Karnataka extends welfare cess to OTT subscriptions: Challenges and next steps

The Karnataka Assembly has recently passed a significant bill proposing a cess of up to 2% on OTT subscription fees. This move is part of the broader Karnataka Cinema and Cultural Workers Welfare Bill – 2024, which aims to support cine and cultural workers in the state.

Details of the Bill
The bill, introduced by state labor minister Santosh Lad, received unanimous approval from the Assembly. It outlines a new “cine and cultural activists welfare cess” that will be levied on both movie tickets and OTT subscriptions. The cess will range from 1% to 2%, with adjustments planned every three years. The bill also proposes the establishment of ‘The Karnataka Cine and Cultural Activists Social Security and Welfare Fund,’ designed to provide benefits to cine artists across the state.

Next Steps and Implementation
State labor department officials have begun drafting rules for the implementation of the cess. According to reports, they are working on a framework and plan to publish draft rules for public review. Additionally, a stakeholder meeting is being organized to discuss the details of the cess collection process. However, specific details on how the cess will be applied to various OTT platforms remain unclear.

Challenges and Implications
The implementation of this cess presents several challenges. OTT platforms like JioCinema, Netflix, and Amazon Prime offer multiple pricing tiers, complicating the process of applying a uniform cess. The additional cost may lead to higher subscription fees for consumers, potentially affecting the affordability of these services.

Moreover, the introduction of this cess could increase compliance burdens for streaming platforms. The challenges are compounded by recent regulatory issues faced by OTT platforms. The Centre’s Broadcasting Services (Regulation) Bill 2023, introduced last November, seeks to regulate OTT platforms further, raising concerns about potential censorship and additional compliance requirements.

Additionally, last year’s anti-tobacco warning rules mandated that OTT content featuring tobacco use include health spots and disclaimers. Earlier this year, the Ministry of Information and Broadcasting (MIB) also took action against 18 streaming platforms for publishing content deemed vulgar. Pune.News