India Tightens GST Scrutiny on Foreign Digital Service Providers: DGGI Targets Non-Compliant Platforms
India Tightens GST Scrutiny on Foreign Digital Service Providers: DGGI Targets Non-Compliant Platforms
As India’s digital economy surges, the Goods and Services Tax (GST) authorities are stepping up enforcement against foreign digital service providers operating in the country without registration. The Directorate General of GST Intelligence (DGGI) has launched a comprehensive crackdown to ensure compliance with India’s expanded Online Information Database Access and Retrieval (OIDAR) rules.
Following the significant revision in October 2023 that widened the scope of OIDAR services, the DGGI has identified numerous global platforms that continue to serve Indian users while evading tax obligations. These platforms span various sectors, including cryptocurrency exchanges, cloud services, AI tools, digital content, online advertising, and edtech.
DGGI Cracks Down on Non-Compliant Digital Platforms
According to government sources cited by CNBC-TV18, the DGGI is actively engaging Indian businesses that partner with or generate revenue for foreign platforms, urging them to share information and encourage GST compliance. Notices, warning emails, and compliance advisories have already been issued to both the foreign entities and their Indian counterparts.
“There’s a clear push to tighten compliance and bring more digital players into the tax net,” a senior official stated.
The DGGI is also pressuring Indian payment gateways—including Pine Labs, Razorpay, and Cashfree—to halt transactions with unregistered overseas companies. In addition, authorities are gathering transaction data from banks and the Reserve Bank of India (RBI), and are pursuing information-sharing pacts with foreign governments to improve cross-border enforcement.
Legislative Push to Block Non-Compliant Websites
To further bolster enforcement, the DGGI has sought new legislative powers to block access to websites of non-compliant service providers. However, current GST laws do not empower the tax department to impose such restrictions directly.
Despite these limitations, India’s tax haul from OIDAR services has seen a dramatic increase—from ₹80 crore in FY 2017–18 to ₹2,675 crore in FY 2023–24. Experts attribute this growth to the expanded OIDAR definition, which removed previous exemptions related to human intervention and non-commercial usage.
“The revised definition now covers a vast range of digital services offered from outside India to Indian consumers,” said Sudipta Bhattacharjee, Partner, Indirect Taxes & Customs at Khaitan & Co.
Notable Registrations and Investigations
As of now, 574 foreign companies have registered under India’s OIDAR framework. This includes prominent names like:
- Udemy (USA)
- Canva (Australia)
- OVH (France)
- Blackboard (Netherlands)
Among the ongoing high-profile probes is a ₹722 crore GST demand on Binance, the global cryptocurrency exchange. The case, currently being heard by the Karnataka High Court, has resulted in an interim stay.
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
