Navigating Taxation as a Social Media Influencer: What You Need to Know

Author name: Vipin Sharma

Created date: 16-05-2024

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In the digital age, social media has transformed from a mere platform for personal expression to a lucrative career opportunity for many. As influencers carve out a niche in this dynamic industry, they face unique financial considerations, particularly in terms of taxation. The rise of social media influencers has caught the attention of tax authorities worldwide, leading to specific regulations regarding Income Tax and Goods and Services Tax (GST). Understanding these tax implications is crucial for influencers to ensure compliance and optimize their financial management. This blog delves into the intricate world of taxation for social media influencers, shedding light on how income tax and GST affect their earnings and operational practices.

Who are Youtubers, Influencers and Finfluencers?

Influencers - Social media influencers are digital creators with expertise in a specific niche. Social media influencer shares content they're passionate about, build and engage with an audience of their followers, and collaborate with their different brands.

YouTubers - A YouTuber is a type of social media influencer who uploads or creates videos on the online video-sharing website YouTube, posting videos to their personal YouTube channel.

Finfluencers - Finfluencer is also a type of social media influencer, these are individuals with a significant presence on social media platforms who offer financial advice, share personal experiences related to money management, and discuss various investment topics.

How these people make money?

Ad sense – Youtubers, Influencers and Finfluencers make money from google adsense, but mainly youtubers earn money from this by posting their videos on youtube or such related platform.

Brand collaboration – Youtubers, Influencers and Finfluencers make money by collaborating with brands.

Selling merchandise – Youtubers, Influencers and Finfluencers make money by selling their name or their famous dialogue merchandises.

Events – Youtubers, Influencers and Finfluencers also make money by doing public events and sponsored events.

GST needed for Youtubers, Influencers and Finfluencers?

As specified under GST act, any person whose annual revenue crosses Rs.20 lakhs (10 lakhs in some states) by providing services, are required to have GST registration. If your annual turnover is less than Rs. 20 lakhs then it’s not compulsory to have GST registration but you can register voluntarily. As youtubers are exporting a service by creating and posting videos on YouTube platform so here the supplier is the youtuber and the recipients are viewers who are watching those videos on YouTube and its head office is situated outside of India, the payment is received in exchangeable foreign currency and the supplier is located in India, so it will be considered as export of service. Indian government has made exports tax exempted (some specified exports are taxed), and this service falls under exempted section, so youtubers don’t need to pay any GST for income received from YouTube or such platforms, but for being tax exempted you need to furnish LUT (Letter of Under Taking). Same for influencers and finfluencers, as they also make videos on YouTube and such other platform qualifying the exports statement said in GST act influencers and finfluencers also don’t have to pay any GST on income from YouTube or such other platforms. Now a question arises ‘are all the income exempted from GST?’

Well no, all the incomes of Youtubers, Influencers and Finfluencers are not exempted, only the income from export of services are GST exempted but if you provide any services to any business in India then you will have to pay tax accordingly. All the B2B or B2C invoices made to recipient in India, will be liable to be taxed under GST.

Income tax for Youtubers, Influencers and Finfluencers

Youtubers, Influencers and Finfluencer’s income is from youtube or such other platform are considered as business income. Income from Youtube or such other related platform are taxed as per normal tax slab rate in India, they also have an option to Opt section 44AD of income tax act in which if your annual turnover is less than 3 cr, then 6% of your total turnover or actual income whichever is higher will be considered as your net income and you will be taxed on that income. Point to note here is that once you Opt 44AD then you have to continue that for 5 years if you change back to normal taxation system then you can’t opt 44AD again for 5 years. If you don’t opt 44AD then you will be taxed normally, your whole income less your expenses will be your net income and that will be taxed according to tax slab rate.