India’s OIDAR Taxation Shift- Key Changes Effective October 1 ( September 29, 2023 )

India’s recent tax policy change, effective from October 1, 2023, ends the Goods and Services Tax (GST) exemption for overseas online information and database access retrieval (OIDAR) providers offering services for non-business purposes.

Tech giants like Facebook and Google will now face up to 18 percent integrated GST (IGST) on their services, irrespective of personal or business use. This change broadens the tax scope, increases compliance challenges, and mandates database maintenance for service providers.

For smaller enterprises, especially in edtech and subscriptions-based, staying abreast of these changes, ensuring compliance, and adapting their operations to align with new tax regulations will be crucial. 

• In a significant move, India has decided to end the Goods and Services Tax (GST) exemption enjoyed by overseas online information and database access retrieval service (OIDAR) providers offering services for non-business purposes. This change, which comes into effect from October 1, 2023, means that companies such as Facebook, Google, and various edtech platforms will face an integrated GST (IGST) of up to 18 percent on their services provided to both individuals and the government.

Until this recent change, OIDAR services provided by overseas companies to the Indian central government, state governments, government authorities, or individuals for non-business purposes were exempt from taxation. However, with this amendment, OIDAR services will now be subject to taxation, regardless of whether they are used for personal or business purposes.