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Netflix slashes base prices in India to accommodate 15% tax

Exclusive: American streaming service Netflix has slashed its base price in India to avoid charging the cost to consumers. Their old base price of Rs 500 is now Rs 435; the Rs 650 plan’s subtotal is now Rs 565; and the Rs 800 plan now has a base price of Rs 696. This change has kept the cost to Indian customers the same, but has reduced Netflix’s revenue per user by around 15% in the country.

A tax component has been added to Indian subscribers’ monthly invoice:

netflix-tax-india

We checked, and this tax component wasn’t there in the bill last month.

This is a stark departure from Netflix’s reaction in New Zealand, where they actually increased prices this October in reaction to a similar digital tax. There, prices were increased by up to NZ$2.50.

The 15% service tax on digital goods

The 15% service tax, which the Indian government has required starting this month, applies on all digital products and subscriptions purchased from abroad, including e-books, movies, cloud storage services, and other digital products. Such a tax has already been applicable on Indian digital products. Not all providers have slashed the prices like Netflix, though. Digital Ocean, a hosting provider, has started charging the tax in India without reducing the base price. Dropbox, which has charged similar taxes to customers in Japan and New Zealand, may also start collecting this tax.

It is unclear whether Netflix has registered in India to deposit the tax, or is simply collecting taxes that it plans to pay after registering later. MediaNama’s email to Netflix about this tax, sent a couple of weeks ago (via this form), has not received a response yet.

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