OIDAR Compliance Simplified: A Guide for Foreign Digital Service Providers

18/05/2025

Share Now

As the global digital economy expands, more foreign companies are finding their customer base in India. From cloud software subscriptions and online learning platforms to streaming services and stock image libraries, digital services have become ubiquitous. But with this growth comes an often misunderstood obligation: OIDAR compliance under India’s Goods and Services Tax (GST) law.

If you’re a foreign company offering digital services to individuals in India, OIDAR registration and compliance are not optional — they’re mandatory. Fortunately, while the rules can seem complicated, understanding the essentials can simplify your obligations significantly.

 

What Is OIDAR?

OIDAR stands for Online Information Database Access and Retrieval Services. It refers to services that are:

• Delivered over the internet or an electronic network, and

• Essentially automated, involving minimal human intervention, and

• Impossible to deliver in the absence of information technology.

 

In plain terms, it includes services such as:

• Video or music streaming (e.g., Netflix, Spotify)

• Cloud-based software (e.g., Canva, Figma, Adobe Creative Cloud)

• Online learning platforms (e.g., Coursera, Skillshare)

• Stock media or template libraries

• Web hosting, domain services, or cloud storage

 

Importantly, not all digital services fall under OIDAR. Services that involve substantial human interaction — like consulting or tutoring over Zoom — may fall outside its scope, depending on their delivery model.

 

Who Needs to Comply With OIDAR Regulations?

Under Indian GST law, foreign service providers offering OIDAR services directly to Indian consumers (B2C) are required to register and pay GST in India — even if they have no physical presence in the country.

 

Applicable Entities Include: 

•  A SaaS company in the US offering monthly plans to Indian freelancers

• A European e-learning site selling courses directly to Indian students

•  A UAE-based firm charging for downloadable design templates

However, B2B transactions (i.e., services provided to Indian companies with a valid GSTIN) are treated under the reverse charge mechanism, where the Indian business is responsible for paying GST. OIDAR compliance applies strictly to B2C supplies, where the end customer is an unregistered individual or entity in India.

 

OIDAR Registration Process in India

If you're a foreign company covered under OIDAR, you must register for GST in India — and the process, while procedural, is straightforward with the right guidance.

 

Key Steps Include:

1. Determine Eligibility

Confirm that your services qualify under OIDAR and that your customers are in India (through IP address, billing address, or bank location).

 2. Appoint an Authorized

Representative in India

If you don’t have a physical establishment in India, you must appoint a representative to act on your behalf. This is typically a Chartered Accountant, law firm, or compliance advisor.

 

3. Submit the Registration Application on the GST Portal

Fill out Form GST REG-10

• Provide supporting documents such as passport of authorized person, certificate of incorporation, authorization letter for representative, and business address proof

• Wait for the processing and issuance of a unique OIDAR GSTIN

 This registration is specific to OIDAR suppliers and is treated differently from standard GST registrations.

 

Compliance Requirements After Registration

 Registration is just the beginning. Once registered, you are expected to meet certain monthly and financial-year-end compliance requirements:

 

1. Monthly Filing of GSTR-5A

 This is the prescribed return for OIDAR service providers. It includes details of:

• Services supplied to Indian individuals

• GST collected and paid

• Currency conversion values

 Filing is mandatory even for nil returns, and late filing attracts penalties and interest.

 

2. Charging GST on Invoices

You must charge 18% Integrated GST (IGST) on the value of services supplied to Indian customers. It’s important to clearly mention this in your invoices and retain proper documentation for audits.

 

3. Currency Conversion and Record Keeping

Amounts must be converted to INR using the applicable RBI exchange rate on the date of transaction. Ensure you maintain proper books, invoices, and customer IP/address logs to substantiate your filings.

 

Consequences of Non-Compliance

OIDAR is not a soft obligation. Non-compliance can attract legal and financial consequences:

• Penalties and Interest: Failure to register or file GSTR-5A on time may result in steep penalties, even for small-ticket items.

• Platform Restrictions: In extreme cases, the Indian tax authorities may request payment gateways or ISPs to block non-compliant entities.

• Loss of Trust: Non-compliance can hurt your brand’s standing and credibility, especially among Indian partners or users who expect responsible cross-border conduct.

 

Key Challenges and How to Address Them

 

1. Determining Customer Location

You must track multiple indicators — IP address, billing address, credit card country — to confirm if the service qualifies as B2C in India. This helps prevent accidental misreporting.

 

2. Exchange Rate Accuracy

Converting USD or EUR invoices into INR based on the correct RBI rate is essential to determine the tax base. Software-led solutions or a dedicated accounting partner can ensure precision.

 

3. Navigating OIDAR Gray Areas

Not all digital services are easy to classify. For example, is a live webinar OIDAR or not? Is a semi-automated training program included? This is where professional expertise is valuable.

A’countable Partners specializes in helping foreign businesses navigate such compliance nuances. From registration to return filing, we offer complete OIDAR support — saving you time, penalties, and stress.

 

Conclusion

India’s digital economy is vast, and global companies are increasingly tapping into this market. If your business provides automated online services to Indian consumers, complying with OIDAR isn’t just about meeting a legal requirement — it’s about building a trustworthy, long-term presence in the region.

Fortunately, compliance doesn’t have to be complicated. With a reliable compliance partner, even foreign businesses without a local office can fulfill their OIDAR obligations smoothly and efficiently.

 

Looking to simplify OIDAR compliance in India?

Let A’countable Partners take care of your registrations, filings, and monthly obligations so you can focus on growing your business globally — without borders, and without worry.