As of October 1, foreign companies providing online services like advertising, cloud services, music and information to non-GST-registered individuals will have to pay goods and services tax. However, the compliance burden for these service providers will increase significantly as they need to register for GST, remit taxes, and file returns.
The move follows the Finance Act, 2023, which amendments the Integrated 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 the purpose, and located in India's taxable territory.
Until now, services from OIDAR providers located abroad in non-taxable territory and received by central government, state government, government authorities or individuals for any purpose other than business was exempted. This exemption has been removed from effect from October 1, the authority said in a statement.
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