As the Entertainment industry is growing so the mode of traditional entertainment has shifted to Digital entertainment industry which is thriving in India. The people nowadays must be addicted to smart gadgets namely laptops, Tablets, Smartphones or Smart Televisions and therefore, the OTT platform is flourishing around the globe especially in India. OTT is often discussed specifically within the context of video content. In the recent past, viewers consumed all video content from a TV set connected to a cable TV or satellite provider. However, viewers can now watch video content across multiple devices; no longer needing to be connected to cable or broadcast TV. OTT describes the technology that delivers on-demand content via the internet across devices like mobile phones, CTVs, computers, and tablets. Live streaming is the broadcasting of content in real-time over the internet, allowing viewers to tune in and watch as it actively happens. Online supplies of digital content, like music, movies, and TV shows, are called OIDAR services. OIDAR stands for Online Information Database Access and Retrieval services.
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What does OTT mean?
OTT stands for “over-the-top” and refers to technology (OTT services or platforms) that delivers streamed content via internet-connected devices. OTT streaming is video or audio content that is played over the internet. There are two types of OTT streaming; pay-to-access and free-to-access. Many OTT services now operate on a paid subscription basis. However, there are several monetization methods used, and a large number run advertisements on their platform as an alternative to subscription-based monetization. Some platforms offer a mix, providing tiered packages that allow users to either access for free with ads or pay for an ad-free experience. The most referred to OTT service is video streaming. Netflix, Amazon Prime, Zee5, Sony Liv, Disney+, Hulu, and YouTube are OTT providers in the video streaming space. Spotify, Sawan, Gaana is considered an OTT platform in the audio streaming space for both music and podcasts.
Applicability of GST on OTT (Digital Content including Music, Movies, Television Shows, etc.)
Case 1: Both Service Supplier and Service Recipient are in India:
| Details | GST Rate |
| Service Supplier should be registered in India and shall collect GST from the Service Recipient | 18% |
Case 2: Service Supplier is outside India and Service Recipient is in India:
| Details | Person liable to pay tax |
| Service Recipient is a business entity registered under GST | Service recipient is liable to tax under the Reverse Charge Mechanism |
| Service Recipient is not registered under GST | Service provider would also be required to get registered in India |
Impact of GST on different activities in Media & Entertainment Industry
GST Rate on Sale of Movie tickets through Cinema Hall/theatre:
| Details | GST Rate |
| Where price of tickets is Rs.100 or less | 18% |
| Where price of tickets is more than Rs.100 | 28% |
GST Rate on Broadcasting through Television:
| Details | GST Rate |
| GST on Direct to Home (D2H) / Cable TV services | 18% |
Advertisement plays a vital role for boom of OTT platform in India:
With the drastic shift of viewership from Traditional TV to OTT, Various advertisement agencies recognize the potential to reach large section of audience OTT platforms offer different advertising proficiency, allowing advertisers to deliver relevant and personalized ads to specific user segments. Advertising is a major source of revenue for businesses and individuals, and it is expected to continue to grow in the future. Advertising revenue is the income that businesses and individuals earn from displaying paid advertisements on social media channels, or other OTT platforms. It majorly depends on the type of advertising, the target audience, and the effectiveness of the campaign. The revenue generated from the advertisements helps support the cost of the content creation and streaming infrastructure, contributing to the growth and sustainability of OTT platforms.
GST Rate on OTT Platform Income
| Details | GST Rate |
| Content Creation Services | 18% |
| Content Sharing Services | 18% |
GST Rate on OTT platform advertisement Revenues
Advertising revenue is considered business income and is subject to GST.
| Details | GST Rate |
| Advertisement Revenue/Income from Advertisement | 18% |
GST Rate on Sponsored Videos
Sponsored videos are those videos where brands or companies pay content creators to feature their products or services in the video. The revenue earned from sponsored videos is considered business income and is subject to GST.
| Details | GST Rate |
| Revenue earned from sponsored videos | 18% |
GST on Affiliate Marketing Earnings
Affiliate marketing is a type of marketing where content creators promote products or services and earn a commission on each sale made through their unique affiliate link. The revenue earned through affiliate marketing is considered as business income and is subject to GST.
| Details | GST Rate |
| Affiliate marketing earnings | 18% |
Conclusion
After launch of 5G services in India the OTT market in India has been growing rapidly in recent years. Rapid adoption and evolution of internet infrastructure have contributed to the enormous popularity of OTT in India. These factors enable OTT platforms to deliver content directly to the viewers, bypassing traditional distribution and media networks. OTT platform has become an important source of income for companies like YouTube, Amazon, Google in India. With the rise of the digital economy, these companies as well as OTT subscribers need to understand their tax obligations and comply with the applicable laws. The GST on OTT income depends on the services’ classification and the income’s nature. The OTT Companies are required to obtain a GST registration and file periodic returns to avail Input Tax Credit. (ITC)
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Author Himanshu Bansal, an Advocate, holds a B.Com degree and an Accounting Technician Certificate from the Institute of Chartered Accountants of India. He also earned an LL.B from CCS University Meerut and is currently pursuing an LL.M. from Dewan Law College, CCSU Meerut.
Dear Sir,
I feel GST rate for Movie Tickets in theater for less than Rs.100/- is 12% and for more than Rs.100/- it is 18% vide Notn.No.27/2018 CTR dt.31.12.2028.