This requirement do not apply if all of the following terms are met:

  • Invoice identifies the original provider
  • Intermediary does not
    • collect the income
    • Set the T&C’s
    • Does not authorise the access/use to the service

Preparing Indian GST returns can be complex.  VAT Calc’s single platform VAT Filer can correctly complete any country filings with verified VAT or GST transactional data from our VAT Calculator or VAT Auditor services.

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