With a view to provide a level playing field to Indian service providers providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, the exemption to such services provided in India by service providers located in foreign territory is being withdrawn with effect from 1^st December, 2016. Thus cross border business to consumer [B2C] OIDAR services provided by a foreign service provider to a person in India will become taxable from 1^st December, 2016 onwards.

The salient features of this levy are as under:

•  A simplified online mechanism of taking registration has been prescribed and registration will be deemed to be granted online on submission of registration application.
•  A simplified mechanism of online payment of taxes and online filing of returns is being prescribed.

            A detailed Circular No. 202/12/2016-Service Tax dated 09.11.2016 has been issued by CBEC, explaining the likely issues arising from the withdrawl of this exemption.

Useful links:

1)      http://www.cbec.gov.in/ServiceTax-Notifications

2)      http://www.cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2016/st-circ-202-2016

Taxation of cross-border digital services: foreign B2C OIDAR supplies to Indian consumers become taxable effective 1 December 2016. Exemption for foreign providers of taxable OIDAR services supplied to persons in India is withdrawn, rendering cross-border B2C OIDAR and electronic services to Indian consumers taxable from 1 December 2016. A simplified online compliance framework accompanies the levy, including deemed registration on online application submission and streamlined online tax payment and return filing, with a detailed explanatory circular issued to address implementation issues.