How proposed taxes on Netflix will impact you
What's the story
Ever since its launch in India, Netflix has become one of the biggest streamers in the country. The platform has a sizeable subscriber base in India, thanks to its original content to OTT releases of some big-budget films. Given its profits in India, the Indian government is reportedly planning to impose taxes on Netflix. Here's how the proposed taxation might impact its subscription plans.
Context
Why does this story matter?
Netflix was launched in India in the year 2016. It is one of the country's first and most popular streaming platforms. Over the years, it has showcased some of the biggest Bollywood and Hollywood films. In recent years, it has also started providing regional content in languages such as Malayalam, Punjabi, Tamil, Telugu, and Marathi, among others, catering to the Indian audience.
Details
I-T authorities suggested taxing Netflix India's income
Headquartered in the United States of America, Netflix reportedly has a permanent establishment (PE) in India. But the Indian income tax authorities are now arguing that its income should be assessed and taxed in India, said a report by Economic Times. The report further said that the OTT giant has infrastructure and employees in India, making it liable to pay taxes here.
Profit
Look at its income, profit
In the assessment year 2021-22 alone, Netflix India reportedly earned around Rs. 55 crore. At present, it has over six million users in India, said the report, noting that the country is an active market for the OTT platform. It also said that Netflix's revenue increased by 25% in India, which makes the country a potential market for the company.
Other OTT platforms
Move to have impact on all foreign services
Not only Netflix, but India is also a potential market for every other foreign streaming platform, including Amazon Prime Video. Therefore, India's move to tax foreign digital companies is being seen as a major step in revenue collection. Once Netflix is put into a taxation bracket, a similar step would be taken with other overseas companies functional in India.
Impact on subscribers
How will it impact monthly subscriptions?
Currently, Netflix has reduced its monthly charges in India to as low as Rs. 149. However, once its Indian income comes under assessment and taxation, it is possible that it will have an impact on the subscribers as well. The streamer might eventually increase the subscription charges for the users in India. However, there is no official word on this yet.