Netflix under I-T scanner, facing tax liability in India for streaming services income: Report

India is taking steps to impose a tax on the income generated by Netflix in the country, according to an Economic Times report. The tax authorities have reportedly attributed an income of approximately Rs 55.25 crore ($6.73 million) to Netflix's permanent establishment in India in the assessment year 2021-22, citing a draft order.

Sources familiar with the matter told ET that this is the first instance in which India will tax foreign digital companies that provide electronic commerce services to customers. The reasoning behind this move by tax officials is that Netflix has stationed some of its employees and infrastructure from the parent entity in India to provide support for its streaming services. This has led to the establishment of a permanent presence in India, which in turn creates a liability for taxes.

Netflix has declined to comment on the same.

The move is part of India's efforts to regulate the digital economy and ensure that foreign companies pay taxes on the revenue they earn in the country. The Indian government has been discussing the introduction of a digital tax for some time now, and this action against Netflix could be seen as a test case for future taxation of other foreign digital companies.

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