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India: Reminder to digital sector, GST compliance

India: Reminder to digital sector, GST compliance

The goods and services tax (GST) reforms, under the legislative changes in 2016 and 2017, have affected many sectors, and specifically the digital sector. Certain businesses operating in the “digital economy” may have overlooked or ignored certain significant provisions that can create a liability to register for GST in India.

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In summary, the following services are taxable under India’s GST law: 

  • Online information and database access or retrieval services (OIDAR services) 
  • Specified services provided through an e-commerce platform such as transportation of passengers by a radio taxi, motorcab, maxicab or a motor cycle through an app-based taxi service; accommodation in hotels or other places meant for residential or lodging purposes, when the supplier of the service is not liable for registration under GST (online travel agency (OTA) services)

Effective dates

  • The changes to OIDAR services were originally introduced under the service tax provisions, effective 1 December 2016, and similar provisions carried forward to GST, effective 1 July 2017.  
  • App-based taxi services were originally taxed under the service tax, effective 1 March 2015 as “aggregator services” and similar provisions carried forward to GST, effective 1 July 2017.  
  • Changes to OTA services were effective 1 July 2017.  

KPMG observation

Indian tax authorities reportedly are focusing on GST compliance, and with increased enforcement actions by the Indian government, it may be timely to revisit these issues and to pay attention to the GST requirements. 

 

Read an April 2018 report [PDF 307 KB] prepared by KPMG International

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