OIDAR GST in India:
The Complete Guide for Foreign Digital Businesses

Executive summary

If your company is incorporated outside India and sells a digital service to someone in India, India's OIDAR rules almost certainly apply to you — and they apply from your very first Indian customer, with no revenue threshold to hide behind.

What OIDAR actually is

OIDAR is the mechanism India uses to tax digital services that cross its borders — ensuring a foreign software company and an Indian one compete on the same tax footing.

The acronym stands for Online Information and Database Access or Retrieval. In plain terms, it is the category of services that are delivered over the internet or an electronic network, where the technology is the delivery mechanism. The legal definition lives in Section 2(17) of the Integrated Goods and Services Tax (IGST) Act, 2017.

The 2023 amendment changed the game

This is the single most important recent development, and many older guides still get it wrong. Before 1 October 2023, a service only counted as OIDAR if it was "essentially automated and involving minimal human intervention." That carve-out let many human-assisted services — live online tutoring, for example — argue they fell outside OIDAR.

The Finance Act 2023 deleted that limb entirely. The test now focuses on the mode of delivery — internet-mediated, impossible without IT — rather than requiring minimal automation. This shifts the default significantly toward including human-assisted services, though it does not make automation irrelevant: where genuine human delivery is the dominant character of what the customer actually receives, rather than merely present alongside an automated core, the position can still be argued. This is a fact-specific question, not a bright line, and is discussed further with a real example in Section 5.

The legal architecture, in one view

Five provisions do almost all the work. You don't need to memorise them, but knowing they exist tells you the regime is real, structured, and enforceable.

Which services qualify

The statute gives an indicative list, and the post-2023 breadth means most internet-delivered services are now in scope:

• Software as a Service (SaaS) and cloud-based applications — think project tools, CRMs, design platforms
• Cloud infrastructure and APIs — hosting, storage, compute, developer APIs
• Streaming of music, video, and other digital media
• Online education — courses, both pre-recorded and (post-2023) live
• Online gaming — excluding online money gaming, which sits under Section 14A and is now banned outright (see Section 5)
• Digital advertising and online marketplaces
• E-books, software downloads, and other digital content
• Data and information services retrieved electronically

Does OIDAR apply to you?

Four questions decide it. Work down the tree — most foreign digital businesses reach "OIDAR applies" faster than they expect.

When you may be exempt, or outside OIDAR entirely

OIDAR is broad, but it is not universal. It is worth being just as precise about who doesn't need to register as about who does — misclassifying yourself into unnecessary compliance is its own costly mistake. The genuine exits are narrower than founders often hope, but they are real:

• No recipients in India. If none of your customers satisfy the two-indicator place-of-supply test (Section 4), you have no current OIDAR obligation — full stop.
• Indian-incorporated entity. OIDAR targets foreign suppliers. If your company is incorporated in India, you are outside OIDAR and fall under standard domestic GST instead.
• Physical or offline delivery. Services that are not delivered over the internet — even if sold digitally — are outside the OIDAR definition.
• Genuinely pure B2B, evidenced. If every Indian recipient holds a valid, verified GSTIN, the reverse charge mechanism applies and the recipients — not you — account for GST. This exemption depends entirely on evidence; a handful of unvalidated "business" customers can unwind it.
• Online money gaming. This is no longer simply "a different OIDAR regime" — real-money gaming is now banned outright in India under the Promotion and Regulation of Online Gaming Act, 2025 (effective 1 May 2026), regardless of skill or chance. Historical operation also carries confirmed retrospective GST exposure at 28% of full stake value following a May 2026 Supreme Court ruling. See our dedicated gaming guide — this is not a standard registration question.

The NTOR concept: B2C vs B2B

Everything about who pays hinges on one piece of jargon: the "non-taxable online recipient," or NTOR. Get this right and the rest follows.

India does not try to collect tax from millions of individual consumers. Instead, it draws a single dividing line: is your Indian customer GST-registered or not? That line is drawn by the definition of the non-taxable online recipient.

Why the 2023 change matters

Previously, a recipient only counted as an NTOR if they received the service for non-business purposes. That created arguments and gaps. Now, the test is simply registration status. If they are not GST-registered, they are an NTOR — full stop — and you are liable.

The two paths, side by side

What you owe — rate, value, and place of supply

Three questions: how much, on what value, and how do you prove the customer was in India. The last one is where disputes are won or lost.

The rate: 18% IGST

OIDAR B2C supplies attract 18% Integrated GST, charged on the value of the service supplied to the Indian consumer. You collect it and remit it to the Indian government through your monthly return.

Place of supply: when is a customer "in India"?

This is the technical heart of OIDAR. Under Section 13(12) of the IGST Act, the place of supply is the location of the recipient. But how do you prove where a digital customer is? The law uses a "two non-contradictory indicators" test.

A recipient is deemed to be in India if any two of the following seven indicators point to India and do not contradict each other:

Valuation and currency

GST is charged on the transaction value — what the customer actually pays. Where you bill in a foreign currency, you convert to Indian rupees using the applicable exchange rate for the relevant period when preparing your return. Keep clear records of the rate applied; inconsistent FX treatment is a frequent audit flag.

Industry playbooks

OIDAR applies across digital business models, but each sector has its own pressure points. Here is how it plays out for the most affected industries.

Worked scenarios

Registration: step by step

India deliberately made this easy for foreign suppliers. There is a single, simplified registration — no Indian PAN, no subsidiary, no physical office required. For the full step-by-step walkthrough including exact document formats and common delay causes, see our dedicated Registration Guide.

Foreign OIDAR providers register under a special category using Form GST REG-10, enabled by Section 24(xi) of the CGST Act and Notification 10/2017-IT. The process is online and typically takes 7 to 15 working days from a complete application.

Ongoing compliance: GSTR-5A

Registration is a one-time event. GSTR-5A is forever — a monthly rhythm that, once set up properly, is straightforward but unforgiving of lapses. See our dedicated filing guide for the full table-by-table breakdown and the three-year filing cut-off.

GSTR-5A is the dedicated monthly return for foreign OIDAR providers, mandated by Section 14 of the IGST Act, Section 39(5) of the CGST Act, and Rule 64 of the CGST Rules. It is due by the 20th of the month following each tax period.

The monthly cycle

What goes in the return

The current GSTR-5A format (updated following the 2023 changes to Rule 64) separates supplies cleanly:

Four rules that trip people up

• Nil returns are mandatory. No Indian sales in a month? You still file — a nil GSTR-5A. Skipping nil months is the most common compliance failure.
• No input tax credit. GSTR-5A has no ITC mechanism. You pay 18% on outputs; there is no offset, and no electronic credit ledger.
• Pay before you file. The return can only be filed after the tax due is paid — in cash, from the electronic cash ledger.
• Sequential filing. You cannot file the current month until the previous month is filed. One missed month blocks all subsequent ones.

Penalties & enforcement

For years, OIDAR enforcement was light. That era is over. Since 2023, India has built the data infrastructure to find non-compliant foreign providers — and is using it.

The penalty framework

For the full legal framework — how late fees, interest, and penalties stack, and why voluntary disclosure changes the outcome — see our dedicated Penalties guide.

How exposure compounds — a worked example

The risk matrix

Where does your business sit? Likelihood of detection has risen sharply on the vertical axis; severity of consequence runs along the horizontal.

How India identifies non-compliant providers

• Payment processor data — gateways report India-origin transaction flows
• App store reporting — platform stores provide India revenue data
• Reverse-charge filings — Indian business customers disclose foreign suppliers in their own returns
• AIS matching and OECD exchange — cross-border information sharing increasingly surfaces undeclared India revenue

Common mistakes & professional observations

Patterns we see repeatedly when foreign companies first confront OIDAR. Most are avoidable; all are costly.

1. "We're too small for India to notice"

There is no revenue threshold, and detection now runs on automated data, not manual effort. Size offers no protection — and small revenue still compounds into large retrospective liability over several years.

2. "All our Indian customers are businesses"

Rarely true on inspection. Individual users, freelancers, and unregistered startups are NTORs. Unless you actively validate GSTINs, you almost certainly have a B2C tail you are liable for.

3. Relying on the pre-2023 "human intervention" argument without reassessment

The automation carve-out is gone for periods from October 2023 onward, shifting the default toward inclusion. But this is genuinely fact-sensitive rather than automatically resolved — a real AAAR ruling shows two tiers of the same authority reaching opposite conclusions on where the human-intervention line sits for a similar service (see Section 5). The mistake isn't necessarily being wrong about the outcome; it's not revisiting the question and getting a current assessment at all.

4. Assuming online money gaming is just "a different OIDAR regime"

It was carved out into Section 14A with its own registration and rules in 2023 — but as of 1 May 2026, real-money gaming is banned outright in India, and historical operation carries confirmed retrospective 28% GST liability on full stake value. Treating this as a classification nuance rather than an urgent, distinct issue is the costlier mistake now. See our dedicated gaming guide.

5. Skipping nil returns

A quiet month is not a free month. The filing obligation continues, and missed nil returns accumulate late fees and — post-2025 — risk the three-year permanent cut-off.

6. Forgetting there is no input tax credit

Some companies budget for a net GST position as they would domestically. Under GSTR-5A there is no ITC — the 18% is a true cost on B2C supplies, which should be reflected in India pricing.

7. Poor location-evidence hygiene

Failing to capture and retain the place-of-supply indicators leaves you unable to defend your classifications under audit. Capture everything the payment flow gives you.

Your decision-ready checklist

Work through this in order. By the end you will know your position and your next action.

Glossary

The essential OIDAR vocabulary, in plain English.