To foreign companies providing services such as advertising, cloud-based services, music, and information to non-GST-registered individuals in the country, they will have to pay GST. The compliance burden for these service providers is likely to increase significantly as they have to register for GST, remit taxes, and file returns.
The move follows the Finance Act, 2023, which amendment of the GST Act to expand the definition of non-taxable online recipient to broaden the scope of Online Information and Database Access or Retrieval Services. A non-taxable online recipient would include any unregistered person receiving OIDAR services, regardless of purpose, and located in India's taxable territory.
Services from OIDAR providers in non-taxable territory were exempted until now, when they were received by central government, state government, government authorities or individuals for any purpose other than business. This exemption has been abolished from October 1.
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