TMI BlogWithdrawal of exemption from service tax on cross border B2C OIDAR services provided online/electronically from a non-taxable territory to consumers in taxable territory in India-reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable territory in India-reg. At present services received in taxable territory in India from outside the taxable territory 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 are exempted [cross border B2C (business to consumer) services provided in taxable territory]. On the other hand, services received by other persons in taxable territory from non-taxable territory [cross border B2B (business to business) services] are taxable under reverse charge i.e. service recipient in taxable territory pays tax. Further, in view of Place of Provision of Service Rules, 2012 rule 9(b) , with respect to online information and database access or retrieval services [OIDAR], the place of supply is location of service provider and thus such cross border B2B/B2C services provided by a person in non-taxable territory and received by a person in taxable territory are outside the levy of service tax. 2. In this context, kind attention is invited to notification No. 46/2016-ST , 47/2016-ST , 48/2016-ST and 49/2016-ST all dated 9th November, 2016. These notifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of provision of such services as determined by the application of Place of Provision of Service Rules, 2012 , is in the taxable territory in India. 3. Are all cross border B2C services provided in the taxable territory made taxable with effect from 1 st December, 2016? No. Only cross border B2C OIDAR services provided in the taxable territory have been made taxable w.e.f 1 st December, 2016. Other cross border B2C services continue to be exempted. Further, cross-border B2B services have been taxable since prior to 1 st December, 2016, under reverse charge mechanism. 4. Do OIDAR services have the same meaning as defined in the Place of Provision of Service Rules, 2012 ? If no, what do we mean by OIDAR services? No. The existing definition of OIDAR services given in PoPSR , 2012 [ clause (l) of rule 2 ] has been redefined to assign the OIDAR services 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 ]. 5. What do we mean by Cross Border B2C O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exempted Exempted Other than 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 All including OIDAR Taxable Reverse Charge Service recipient in taxable territory 8. What are the changes made in statutory/legal provisions and when are these coming into effect? Notification Nos. 46/2016-ST , 47/2016-ST , 48/2016-ST and 49/2016-ST have been issued on 9th November, 2016 to effect these changes. These changes will however, come into force with effect from 1 st December, 2016. 9. What are the changes made in the Place of Provision of Services Rules, 2012 [ PoPSR ] and what are its implications? 1. Vide notification No. 46/2016-ST, the Place of Provision of Services Rules, 2012 [ PoPSR ] are being amended with effect from 1 st December, 2016,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of e-books, movie, music, software and other intangibles via telecommunication networks or internet; iv. providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network; v. online supplies of digital content (movies, television shows, music, etc.); vi. digital data storage; and vii. online gaming. 12. 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. 13. What services would NOT be considered as OIDAR services? Indicative list of non-OIDAR services i. Supplies of goods, where the order and processing is done electronically ii. Supplies of physical books, newsletters, newspapers or journals iii. Services of lawyers and financial consultants who advise clients through email iv. Booking services or tickets to entertainment events, hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os and downloadable pdfs Yes Yes Yes Online course consisting of pre-recorded videos and downloadable pdfs plus support from a live tutor Yes No No Individually commissioned content sent in digital form eg, photographs, reports, medical results Yes No No 16. Indicative List of OIDAR services 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. Supply of software and updating thereof; (a) Accessing or downloading software (including procurement/accountanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollect 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. 18. When will the liability to collect and discharge service tax for providing cross border B2C services in taxable territory, be on an intermediary/electronic platform and not on service provider in the non-taxable territory? When an intermediary located in the non-taxable territory including an electronic platform, arranges or facilitates provision of cross border B2C OIDAR service but does not provide the main service on his account, the intermediary shall be deemed to be receiving such services from the service provider in non-taxable territory and providing such services to the non-assesse online recipient except when such intermediary satisfies all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider of OIDAR services in non-taxable territory shall be required to register and discharge service tax liability. If intermediary does not satisfy the said conditions, the intermediary will be deemed to be receiving and providing cross border OIDAR services in taxable territory and thus liable for collecting service tax from consumers in taxable territory and depositing with the Government of India. However, the intermediary services provided by such intermediary (as defined under Provision of Place of Service Rules) for which it charges fee from the service provider will continue to be non-taxable, provided the intermediary falls in non-taxable territory. 21. Is there any deeming provision for the provider of online information and database access or retrieval services/electronic services? There is a presumption that for each transaction in the supply chain between an OIDAR services/electronic services provider and the end consumer, each intermediary (such as a content aggregator) is deemed to have received and provided the said service provided the conditions discussed at Sl. No. 18 above are not satisfied. To give effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . provider of payment services (e.g. a credit card company) is not deemed as taking part in the provision of the said service to the final customer if that provider only processes the payment. ii. The internet provider is not taking part in the provision of the said service when he is only making the internet network available for carrying of the content and/or collection of payment (via wi-fi, cable, satellite, other). iii. In cases where a mobile operator only performs the functions of carrying the content and/or processing the payment (in the same way that an internet provider makes the internet network available), that mobile operator should be treated in the same way and not as providing the said service of online information and database access or retrieval services. If, however, a mobile operator is involved in any way other than that described above (carrying of the content or processing of payment) his participation cannot be disregarded. In other words, his involvement in the provision of the service would then become sufficiently predominant and therefore he should be seen as taking part in the supply. One of the tests which should help to identify whether a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of service provider and comply with all service tax provisions on behalf of such service provider. 27. How can the service provider located in non-taxable territory providing cross border OIDAR services, identify that the service recipient is in taxable territory and whether the service recipient in taxable territory is non-assesse online recipient or not? Person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied, namely :- the location of address presented by the service recipient via internet is in taxable territory; the credit card or debit card or store value card or charge card or smart card or any other card by which the service recipient settles payment has been issued in the taxable territory; the service recipient s billing address is in the taxable territory; the internet protocol address of the device used by the service recipient is in the taxable territory; the service recipient s bank in which the account used for payment is maintained is in the taxable territory; the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. Whether the application for registration and other documents would be required to be submitted in physical form? Documents, such as copy of certificate of registration/incorporation would be accepted in PDF format, which may be forwarded to the authority granting registration via Email. Further, a simple declaration by the service provider stating and affirming that they would charge service tax from the individual customers in India and deposit the same with Government of India through internet is required. 32. How to deposit service tax and file service tax returns? Payment of service tax would be made online as in case of other resident service providers in the taxable territory electronically through internet banking on web site https://www.aces.gov.in/ . Such service providers would file ST-3C returns online as done by other service providers located in India electronically through internet banking on web site https://www.aces.gov.in/ .. 33. Whether threshold exemption of ₹ 10 lakhs should apply to such transactions? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date when point of taxation arises in terms of the Point of Taxation Rules, 2011 [Rule 11 of Service Tax Rules ]. The point of taxation (or tax point, as it is called in certain jurisdictions) in the instant case would generally be earliest of the following three events of issuance of invoice or receipt of payment or completion of provision of service. 37. Whether the foreign supplier would be eligible for input tax credits? No 38. Whether the individual consumer of cross border service necessarily has to be an Indian resident for the service tax liability to arise? No. It is not necessary for the service recipient to be an Indian resident for the service tax liability to arise. The person in taxable territory receiving such services should satisfy any two of the non-contradictory conditions specified in Sl. No. 27 above. 39. What are the requirements of record keeping? The data to be recorded would be limited to what is required to satisfy that the tax for each provision of service has been charged and accounted for app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that in case of OIDAR services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, any person located in taxable territory representing such service provider for any purpose in the taxable territory shall be the person liable for paying service tax [ notification No.48/2016-ST refers]. 44. How many returns are required to be filed and what is the frequency of returns? The taxable person shall submit a half-yearly return in Form ST-3C electronically for the months covered in the half-yearly return by the 25th of the month following the particular half-year. 45. In case of doubt who should you correspond with? Any issues or doubts which may arise or any omission/error observed may kindly be brought to the notice of Shri Ram Tirath, Member (Budget), Phone No.011-23094788, Sh. Amitabh Kumar Joint Secretary (TRU-II), at amitabh.kumar@nic.in Phone Number 011-23093027, Dr. Somesh Chander, Director at somesh.chander@nic.in , Phone No. 011-23095522, or Dr. Abhishek Chandra Gupta, Technical Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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