Whether commission retained by an overseas freelance marketplace is consideration for OIDAR service or intermediary service under the IGST Act?

[Mith Moh]

ABC, a company incorporated outside India, operates an online marketplace connecting Indian freelancers with overseas clients similar to platforms like Upwork, Fiverr etc. The platform enables freelancers to create profiles, list their services, communicate with clients, execute contracts, deliver work digitally, receive payments through an escrow/payment mechanism, and obtain invoices through the platform.

ABC does not charge any fee for registration, profile creation, or listing services. Instead, it deducts a commission (e.g., 10% of the contract value) only when a contract between the freelancer and the client is successfully concluded and payment is received. Separate invoices are generated by ABC on the freelancer for the commission retained in addition to main invoice which is between freelancer and client.

1. Can the commission retained by ABC be regarded as consideration for an OIDAR service under the amended definition in Section 2(17) of the IGST Act OR does the fact that ABC also facilitates the underlying supply necessarily result in its classification as an intermediary service, or can OIDAR be regarded as the more appropriate classification for the purpose of determination of place of supply prior to 30.03.2026?

Whether place of supply is determined by Section 13(2)(b) or 13(12) of IGST act prior to 30.03.2026?

AI Summary

Online marketplace commission classification depends on whether digital platform facilitation is OIDAR or intermediary service for place-of-supply treatment.
Commission-based online freelance marketplace services require classification by reference to the distinct digital platform service supplied to freelancers. The service may be characterised as OIDAR where it is delivered through an electronic network and cannot be ensured without information technology, notwithstanding its role in facilitating freelance contracts. A competing characterisation is intermediary service, making the exact nature of the facilitation decisive for place-of-supply treatment. The discussion records differing views on OIDAR treatment, registration, reverse charge and tax collection, without identified clarification specifically concerning such platforms under the amended OIDAR definition.