TDS ON OIDAR SERVICES FOR SERVICE RECEIVER
What is OIDAR services :
OIDAR full form is Online Information Database Access and Retrieval Services (OIDAR) : As the Full form is defining itself that includes services related to Online information database Services including storage of database, access of database, the transformation of the database, retrieval of the database through cloud server which can be online server or offline server.
So in Summary, OIDAR is a category of services provided through the medium of the internet or through cloud and received by the service receiver through online without having a physical interface with the supplier of services.
Examples of OIDAR services:
- Providing of Hosting Services (Cloud-based hosting)
- Provision of e-books, movies, music, and videos like Hotstar, Amazon Prime,
- Online Gaming Service
So lets discuss about taxation of OIDAR services.
Taxation Aspects for Service Receiver.
Mostly OIDAR Services are provided outside India. So Many Indian organizations and individuals are services receivers of OIDAR Services like Hosting services provided by Digital Ocean.
TDS on OIDAR Services
So it will be deemed as an Import of Services. As per provisions of TDS, On import of services TDS is required to be deposited under section 195 @10% on the payment made to Non-Resident Services provider.
Nowadays because of Indian government regulations all OIDAR Services provider has to take Indian PAN registration
For example, if you are paying hosting charges of 100 $ i.e. Rs. 7500/-. So you have to deposit 10% i.e. Rs. 750/- on import of services under section 195.
Some OIDAR services providers also give credit or refund of TDS deposited if you provide them Form 16 each quarter as DIGITAL OCEAN provide credit of TDS deposited on payment of TDS on their PAN and provide them form 16.
GST on OIDAR Services
As a Service Receiver of OIDAR services, GST has to be deposited on OIDAR services under Reverse Charge Mechanism. The service Receiver should pay IGST on OIDAR services if the Service receiver is registered in GST as a taxable person.
On payment of GST on Reverse Charge Mechanism, Service receiver can take the Input tax credit in next month or next quarter in GSTR-3B.