TaxTMI 
TaxTMI 
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.
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....o 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 9th November, 2016. These notific....
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....e 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-taxabl....
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....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 effe....
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....ents through email iv. Booking services or tickets to entertainment events, hotel accommodation or car hire v. Educational 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. Offline physical repair services of computer equipment vii. Advertising 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 consumer's 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 doesn't change the nature of the supply from an OIDAR service All 'electronic services' that ar....
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.... 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. 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 electroni....
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....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 in....
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.... 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 t....
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....ngement 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 territor....
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....ate 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 de....
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.... 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....
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....nly. 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 Secretar....