Income Tax News: In today’s digital world, content creators and influencers are making waves and minting money through their presence on social media platforms like YouTube, Instagram, X, and more. But as these platforms are often based abroad, Indian tax laws come into play for streamers and influencers earning an income from their social media activities.
How is Your Social Media Income Taxed?
The earnings from your YouTube channel, Instagram posts, X tweets, etc. can be classified either as ‘Income from Business and Profession’ or ‘Income from Other Sources’ under the Income Tax Act. If content creation on social media is your full-time profession and primary source of income, it will likely be treated as business income. However, if it’s just a casual side-gig, the income may fall under ‘Other Sources’.
Deductions – What Expenses Can You Claim?
For business income, you can claim deductions for expenses incurred in running your social media operations, like equipment costs, internet charges, etc. But for income classified as ‘Other Sources’, only expenses directly related to earning that specific income can be deducted.
No matter the income source, maintain proper records of your expenses, as tax authorities may ask for them. Compliance requirements like tax audits and book-keeping also apply if your income is classified as business income.
TDS – That Inescapable Tax Deduction
Tax Deducted at Source (TDS) applies to your social media income, whether paid by an Indian or foreign entity. For Indian payouts above Rs. 30,000, a 10% TDS is deducted under Section 194J. For foreign payments, check the Double Taxation Avoidance Agreement (DTAA) between India and that country to see if you can claim tax credits.
GST Registration
If your annual income from providing ‘Online Information and Database Access or Retrieval Services’ (OIDAR) like blogging or influencing crosses Rs. 20 lakh (Rs. 10 lakh for special category states), you’ll need to register for Goods and Services Tax (GST). An 18% GST applies on your registered services.
Filing ITR
How you report your income on your ITR depends on who’s paying you:
- Foreign Company: If a foreign company pays you, it’s considered foreign income, and you’ll need to file an ITR regardless of the amount.
- Indian Company: If an Indian company pays you, it’s domestic income, and you’ll follow regular ITR filing rules.
This information is for general guidance only. Consulting a tax advisor is a smart move to ensure you’re following all the rules and maximizing your tax benefits.