Special Considerations for OIDAR (Online Information and Database Access or Retrieval) Services in GSTR-5

The advancement in technology has made it possible for businesses to deliver services from abroad in India through the use of internet. Online Information Database Access and Retrieval services (OIDAR) is a type of service that is provided through the internet to the recipient in India, online without any human intervention. Example-downloading an e-book online by paying some amount.

The IGST Act section 2 (17) defines OIDAR GST Registration as a service mediated by information technology over the internet or an electronic network, involving minimal human intervention and difficult to ensure in the absence of information technology and involves electronic services such as advertising on the internet, providing cloud services, providing e-books, music, software and other intangibles providing data or information, online supplies of digital content, digital data storage and online gambling.

OIDAR GST Registration for  Service Providers

As per section 13(12) of the IGST Act, for any supply to be taxable under GST in India, the place of supply of the service should be in India. Since OIDAR services are supplied in India they come under the purview of taxation here. There are two types recipients in this type of transaction.

Registered Person or Business Entity

When the supplier is located outside India and recipient is a business entity based in India, the reverse charge mechanism is triggered and the recipient who is a registered under GST will be liable to pay this tax by including while filing their returns along with the necessary compliance.

Unregistered Person, Government, or Local Authority

Section 14 states that when the supplier is located outside India and recipient is, Government, local authority or an individual who is not registered under GST in India then the supplier is liable to pay the tax for such supply of services.

Non-Taxable Online Recipient

Non-taxable online recipient is, Government, Local authority or an individual receiving the online information and data access or retrieval services for any purpose other than commerce, industry, or any other business profession in India. In such a case the supplier can take single registration under the Simplified Registration Scheme in form GST REG-10 as per section 14(2) of IGST Act, if they fulfil certain specified criteria. In case there is a representative of the overseas supplier in the taxable territory, he shall register and pay the tax on behalf of the supplier. And if he does not have a representative, he can appoint one.

Filing of Returns for OIDAR Services

Rule 64 of CGST Rules, 2017 states that every registered person providing online information and database access or retrieval services from a place outside India to a non-taxable recipient in India shall file return in form GSTR-5A on or before the 20^th day of the month succeeding the calendar month or part thereof. There is no provision of input tax credit for OIDAR suppliers.  The return filing can be summarized as follows:

• An overseas service provider providing OIDAR services from abroad to a recipient in India, GSTR-5A return is to be filed within the 20^th day of the succeeding month.
• Other categories of OIDAR service providers, returns to be filed in regular form, that is GSTR-1, GSTR-2 or GSTR-3 and annual tax returns as applicable to the respective OIDAR service provider.

Related Post: OIDAR Services Under GST: Understanding Tax Implication And Compliance Guidelines

What is GSTR-5A?

GSTR-5A is a return that every person registered in GST under OIDAR has to file, containing details of the goods or services supplied by the supplier residing outside India to an unregistered person in India. For example, when an unregistered person in India accesses the database of a company in the United States. The service provider has to pay GST and file GSTR-5A. it is a mandatory return and businesses that do not have not supplied any services have to file a nil return. The return can be filed only after payment of the tax amount due.

Due Date for Filing GSTR-5A

Non-resident OIDAR service providers are required to file GSTR-5A by the 20^th day of the succeeding month. For example, the return of August 2023 have to file the return by the 20^th of September 2023.

Pre-Requisites for Filing GSTR-5A

GSTR-5A can be filed online by logging in on the GST portal or through a platform provided by a application software provider. The following are the prerequisites for filing GSTR-5A

• The taxpayer must be registered as an OIDAR service provider
• The taxpayer must have a valid GSTIN, user id and password to login in to the GST portal.

Consequences of Non-filing, Late filing of GSTR-5A

GSTR-5A of the current period cannot be filed if the return of the previous tax period is not filed. A late fee of Rs.50/-per day for normal return and Rs.20/- per day for nil return is applicable if the return is not filed within the due date.

Difference Between GSTR-5 and GSTR-5A

While both GSTR-5 and GSTR-5A is filed by non-resident taxpayers on the 20^th of the succeeding month, GSTR -5 is filed by non-resident taxpayers for providing goods and services or both to persons or entities in India, GSTR-5A is filed by non-resident taxpayers for providing for online services in India for some consideration or revenue.

Also Read: GSTR-5: Everything You Need to Know

Online Filing Procedure for GSTR-5A

The taxpayer can file GSTR-5A online by logging in to the GST portal with his user id and password and selecting the particular return in the Returns dashboard. The taxpayer has to furnish details of outward supplies made to non-taxable persons in India along with the amendments if any of preceding tax periods, interest and any other liabilities due. The online filing process consists of taxpayer furnishing details in 6 tables; the 7^th table gets auto-populated based on the values entered in 5, 5A and 6. The 4 main steps involved are as follows:

Step 1-Tables 1 to 4-GSTIN, Name or name of legal representative (which are auto-populated when user enters GSTIN), month and year of return filing.

Step-2-Involves entering details in various tables as listed below:

• Table 5-Taxable outward supplies to users in India comprising of the tax rate, tax value, details of place of supply, Cess, and integrated tax.
• Table 5A-Modifications to taxable supplies assigned to non-taxable persons in the India for the earlier tax periods.
• Table 6-interest, penalty or any other amount.
• Table 7-Tax, late fee, interest and other charges. Values here are auto-populated based on the values entered in 5, 5A and 6.

Step 3-Preview Draft-The GSTR-5A can be previewed in pdf format.

Step 4- Initiate Filing for GSTR-5A-user has to select the ‘Proceed to File’ option to initiate filing of GSTR-5A. After the payment is made and all liabilities are cleared, the return is filed, the success message is displayed and the taxpayer gets the acknowledgement through SMS and email.

Conclusion

OIDAR or Online Information and Database Access or Retrieval services providers for non-taxable recipients in India are required to register compulsorily in GST and file GSTR 5A within the specified due date. The return can be files only after the liabilities are cleared. So it is important for OIDAR suppliers to understand the rules and procedures in respect of tax payment and compliance under GST.

Also Listen: GSTR 7 in GST: Essential Compliance for TDS Deductibles

Vidya Sagar Freelance Writer

Vidya Sagar has post graduate and Law graduate qualifications. She has worked in the finance industry for many years. She is passionate about writing and keen on writing articles related to tax, accounting, audit, and other finance related topics. She likes to simplify complex financial matters to help her readers understand easily. She reads a lot in her spare time and keeps herself updated with the latest financial news. She likes helping people in all their financial and compliance requirements

See Full Bio

Finance GST Income Tax