Netflix Reduces Fees to Accommodate Service Tax; Digital Ocean, Play Store Apps Starts Charging Service Tax


Service Tax in India-002

Effective December 1st, a major change in the service tax regime has been executed which completely turns the table for foreign based service providers and Indian customers.

While before, the service charge was dependent on the location of the service provider, now, it depends on the location of the service received. Hence, prior to December 1st, service providers located outside India were exempted from paying any service tax if they provided their services inside India.

But now, any service accessed and purchased by Indians would be taxed. And it includes service providers located outside India as well.

As we had covered this last month, service tax would be now applicable for Indian customers, if they purchase service pertaining to:

“(i) advertising on the internet; (ii) providing cloud services; (iii) provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet; (iv) providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network; (v) online supplies of digital content (movies, television shows, music, etc.); (vi) digital data storage; and (vii) online gaming;”

(via Govt. circular issued on Service Tax)

Slowly, but gradually, various service providers located outside India have started charging service tax of 15% on their services, and Indian customers’ woes have started.

As of now, three big companies have openly stated their intentions, and one among them have actually reduced their own subscription fees so that the customers are not burdened with the additional charge.

Digital Ocean Informs Alerts Their Users

Website hosting and Cloud computing firm Digital Ocean was the first major corporation to openly come out and inform their users about the service tax, which they need to pay to Indian Govt.

Via their blog, Digital Ocean informed, “As of December 1, 2016, DigitalOcean is required to charge Service Tax sales to non-business Indian customers. All Service Tax collected from customers in India will be paid to the Indian tax authority. Customers can access their Service Tax charges by visiting their Billing page and reviewing their monthly invoice..”

Only non-business customers are required to pay the extra service tax, and business customers can simply update their Service Tax ID, which will exempt them from paying the additional charges.

As a goodwill measure, Digital Ocean has decided to give a cashback of the additional service tax for the first month, for all their customers.


Google Says Service Tax Applicable On Playstore

Meanwhile, in a reply to Medianama, Google has confirmed that new Service Tax of 15% would be applicable to all content creators who are selling their services/ideas via Google Playstore.

Google said, “The new 15% service tax, announced by the Government of India on 9 Nov 2016 effective from December 1, 2016 for digital services provided by non residents will be applicable on the B2C sales (i.e. to non business customers in India) like Google Play store.”

Hence, the tax would be applied on the content (apps) which are sold via Google Playstore. Again, they have clarified that only non-business customers need to pay this tax.

Netflix Reduces Their Subscription Fees

Meanwhile, Netflix in India has reduced their monthly subscription fees to adjust the increased charges levied via service tax.

Here is the reduced charges:

  • Rs 500 plan reduced to Rs 435 (reduction of 13%)
  • Rs 650 plan reduced to Rs 565 (reduction of 13.07%)
  • Rs 800 plan reduced to Rs 696 (reduction of 13%)

Here is the new tax component added in this month’s bill, which was not present last month:


Have you encountered increased bill from foreign service providers, due to the introduction of special 15% service tax? Do let us know by commenting right here..

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