Currently, Online/ electronic B2C service Providers located
outside the taxable territory providing such services in taxable territory to Govt. , Local Auth., Govt. Auth., or an Individual
in relation to any purpose other than commerce, industry or any other business
or profession are exempted.
I. EXEMPTION WITHDRAWN
- Cross Border Online/ Electronic B2C Services Shall Be Taxable w.e.f. December
1, 2016.
With the objective of enhancing, the competitiveness of Indian
Service Providers providing taxable B2C Services (OIDAR Services) including
electronic/online services in India, the earlier exemption to Foreign Service providers
vide "Entry No. 34(a) of the Mega Exemption Notification" located in
foreign territory & providing such services in India has been withdrawn
w.e.f. 1st December 2016 as per the following notifications.
As per Notification No.
46/2016-ST, 47/2016-ST, 48/2016-ST, 49/2016-ST, all dated 9th November 2016, Service
Tax shall be charged on:
i. B2C Services provided by any person located in non taxable
territory, &
ii. Received by Government, Local Authority, Governmental
Authority or an Individual for any
purpose other than Commerce, Industry
or any other Business & Profession w.e.f.
December 1st, 2016.
II. Amendments in Point Of Provision Rules, 2012:
i. Earlier Provisions: As per POP Rules 2012, for OIDAR
Services, the place of supply of such services
shall be the location of service provider, if Location of service receiver is
not available in ordinary
course of business.
Thus, as per current
provisions, B2C services provided by a Foreign Service provider in India shall be deemed to be provided at the
place at which Service Provider is located. Therefore,
these services were outside the purview of Service Tax.
ii. Amended Provisions: Now, the POP Rules, 2012 has been amended vice
notification no. 46/2016-ST to
provide that " in case of services other than
"Online Information & Database Access
or Retrieval / B2B Services" , where
the location of service receiver is not available in ordinary course of business, the place of provision shall be the
location of provider of service, thereby
bringing the Online B2C services under the purview of Service Tax.
III. Service Provider Liable to Pay Service Tax: As per
Notification No. 48/2016-ST dated November 9, 2016, Service provider located in
non-taxable territory providing online/electronically B2C services to "non
assessee online recipient", only such service provider shall be liable to
pay Service Tax under Reverse Charge
Mechanism in the following cases:
Case I: Intermediary
Liable to Pay Service Tax - Where the
service provider located in Foreign
Territory provides services through an Intermediary, then such intermediary
shall be deemed to be receiving
such services from such Foreign Service Provider & providing such services to " Non Assessee Online
Recipient", then such Intermediary shall be shall be deemed to be the person liable to pay Service
Tax.
Case II: Authorized
Representative - Where the Foreign Service Provider is
represented in India by any
person for any purpose, then such person shall be liable to pay service Tax.
Case III: Appointment of Authorized
Representative - If a service provider in non-taxable territory does not have any physical presence
or does not have a representative in Taxable territory,
then the Service Provider may appoint a person in taxable territory for the
purpose of Paying Service
Tax & such person shall be liable for paying Service Tax.
Meaning of Non-Assessee Online Recipient: A recipient of OIDAR
Services shall be deemed to be a non-assessee online recipient if such
person does not have Service Tax Registration under
Service Tax Rules.
IV. Forms For
Registration under Service Tax for Persons Liable to Pay Service Tax in case of
OIDAR Services:
i. FORM ST-1A: Application for
registration under Service Tax.
ii. FORM
ST-2A: Certificate of registration under Section 69 of Finance Act.
iii. FORM ST-3C: Return u/s 70 of Finance
Act, read with Rule 7 of Service Tax Rules,
W.r.t. OIDAR Services provided or agreed to be
provided by a person located in non-taxable territory
to a person located in taxable territory.
Further, a new Proviso has been inserted in rule 4A (1) of Service
Tax Rules prescribing invoicing details for Foreign Service Providers.
V. Amendment in
Reverse Charge Notification: The reverse Charge Notification has
been amended vide Notification No. 49/2016-ST dated November 9, 2016 prescribing
the Service Tax Payment & Procedure thereunder on the service provider
located in Non-Taxable Territory with respect to OIDAR Services provided or
agreed to be provided in taxable territory to " Non-Assessee Online
Recipient w.e.f. December 1, 2016"
VI. Meaning of Online Information & Database Access or Retrieval
Services:
OIDAR/ B2C
Services means those services whose delivery is mediated over:
i) Internet or
Electronic Network, which renders them essentially automated with minimum human
intervention
& whose supply is impossible in the absence of
Information Technology.
OIDAR/ B2C services
includes the following:
i) Advertising on the
internet.
ii) Cloud Services/
Digital Data Storage.
iii) E-Books,
E-Movies, E-Music, softwares
iv) Online gaming.
Compiled by Tanveer Alam
