GST on amount received from google, Goods and Services Tax - GST

[Kaustubh Karandikar]

XYZ (India) is getting payment from Google in foreign currency for their You Tube channel when a YouTube Premium subscriber watches XYZ’s you tube content on the Watch Page. Is XYZ required to pay GST on the amount received?

Posts / Replies

[Amit Agrawal]

Without checking entire factual & technological aspects read with agreement with Google and applying relevant provisions to determine place of supply, location of service recipient & so on, it is not possible (at-least for me) to give any views for given situation.

[Padmanathan Kollengode]

What I understand is Youtube charges businesses to play their advertisement in between content videos. Also they have a premium feature, where a viewer has to pay Youtube to watch the content videos without any advertisement. This forms the income of Youtube.

Now youtube pays the video content creators based on views/ click for their videos etc.

Therefore, here the content creator is the supplier of service and Youtube is the service recipient of service.

section 2(17) of IGST Act defines “online information and database access or retrieval services” as services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply 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;

The activity of providing video through internet by content creator to youtube is OIDAR Service in My opinion.

Section 13(12) IGST Act states that the place of supply of online information and database access or retrieval services shall be the location of the recipient of services.

Export of service is defined under section 2(6) of IGST Act, as under:

(6) “export of services” means the supply of any service when,––

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;

Summarizing:-

1. Supplier XYZ is located in India

2. Recipient Youtube is located outside India

3. Place of supply is outside India as per Section 13(12)

4. payment is received in convertible foreign exchange currency

5. XYZ and Youtube are not merely establishments of a distinct person.

therefore, it would be an export of service.

[Kaustubh Karandikar]

Padmanathan ji you are rightly described the query and also thanks a lot for your detailed advice.

[Amit Agrawal]

I respectfully do not agree with Shri Padmanathan ji that 'given services by XYZ (India) to Google is OIDAR Services (i.e. in given facts of the query & presuming nothing more)'.

First a disclaimer: I am not very tech-savvy person and I am hardly an user of You-tube videos. And I do not have experience of its premium feature and do not know what is 'watch page'.

So, I take 'facts given by Shri Padmanathan ji' as 'base' for my factual understanding' and my views thereof are as under:

"What I understand is Youtube charges businesses to play their advertisement in between content videos. Also they have a premium feature, where a viewer has to pay Youtube to watch the content videos without any advertisement. This forms the income of Youtube.

Now youtube pays the video content creators based on views/ click for their videos etc.

Therefore, here the content creator is the supplier of service and Youtube is the service recipient of service."

I am presuming (as I do not know factual position) that YouTube & Google is one and the same legal entity.

Now, in given set of facts with presumption about same entity, I am of the view that Youtube / Google is providing OIDAR Service and NOT the XYZ (India).

XYZ (India) is merely 'video content' creator (as per facts listed above), who may have delivered these videos to Google using internet. But, mere delivery of 'video content' through internet / cloud etc. (& nothing more) does not make XYZ (India)'s services as OIDAR.

To put its differently, conceptually speaking, XYZ (India) can deliver those video ''in a compact disk sent through courier' instead of making delivery over the internet or an electronic network To Google. Chosen mode of delivery (i.e. over internet) is merely a matter of a convenient mode of delivery. But, merely for using such mode for delivery (& nothing more) does not make XYZ (India) as OIDAR service provider.

Also, one needs to study factual and legal aspects whether Google / YouTube (as the service recipient, presumed above) is located outside India or not (one needs to keep special provisions for OIDAR services under GST .. For example: Section 14 & explanation under Section 13(12) the IGST Act, 2017 in mind).

Hence, I would hesitate before reaching conclusions on query raised. And I would again say and submit that "Without checking entire factual & technological aspects read with agreement with Google and applying relevant provisions to determine place of supply, location of service recipient & so on, it is not possible (at-least for me) to give any views for given situation."

These are ex facie views of mine, the same should not be construed as professional advice / suggestion.

[Kaustubh Karandikar]

Respected Amit ji and Padmanathan ji, going by your contrary views, the basic unanswered question is who is the service receiver and who is the service provider because the payment received by XYZ is only on the basis of number of 'Likes' received by him on you tube and not for rendering any service.

[Kaustubh Karandikar]

According to my understanding, YouTubers and bloggers are considered as suppliers of services. Services by bloggers can be considered as online information and database access or retrieval services. Therefore, it can be said that the YouTuber and bloggers rendering services to recipients outside India, such as Google, YouTube, etc. Views of the experts please.

[Amit Agrawal]

Dear Shri Kaustubh Ji,

I have nothing to add further to my posts above, due to limitations explained in those posts.

Someone, who is aware of entire factual & technological aspects involved and has gone through agreement of XYZ (India) with Google, will be able to throw more light on queries raised by you.

[Kaustubh Karandikar]

Amit ji, i got lot of valuable inputs from you on this subject which i think will be sifficient to come to a conclusion. Thanks once again.

[Amit Agrawal]

You are welcome, Shri Kaustubh Ji!

Just an additional input, which I hope you won't mind (Please treat this as purely academic discussion):

If XYZ (India) is treated as OIDAR service provider (which I doubt very much, due to reasons explained in my post at serial No. 5), then, question is who is service-recipient (i.e. Google or any end-consumer who is watching the videos and giving 'likes') and what is place of supply?

In other words, If XYZ (India) is treated as OIDAR service provider, what is role of Google / YouTube (i.e. intermediary between XYZ (India) and end-consumers OR something else)? This becomes much more important that it is very likely that video-contents are developed by XYZ (India) by keeping Indian audience in mind and location of end-consumers (who are liking these videos) are located in India.

So, one needs to be very clear about entire factual, legal aspects & risks involved while determining answers to various question/s raised during course of this ongoing discussion.

Issues raised by you, Sir, have so many facets to be considered. Hence and at the cost of repetition, kindly note that I have not given any conclusive views - due to limitations explained in all my earlier posts above - on various queries raised by you.

These are ex facie views of mine, the same should not be construed as professional advice / suggestion. & I respect contrary views.

[Amit Agrawal]

*Please read in my last post as '............... (which I doubt very much, due to reasons explained in my post at serial No. 4 (& not 5)) ...........

[Shilpi Jain]

These transactions are generally structured the way Padmanabanji has mentioned. This would be an OIDAR service.

Though in the past in the ST regime in some cases the dept has tried to treat this as an intermediary services and tax but in vain