The revenue that Netflix receives in India from the selling of streaming services may be subject to taxation by the Indian government. According to a draught ruling, the tax authorities credited Netflix’s Indian permanent establishment (PE) with an income of about 55 crores (US$ 6.73 million) for the assessment year 2021–2022.
India would become the first nation in the world to tax foreign digital businesses that offer clients services associated with electronic commerce as a result of this move by the income tax department.
Netflix may be liable for corporate income tax as well as any related penalties and interest fees because it is regarded to have a permanent establishment (PE) in India.
This is due to the fact that Netflix’s streaming services are supported by staff members and infrastructure that are on secondment from its parent business in India. As a result, Netflix has a permanent establishment (PE) in India and must pay taxes there. According to the draught legislation, Netflix’s Indian PE will generate about 55 crores during the assessment year 2021–2022.
India is a significant market for Netflix because the country has more than 6 million subscribers. The choice to begin taxing the business could have a significant impact on other international digital businesses that are currently operating in India.