GST worked examples: OIDAR and cross-border digital services

Digital services cross borders easily, so GST has special rules for them. Online information and database access or retrieval services (OIDAR) supplied from abroad to consumers in India are taxed through a simplified registration of the foreign supplier. The same services supplied to registered businesses are taxed under reverse charge. Indian providers of digital services to foreign clients may qualify as exporters. Figures are illustrations; rates are those in force on 04.10.2026.

H.1 — Streaming subscription bought by an individual

Facts. A foreign streaming service charges a Delhi individual Rs. 500 a month.

1. Streaming is an OIDAR service (section 2(17) IGST Act), and the individual is a non-taxable online recipient (section 2(16)) — from 01.10.2023, any unregistered person, or a person registered only to deduct tax at source.
2. Place of supply of OIDAR services is the recipient's location — India (section 13(12)).
3. The foreign supplier registers under the simplified scheme of section 14 IGST Act and pays IGST 18% = Rs. 90 a month, filing GSTR-5A.

Result. The subscriber pays Rs. 590; the tax is collected from the foreign supplier.

H.2 — Cloud services bought by a registered business

Facts. A foreign cloud provider charges a registered Delhi company Rs. 5,00,000.

1. The company is not a non-taxable online recipient, so the simplified scheme does not apply.
2. This is an import of services: the company pays IGST 18% = Rs. 90,000 under reverse charge (section 5(3)), issues a self-invoice and takes credit.

Result. Business purchases are taxed through the buyer; consumer purchases through the supplier.

H.3 — Indian subsidiary providing services to its foreign parent

Facts. A Delhi company, a subsidiary of a US company, develops software for the parent for Rs. 5 crore a year, paid in dollars.

1. A subsidiary and its parent are separate legal persons, not establishments of one person, so the condition in section 2(6)(v) is met (Circular 161/17/2021-GST).
2. Development on its own account is not an intermediary service (Circular 159/15/2021-GST). Place of supply is the recipient's location — the United States (section 13(2)).
3. All five conditions of export are met: zero-rated under a letter of undertaking, with refund of accumulated credit.

Result. Export of services.

H.4 — Indian agent arranging supplies for a foreign principal

Facts. A Mumbai firm finds Indian customers for a foreign manufacturer and earns a commission in foreign exchange.

1. The firm is an intermediary (section 2(13)).
2. Until 29.03.2026, the place of supply of intermediary services was the supplier's location — India (section 13(8)(b)) — so the commission was taxable, not an export. The High Courts upheld that rule.
3. Section 13(8)(b) was omitted by the Finance Act, 2026 from 30.03.2026. Intermediary services now follow the general rule — the recipient's location, outside India — and can qualify as exports.

Result. Commission earned from 30.03.2026 may be zero-rated if the other export conditions are met.