Circular No. 202/12/2016-Service Tax
F.No. 354/149/2016-TRU
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
Dated the 9
th
November, 2016
To,
Principal Chief Commissioners of Customs and Central Excise (All)
Principal Chief Commissioners of Central Excise & Service Tax (All)
Principal Director Generals of Goods and Service Tax/System/CEI
Director General of Audit/Tax Payer Services
Principal Commissioners/ Commissioners of Customs and Central Excise (All)
Principal Commissioners/Commissioners of Central Excise and Service Tax (All)
Principal Commissioners/Commissioners of Service Tax (All)
Principal Commissioners/Commissioners LTU/Central Excise/Service Tax (Audit)
Madam/Sir,
Subject: - Withdrawal 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.
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 9
th
November, 2016. These notifications shall come into force with effect from 1st December 2016, whereby service tax would
be chargeable on online information and database access or retrieval [ OIDAR ] services provided by any person located in
non-taxable territory and received by Government, local authority, governmental authority, or an individual in relation to any
purpose other than commerce, industry or any other business or profession [ cross border B2C (business to consumer)
OIDAR services provided in taxable territory ]. Online information and database access or retrieval [ OIDAR ] services have
been re-defined in Service Tax Rules, 1994 to include electronic services. In this regard, there may be many questions in the
mind of service providers in the non-taxable territory, recipients in the taxable territory and other stakeholders, in respect of
various aspects pertaining to the taxation of such services. Accordingly, the following clarifications are issued:-
Sl.
No.
Issue Clarification
1. 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.
2.
What do we mean by
cross border B2C
services provided in
the taxable territory?
It means those services where the service provider is in non-taxable territory and the service
recipient is 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 (located in the
taxable territory in India) and the 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
OIDAR services
provided in taxable
territory in India?
Cross border B2C OIDAR services means online information and database access or
retrieval services provided by a person located in non-taxable territory to a non assesse
online recipient in taxable territory in India.
Non assesse online recipient has been defined in Service Tax Rules, 1994 [rule 2(1)(ccba)]
to mean Government, a local authority, a governmental authority or an individual receiving
OIDAR services in relation to any purpose other than commerce, industry or any other
business or profession, located in taxable territory [notification No. 48/2016-ST refers].
6.
Is there any
change
regarding cross
bo rder B2B
[business to
business]
services
provided in
India?
Will the cross
border B2B
OIDAR services
provided in
taxable territory
in India to a
business entity
be taxed under
forward charge
or reverse
charge?
No. The current dispensation of taxing cross border B2B services under reverse charge
mechanism i.e. the recipient business entity pays service tax, continues.
Cross border OIDAR services provided in taxable territory in India to a business entity will
be taxed under reverse charge i.e. the business entity receiving the services will pay tax
under reverse charge.
7.
Service recipient in taxable territory receiving cross border B2C
services
Service
Taxable/
Exempted
Taxing
Mechanism
Person
liable to
pay tax
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
OIDAR
Taxable
[w.e.f.
01.12.2016]
Forward
charge
Service
provider
in non-
taxable
territory
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
Other
than
OIDAR
ExemptedExemptedExempted
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?
1. 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.
2. 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,-
i. 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].
ii. to amend proviso of rule 3 of PoPSR so as to make the proviso inapplicable to OIDAR
services.
iii. to omit the clause (b) of rule 9 of PoPSR .
2. As a result, default rule 3 of PoPSR will be applicable in such cases from 1st December,
2016, whereby the place of provision of a service is the location of recipient of services i.e.
cross border B2B/B2C OIDAR services received by a person located in taxable territory
will be leviable to service tax in the taxable territory. In order to avoid any confusion, the
existing proviso to rule 3 of PoPSR has been made inapplicable for OIDAR services
10.
Even though the cross
border OIDAR
services 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 services received 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].
11. What is the definition
of OIDAR services?
Online information and database access or retrieval [ 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,-
i. advertising on the internet;
ii. providing cloud services;
iii. provision 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. S upplies of goods, where the order and processing is done electronically
ii. S upplies of physical books, newsletters, newspapers or journals
iii. S ervices of lawyers and financial consultants who advise clients through email
iv. B ooking services or tickets to entertainment events, hotel accommodation or car hire
v. E ducational 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)
vi. O ffline physical repair services of computer equipment
vii. A dvertising services in newspapers, on posters and on television
14.
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:
i. 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 consumers device, or
the consumer receives an automated e-mail containing the content
ii. where the provision of the digital content is essentially automatic, and the small amount of
manual process involved doesnt change the nature of the supply from an OIDAR service
All electronic services that are provided in the ways outlined above are OIDAR services.
15.
Examples of services whether or not OIDAR services
Service
Whether Provision of service mediated
by information technology over the
internet or an electronic network
Wheter it is Automated and
impossible to ensure in the
absence of information
technology
OIDAR
service
Pdf document manually emailed by
provider
Yes No No
Pdf document automatically emailed
by providers system
Yes Yes Yes
Pdf document automatically
downloaded from site
Yes Yes Yes
Stock photographs available for
automatic download
Yes Yes Yes
Online course consisting of pre-
recorded videos 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
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.
2. 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.
3. 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.
4. 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.
17.
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.
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 the following
conditions, namely :-
1. the invoice or customers bill or receipt issued or made available by such intermediary
taking part in the provision clearly identifies the service in question, its provider in non-
taxable territory and the service tax registration number of the provider in taxable territory;
2. the intermediary involved in the provision does not authorise the charge to the customer or
take part in its charge i.e. intermediary neither collects or processes payment in any manner
nor is responsible for the payment between the non-assesse online recipient and the
provider of such services;
3. the intermediary involved in the provision does not authorise delivery;
4. the general terms and conditions of the provision are not set by the intermediary involved in
the provision but by the service provider:
Thus, in the context of cross border B2C OIDAR services provided to individual consumers, either
the underlying supplier of services or the intermediary/digital platform operator, depending on
who is seen to be providing the electronic services, would be required to collect service tax from
consumers and remit the tax to the Government.
When the service provider in non-taxable territory is represented for any purpose in taxable
territory by a person, then such person is deemed to be the person liable for paying service
tax [notification No. 48/2016-ST refers].
19.
What is the
aggregator model in
the context of the
cross-border provision
of electronic services
in the B2C context?
If the electronic market place owner enables a potential customer to connect with persons
providing service of a particular kind under the brand name or trade name of the market place
owner, he is covered under the aggregator model. The aggregator is either required to have a
physical presence in India or is required to appoint a person in India to discharge the compliance
liability on his behalf.
20.
If the owner of market
place is acting merely
as an intermediary, is
he liable to register
and pay service tax? If
not, then on whom
does this liability rest?
If the intermediary successfully establishes that he is merely an intermediary by satisfying the
conditions as discussed at Sl. No. 18 above, the actual provider 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 effect to the above, a proviso
has been inserted in the Service Tax Rules in Rule 2 (1) (d) (ii) [notification No 48/2016-ST
refers].
22.
Please give an
example where the
intermediary is the
person liable to pay
service tax.
For example, a business, which provides the applications through its website would be deemed
to be providing these applications to the final customer if any of the conditions mentioned at Sl.
No. 18 are not fulfilled. Therefore business providing the applications through its website would
be responsible for taking registration with CBEC and paying service tax and not the business that
owns/makes the applications (content owner).
23.
Please give an
example of service
procured from
individual or market
place?
In some instances, the service may be supplied directly by the owner of the electronic content to
the final consumer. For instance, an individual purchases a song directly from an independent
artist via his or her website. Such owner shall be responsible for taking registration and payment
of service tax. Other situations may involve transactions between multiple intermediaries. For
instance, in the case of a ring tone, the content owner may enter into a licensing agreement with
an aggregator of ring tones who in turn enters into agreements with mobile telecom providers that
provides these ringtones to their mobile customers. Here, telecom operator shall be responsible
for taking registration and collection of service tax from customers and payment of the same to
the Government of India. Similar arrangements exist when creators of applications contract with
applications stores or platforms from where customers purchase these applications by paying to
the store or the platform via which the applications was bought . Here, application store or
platform shall be responsible for taking registration and collection of service tax from customers
and payment of the same to the Government of India.
24.
Who is considered as
not taking part in
providing the service
of OIDAR services?
In the following situations, taxable persons involved in the provision of service of online
information and database access or retrieval services cannot be deemed as taking part in the
said provision:-
i. 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 mobile operator takes part in the cross-border
provision of service is to verify whether the network is essential for the provision of the said
service. Another possible point is to verify whether the payment collection covers only a
simple charge to a bill.
iv. There is no doubt that where an application store or a portal puts up such electronic service
for supply, it must be seen as predominantly involved in the provision of that service and it
should therefore be regarded as taking part in the supply. The fact that there is an additional
intermediary taking part in that supply who is placed between the app store or portal and the
final customer ( e.g. a mobile operator), does not automatically change the situation of the
app store or portal.
25.
What would be the
basis to determine
whether a person is
taking part in the
provision of cross-
border online
database service?
In order for a taxpayer or a tax authority to determine whether a person is taking part in the
provision of online information and database access or retrieval services provided through a
telecommunications network, an electronic interface or a web portal, the facts and the nature of
the contractual relations need to be examined. If there is a contradiction between contractual
arrangement and economic reality, then the latter will prevail . This means that even though there
is contract to the contrary but the intermediary involved in the supply authorises the charge to the
customer or takes part in its charge i.e. intermediary collects or processes payment in any
manner and is responsible for the payment between the non-assesse online recipient and the
supplier of such services. Further, the intermediary involved in the supply does authorise delivery
of online information and database access or retrieval services;
26.
Whether registration of
the service provider
would be mandatory?
Registration of suppliers of cross border B2C OIDAR services in India is mandatory in India. If the
service provider does not have a physical presence in India, then he can appoint an authorized
person/agent to comply with the service tax laws and remit tax to the Government. In case the
service provider is represented by authorized person or agent, such person may be allowed to
take registration on behalf 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 :-
1. the location of address presented by the service recipient via internet is in taxable territory;
2. 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;
3. the service recipients billing address is in the taxable territory;
4. the internet protocol address of the device used by the service recipient is in the taxable
territory;
5. the service recipients bank in which the account used for payment is maintained is in the
taxable territory;
6. the country code of the subscriber identity module (SIM) card used by the service recipient
is of taxable territory;
7. the location of the service recipients fixed land line through which the service is received by
the person, is in taxable territory.
Further, the person in the taxable territory receiving such services shall be deemed to be non-
assesse online recipient if such person does not have a service tax registration in the taxable
territory.
[notification No.48/2016-ST refers]
28.
Which authority will be
the administrative
authority under CBEC
for the purposes of
administration of cross
border OIDAR
services provided to
non-assesse online
recipient in taxable
territory?
Large Taxpayer Unit, Bengaluru (LTU-Bengaluru) under the Central Board of Excise and
Customs (CBEC) would be the administrative authority for the purpose of administration of
service provider in non-taxable territory providing cross border OIDAR services provided to non-
assesse online recipient in taxable territory.
29. What is procedure of
registration?
First down load firefox software.
Go to site https://www. aces .gov.in/ It will open home page for ACES. Click Service Tax. It will
open login window. Click on new user to click here. Fill in the details such as user ID (which you
want), name, mobile number, email etc. It will generate user ID and password, which shall be
delivered on e-mail provided. Login again with login ID and password. Complete registration
formalities in Form ST 1A and submit. It will generate non-PAN based registration number and
acknowledgment. Registration in FORM ST 2A shall be deemed to be issued from the date of
application. Download and keep it. Physical registration shall be delivered in PDF format by
email/post.
30.
How registration would
be granted in absence
of PAN? What is
PAN?
Special registration procedure is being provided, which will be based on country
code/registration/business number obtained by such service provider in the country of
incorporation. This details of this procedure would soon be available on cbec.gov.in.
PAN (Permanent Account Number) is a ten-digit alphanumeric number allotted by Income Tax
Department of Government of India.
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 Rs 10
lakhs should apply to
such transactions?
Service providers in non-taxable territory may seek registration under rule 4 of the Service Tax
Rules, 1994 in form ST 1A, within 30 days from 1
st
December, 2016, if they crossed threshold of
Rs.10 lakh in the previous financial year, i.e, in 2015-16 for provision of any taxable service in
India and service tax liability would arise after crossing the threshold.
34.
Whether such services
would be considered
as non-taxable
services for the
previous years and
benefit of Rs.10 lakh
would be available in
current financial year?
One of the conditions for availing small scale exemption [notification No. 33/2012-ST refers] is
that the aggregate value of taxable services rendered by a provider of taxable service from one or
more premises, does not exceed ten lakh rupees in the preceding financial year. Cross border
B2C services were taxable. However, such services when provided by a person in non-taxable
territory to non-assesse online recipient were exempted. If total turnover of such services crossed
Rs.10 lakh in previous year, the small exemption benefit would not be admissible.
35.
Most of the online
services are branded
services. Whether
small scale exemption
would be available to
the said service
providers?
Small scale exemption is not applicable to taxable services provided by a person under a brand
name or trade name, whether registered or not, of another person. [notification No. 33/2012-ST
refers]
[Brand name or trade name has been defined in the said notification to mean a brand name or a
trade name, whether registered or not, that is to say, a name or a mark, such as an invented word
or writing, or a symbol, monogram, logo, label, signature, which is used for the purpose of
indicating, or so as to indicate a connection, in the course of trade, between a service and some
person using the name or mark with or without any indication of the identity of that person.]
36.
How would the service
provider in non-taxable
territory compute the
value of his/her
turnover in Indian
rupees?
The value of taxable service would be calculated on the basis of the rate of exchange, which shall
be the applicable rate of exchange as per the generally accepted accounting principles on the
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 appropriately. The information that is
available to service provider in the course of their normal business activity would be relied upon.
This would be limited to the type of service, the date of the service, the service tax payable and
the information used to determine the place where the customer has her usual residence.
40.
What are the
provisions relating to
invoice?
In case of online information and database access or retrieval services provided or agreed to be
provided in taxable territory by a person located in the non-taxable territory, an invoice, a bill or, as
the case may be, challan shall include any document, by whatever name called, whether or not
serially numbered, but containing name and address of the person receiving taxable service to
the extent available and other information in such documents as required under sub -rule (1) of
rule 4A of the Service Tax Rules, 1994. [notification No.48/2016-ST refers]
41.
When does the liability
of service provider
located in non-taxable
territory arise? How
would he/she pay the
tax?
The liability to pay service tax is determined under Point of Taxation Rules, 2011. On or after 1
st
December, 2016 service provider would charge total tax of 15% [Service tax 14%+ Swachh
Bharat Cess 0.5% + Krishi Kalyan Cess 0.5%] along with consideration for online information and
database access or retrieval services. This tax shall be deposited with the Central Government by
the 6th day of the following month in which service was provided. Duty may be deposited
electronically through internet banking on web site https://www. aces .gov.in/ .
42.
What evidence would
the service provider
have that he/she has
paid his/her tax?
The service provider is required to visit the website https://www. aces .gov.in/ for paying his/her
tax. She would be required to opt for e-payment. As on date e-payment facility is available with
respect to Indian banks only. On electronic payment of service tax, a challan will be generated
which will be the proof of having made the service tax payment.
43.
Whether the service
provider is allowed to
appoint a
representative to
discharge his/her
liabilities and
responsibilities?
It has been 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 Officer - TRU at abhishek.gupta81@nic.in , Ph. 011-23095547.
46.
Which authority is
mandated to collect
the service tax for the
Government of India?
CBEC is mandated to collect the service tax for the Government of India. All details regarding
policy, rules, regulations, notifications etc are available at
http://www.cbec.gov.in/ .
CBEC is a part of the Department of Revenue under the Ministry of Finance, Government of India.
CBEC deals with, inter alia , the tasks of formulation of policy concerning levy and collection of
Customs & Central Excise duties and Service Tax, prevention of smuggling and administration of
matters relating to Customs, Central Excise and Service Tax.
3. All concerned are requested to acknowledge the receipt of this circular. Efforts should be made to identify service providers
located in non-taxable territory providing cross border B2C OIDAR services in taxable territory by taking help of
advertisements of such service providers appearing in newspapers, internet websites, social networking platforms etc.. Details
of such service providers located in non-taxable territory should be intimated to Principal Commissioner, LTU-Bengaluru and
such service providers should be contacted through email and informed about the service tax liability and compliance
mechanism.
4. Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version would follow.
Yours faithfully,
(Dr.Abhishek Chandra Gupta)
Technical Officer (TRU)
email:- abhishek.gupta81@nic.in
Telephone: +91 11 23-95547
For Point of Taxation rules, 2011 (as amended), Click here
