What is definition of OIDAR services ? FAQ’s and Taxability in India

By | November 12, 2016
(Last Updated On: January 29, 2017)

OIDAR services

What is the definition of OIDAR services?

Online information and database access or retrieval i.e OIDAR services  have been defined in Service Tax Rules, 1994, rule 2(1)(ccd) to mean services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as,-

  1. advertising on the internet;
  2. providing cloud services;
  3. provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;
  4. providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;
  5. online supplies of digital content (movies, television shows, music, etc.);
  6. digital data storage; and
  7. online gaming

OIDAR services

Who shall be liable to collect and discharge the service tax liability in cases of provision of cross border B2C OIDAR services?

Service providers providing OIDAR services to a non-assesse online recipient in taxable territory would be responsible for collection of service tax and remitting the same to the Government of India. However, the service provider in the non-taxable territory may appoint an agent in the taxable territory who will be person liable for paying service tax

Are all cross border B2C services provided in the taxable territory made taxable with effect from 1stDecember, 2016?

No. Only cross border B2C OIDAR services provided in the taxable territory have been made taxable w.e.f 1st December, 2016. Other cross border B2C services continue to be exempted. Further, cross-border B2B services have been taxable since prior to 1st December, 2016, under reverse charge mechanism.

What is taxable territory?

  • Taxable territory has been defined in section 65B of the Finance Act, 1994 as the territory to which the Finance Act, 1994 applies i.e. the whole of territory of India other than the State of Jammu and Kashmir.
  • “India” includes not only the land mass but its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976; the sea-bed and the subsoil underlying the territorial waters; the air space above its territory and territorial waters; and the installations structures and vessels located in the continental shelf of India and the exclusive economic zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof.

Even though the cross border OIDARservices are being made leviable to service tax with effect from 1st December, 2016, will these services not get exempted by means of any existing exemption?

Vide notification No. 47/2016-ST, the existing exemption [Sl. No. 34(a) of notification No. 25/2012-ST] to services provided by a person located in a non- taxable territory and received by Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession, will not be available for OIDAR servicesreceived by such persons w.e.f 1st December, 2016. OIDAR services have been assigned the same meaning as assigned to it in the clause (ccd) of sub-rule 1 of rule 2 of the Service Tax Rules, 1994 [inserted vide Notification no. 48/2016-ST].

Do OIDAR services include all services mediated by information technology over internet or electronic network?

Using the internet, or some electronic means of communication, just to communicate or facilitate outcome of service does not always mean that a business is providing OIDAR services.

What services would NOT be considered as OIDAR services?

Indicative list of non-OIDAR services

  1. Supplies of goods, where the order and processing is done electronically
  2. Supplies of physical books, newsletters, newspapers or journals
  3. Services of lawyers and financial consultants who advise clients through email
  4. Booking services or tickets to entertainment events, hotel accommodation or car hire
  5. Educational or professional courses, where the content is delivered by a teacher over the internet or an electronic network (in other words, using a remote link)
  6. Offline physical repair services of computer equipment
  7. Advertising services in newspapers, on posters and on television

What type of services will be covered under OIDAR services?

OIDAR services covers services which are automatically delivered over the internet, or an electronic network, where there is minimal or no human intervention. In practice, this can be either:

  1. where the provision of the digital content is entirely automatic eg, a consumer clicks the ‘Buy Now’ button on a website and either:

• the content downloads onto the consumer’s device, or

• the consumer receives an automated e-mail containing the content

  1. where the provision of the digital content is essentially automatic, and the small amount of manual process involved doesn’t change the nature of the supply from an OIDAR service

All ‘electronic services’ that are provided in the ways outlined above are OIDAR services.

Examples of services whether or not OIDAR services


Whether Provision of servicemediated by information technology over the internet or an electronic networkWheter it is Automated and impossible to ensure in the absence of information technology

OIDAR service

Pdf document manually emailed by provider




Pdf document automatically emailed by provider’s system




Pdf document automatically downloaded from site




Stock photographs available for automatic download




Online course consisting of pre-recorded videos and downloadable pdfs




Online course consisting of pre-recorded videos and downloadable pdfs plus support from a live tutor




Individually commissioned content sent in digital form eg,

photographs, reports, medical results




Indicative List of OIDAR services

  1. Website supply, web-hosting, distance maintenance of programmes and equipment;

(a) Website hosting and webpage hosting;

(b) automated, online and distance maintenance of programmes;

(c) remote systems administration;

(d) online data warehousing where specific data is stored and retrieved electronically;

(e) online supply of on-demand disc space.

  1. Supply of software and updating thereof;

(a) Accessing or downloading software (including procurement/accountancy programmes and anti-virus software) plus updates;

(b) software to block banner adverts showing, otherwise known as Bannerblockers;

(c) download drivers, such as software that interfaces computers with peripheral equipment (such as printers);

(d) online automated installation of filters on websites;

(e) online automated installation of firewalls.

  1. supply of images, text and information and making available of databases;

(a) Accessing or downloading desktop themes;

(b) accessing or downloading photographic or pictorial images or screensavers;

(c) the digitised content of books and other electronic publications;

(d) subscription to online newspapers and journals;

(e) weblogs and website statistics;

(f) online news, traffic information and weather reports;

(g) online information generated automatically by software from specific data input by the customer, such as legal and financial data, (in particular such data as continually updated stock market data, in real time);

(h) the provision of advertising space including banner ads on a website/web page;

(i) use of search engines and Internet directories.

  1. supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events;

(a) Accessing or downloading of music on to computers and mobile phones;

(b) accessing or downloading of jingles, excerpts, ringtones, or other sounds;

(c) accessing or downloading of films;

(d) downloading of games on to computers and mobile phones;

(e) accessing automated online games which are dependent on the Internet, or other similar electronic networks, where players are geographically remote from one another.

(5) supply of distance teaching.

(a) Automated distance teaching dependent on the Internet or similar electronic network to function and the supply of which requires limited or no human intervention, including virtual classrooms, except where the Internet or similar electronic network is used as a tool simply for communication between the teacher and student;

(b) workbooks completed by pupils online and marked automatically, without human intervention.

Read Complete FAQ on Withdrawal of Service tax exemption on cross border B2C OIDAR services

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