- Increased Registrations: In recent months, around 40-50 more offshore entities have registered with the GST authorities after an investigation revealed non-payment of taxes on Online Information and Database Access or Retrieval (OIDAR) services. This is expected to increase GST revenue by several hundred crores.
- OIDAR Services: OIDAR services are provided online without physical interaction, including online advertising, cloud services, e-books, digital content, and online gaming. These services are taxable in India when provided to Indian consumers.
- DGGI Efforts: The Directorate General of GST Intelligence (DGGI) has been actively making offshore entities aware of India’s tax laws to ensure compliance. Many entities, upon becoming aware, have registered and started paying the required taxes.
- GST Provisions for Overseas Entities: Under GST laws, overseas entities providing digital services to Indian end-users must register for GST, submit monthly returns, and remit applicable taxes. Non-compliance results in financial penalties and legal repercussions.
- Revenue Growth and Compliance: Since the introduction of GST, 574 offshore entities have registered, increasing revenue from Rs 80 crore in FY18 to Rs 2,675 crore in FY24. The DGGI emphasizes creating awareness and providing clarity on taxability to ensure compliance, especially in the online gaming sector, which has significant revenue potential but higher instances of non-compliance.
Source A2ztaxcorp
