The availability of cheaper and feature-rich cell phones along with the
penetration of low-cost internet in rural India fuelled by the Digital
India campaign, has pushed service providers to transform the way services
are delivered and as a result, the players in advertising, media, education and
gaming have grown exponentially over the last few years. Considering the size
of the Indian market and growing demand in these sectors, several overseas
entities are investing in India and rendering services digitally to Indian
customers.
The levy of tax on Online information and Database Access Service (OIDAR)
was introduced in India in 2001 under the erstwhile service tax regime and in
2016 the ambit of services was widened to include several digital
services into the tax fold. In July 2017, the GST law borrowed the provisions
governing OIDAR from the service tax law