Dharma Productions just won a ₹12 crore tax dispute against Maharashtra GST officials. The Bombay High Court ruled that a digital film license isn't "Information Technology software," despite its online delivery. This sets a precedent for how other forms of passively consumed digital content get taxed.
How We Got Here
Before October 2021, India taxed IT software IP at 18% GST, while other IP rights were at 12%. Maharashtra officials argued Dharma’s films, delivered digitally, qualified for the higher 18% rate for the FY2017-2021 period.
The Numbers
- The court stated a passive audio-visual work "incapable of execution, manipulation or interactivity" cannot be IT software.
- Maharashtra GST department claimed digital film delivery was a "representation of data, sound or image recorded in a machine-readable form."
- The state also argued film downloads qualified as "Online Information Database Access and Retrieval (OIDAR) service" under IGST Act guidance.
- The 12% vs. 18% tax rates for IP rights were merged into a single 18% rate effective October 1, 2021.
What Happens Next
🇮🇳 Why This Matters for India
For digital content creators in Bollywood and regional film industries across Mumbai and Hyderabad, this ruling clarifies how their pre-2021 digital IP was taxed.
The Take
This is a clear win for content houses, shielding them from retroactive tax demands on legacy digital IP deals. What’s missed is the subtle signal that courts are willing to push back on revenue authorities trying to broadly apply "software" definitions to passive media.
Source:
MediaNama ↗