QUESTION

ABC purchased Google Storage through online, transaction type was international transaction. Whether he needs to pay RCM on this purchase, if yes, what would be the rate of GST?

ANSWER 

Facts of the case: ABC purchased Google storage through online international transaction. Whether RCM is applicable and rate of tax on same?

Law Applicable: SECTION 2 of IGST Act

(17) 'online information and database access or retrieval services' means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,''
      (i) advertising on the internet;
      (ii) providing cloud services;
      (iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
      (iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
      (v) online supplies of digital content (movies, television shows, music and the like);
      (vi) digital data storage; and
      (vii) online gaming;

(11) ''import of services' means the supply of any service, where''

                    (i) the supplier of service is located outside India;
                    (ii) the recipient of service is located in India; and
                    (iii) the place of supply of service is in India;

SECTION 13 of IGST Act

(12) The place of supply of online information and database access or retrieval services shall be the location of the recipient of services.

Notification No. 10/2017- Integrated Tax (Rate)

Interpretation: As per section 2(17) clause (vi) OIDAR services includes digital data storage. 

Place of supply in case of OIDAR services as per section 13(12) shall be the location of the recipient of services.

In the instant case as the supplier of service is located outside India and recipient is located in India and POS is the location of  recipient of services i.e. India. Thus it is considered as Import of Services.

Further as per  Notification No. 10/2017- Integrated Tax (Rate)  RCM will be applicable on service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient.

As ABC is  other than non-taxable online recipient therefore ABC is required to pay tax on RCM basis.

So far as rate of tax is concerned, the same is taxable @ 18% (Heading 998313 Information technology (IT) consulting and support services)).

Conclusion: Purchase of Google storage online is covered under OIDAR services and RCM will be applicable @ 18%. (Reply dt. 27/03/2021)