The Intersection of AI and Tax Laws: OTT Platforms under Income Tax Act, 1961 and GST
Abstract
This paper explores the intersection of Artificial Intelligence (AI) and tax regulations, specifically analyzing the tax treatment of OTT platforms under the Income Tax Act, 1961, and the Goods and Services Tax (GST) framework. The rise of Over-the-Top (OTT) platforms has transformed digital content consumption, raising complex tax implications under Indian law. Under Income Tax laws, OTT platforms face challenges related to permanent establishment (PE), equalization levy, and international taxation, particularly for foreign-based platforms. Additionally, AI-driven content monetization raises questions regarding royalty taxation and digital transactions. In This paper examines the classification of digital services, the role of AI in tax automation, and compliance burdens on platforms operating across jurisdictions. AI plays a crucial role in tax compliance, from automated tax calculations to fraud detection, and its integration into OTT taxation can enhance efficiency and accuracy. From a GST perspective, OTT platforms are categorized based on their nature subscription-based or ad-based models with different tax implications. It further suggests policy recommendations to harmonize AI advancements with evolving tax laws, ensuring a fair and efficient taxation system for the growing OTT industry. This study underscores the need for a robust AI-driven tax framework to ensure compliance while minimizing regulatory complexities for digital businesses.
Keywords
Digital Media Ethics, IT Rules 2021, OTT Content Regulation, Framework for Digital Media, Content Moderation