Just a few weeks back we saw the news of the new law coming from Karnataka. The government has imposed an extra 2% cess on entertainment consumption on both big screens and OTT. Naturally, this cost would fall on common people who will have to pay more than the regular charges to watch a film.
We do understand that it is fairly easy to do so in terms of big screens because they are physical commercial spaces operating within the borders of Karnataka. Thus, the State Government of Karnataka has all the rights to tax it according to the new law.
But,
OTT is different.
It is not a Karnataka thing. It is a national thing that operates within the boundaries of entire India.
So, is it even possible for the Karnataka government to tax OTT platforms?
Okay, just imagine if Karnataka imposes this tax. Then what?
Next is what? Telangana, Uttar Pradesh…
Let’s assume that West Bengal imposes a 5% tax instead of 2%.
This will be a ridiculous situation. You see, OTT platforms are under GST and it is not only a Karnata thing. Thus, OTT platforms are not going to be expensive following the impact of the new laws in Karnataka.
We are pretty sure that there would be severe legal challenges or even impossibility of imposing this cess on these OTT platforms.
Let’s see what happens. We are pretty sure that this new tax is not gonna have any direct impact on the OTT platforms.