Tax Obligations for Social Media Content Creators
- PRITI SIRDESHMUKH
- 3 hours ago
- 7 min read
Social media content producers are at the vanguard of the constantly changing digital scene, influencing consumers and setting trends. But great power also comes with great responsibility, which includes handling your taxes and money. It's essential to comprehend your tax responsibilities in order to maximise your deductions and prevent any legal issues. Our area of expertise is offering complete tax solutions that are suited to the particular requirements of content producers. The elements of completing your Income Tax Return (ITR), such as the applicable tax rates, permitted deductions, and the effects of GST on your income, will be covered in this article.
Table of Contents
What is the Income of Social Media Content Creators?
Social media use has skyrocketed in tandem with technological advancements and the growing number of internet users. Content creation and monetisation on social media is now feasible. Put another way, social networking has evolved into a source of revenue for a variety of people, either actively or passively. The fact is, in certain situations, social media revenues surpass even mainstream income. As a result, the income tax agency has started looking into people who failed to disclose their income from social media when they filed their ITR. Social media influencers have received multiple notices for tax evasion. As a result, it's critical to comprehend how social media income affects taxes.
Sources of Income for Social Media Content Creators
Social media content creators can earn through the following sources:
Revenue from Advertising: Creators, particularly influencers, rely heavily on the money they make from advertisements that appear on social media sites like YouTube, Instagram, and others.
Collaborations with brands and sponsorships Influencers on social media frequently work with businesses and brands to market their goods to their followers on digital channels. In exchange for endorsing the companies, goods, and services, these influencers get compensated.
Affiliate Promotion Influencers on social media can also make money by using affiliate links to promote goods and services.
Revenue from the creation of content for brands, including writing, photography, and video production.
Conversations and Contributions revenue from super chats and contributions from fans, like those made via YouTube's super chat function.
Revenue from the direct sale of branded goods/merchandise to followers is referred to as merchandise sales revenue.
Taxability of Social Media Income
Social media revenue will be subject to taxation based on both the amount of revenue and the degree of activity. For instance, the amount of money earned and whether social media is a primary or secondary source of income will determine which tax bracket the income falls under. Income from social media can be divided into two categories:
Income from Business or Profession: The revenue from social media will be taxed under the heading of income from business or profession if the person creates content for social media on a full-time basis and it is their main source of income. Additionally, social media revenue is considered to be from a business or profession and is subject to business income tax rates if it surpasses the income from the principal source.
Income from Other Sources: Social media revenue is categorised as income from other sources if it is a person's supplemental source of income rather than their main source. Additionally, earnings from social media are classified as income from other sources if they are not significant.
Tax Obligations of Social Media Content Creators
Individuals who make money from social media platforms must report it under the relevant heading. These individuals must adhere to tax laws in a way akin to that of professionals who work for themselves. All of your income, including that from sponsored articles, product placements, and brand endorsements, must be disclosed when you file your ITR. Additionally, tax evaders using social media have been the target of a crackdown by the income tax department. You must make sure that you disclose any income you receive from social media and pay taxes on it at the appropriate rates.
Rate Applicable to Income Tax on Social Media
Income from social media is not subject to a particular tax rate. The head under which social media income is categorised determines the tax rates. For instance, social media revenue is subject to income tax at the rates of the applicable income tax slab if it is categorised as business or professional income. In a similar vein, social media income is taxed as such if it is categorised as income from other sources. People who make money on social media must record their earnings and file their ITR each year. According to the Income Tax Act, TDS must be deducted from any perks or gifts from brands that total more than Rs. 20,000.
Slab Rate under the New Tax Regime
Income Range
| Tax Rate
|
Upto 3,00,000 | Nil |
3,00,000-6,00,000 | 5% |
6,00,000-9,00,000 | 10% |
9,00,000-12,00,000 | 15% |
12,00,000-15,00,000 | 20% |
Above 15,00,000 | 30% |
Slab Rate under the Old Tax Regime
Income Range
| Tax Rate
|
Up to 2,50,000 | Nil |
2,50,000-5,00,000 | 5% |
5,00,000-10,00,000 | 20% |
Above 10,00,000 | 30% |
Deductions Allowed on Social Media Income
The guidelines for claiming deductions under the income from business/profession and income from other sources are varied according to the Income Tax Act. If the income is taxed under the heading of income from other sources, then the only expenses that are deductible are those that were directly or entirely incurred for the purpose of producing that specific revenue. However, when it comes to business income, both the direct costs incurred to generate that money and the costs incurred to run the business are deductible. These include:
Business expenses include things like camera gear, lighting, editing software, and props that are directly associated with creating content.
Travel Costs: The costs associated with travelling for business meetings or content production.
Phone and Internet Bills: The amount of your phone and internet bills that are related to your business.
Home Office Expenses: You may deduct a portion of your rent, utilities, and upkeep if you utilise a portion of your house only for work.
Professional Fees: Money paid to independent contractors or freelancers, such as graphic designers, photographers, or video editors.
For instance, the cost of the equipment needed to film a clip for Instagram or a video for YouTube will be regarded as business expenses and can be written off when calculating both company and non-business revenue. Likewise, the price of getting a blue tick on X (Twitter) has nothing to do with making money. As a result, it cannot be classified as income required to generate the aforementioned revenue and cannot be deducted as an expense under the heading of income from other sources.
GST Implications on Social Media Income
Social media influencers and content producers who offer services are subject to GST (Goods and Services Tax). You are required to register for GST if your yearly turnover surpasses Rs. 20 lakh (Rs. 10 lakh for states in specific categories).
Registration for GST is required if your income is over the threshold. You have to charge GST for your services after registering.
GST Rate: 18% is the typical GST rate for services.
GST returns must be filed on a regular basis. This covers both an annual return and monthly or quarterly returns.
GST Implications on Social Media Marketing Service
GST is applied to the money you get paid when you offer social media marketing services. What you should know is as follows:
Applicability: If your turnover exceeds the designated threshold, GST will be charged.
Rate: 18% GST is the appropriate rate for marketing services.
Compliance: Make sure you complete your returns on time and deliver accurate invoices with GST information.
Conclusion
Maintaining a prosperous and law-abiding social media profession requires keeping up with your tax responsibilities. It is more crucial than ever to make sure you are fulfilling all legal obligations and utilising all of the available deductions, especially in light of the growing scrutiny around digital incomes.
Frequently Asked Questions
Do YouTubers need to pay taxes?
Yes, YouTube revenue is taxable at the appropriate slab rates. Your YouTube channel is taxed as business or professional income if it is your main source of income or accounts for a sizable portion of your total revenue. Likewise, the YouTube channel is subject to income from other sources if it is a secondary source of revenue.
Is there GST on social media marketing?
Social media marketing services fall under OIDAR (Online Information and Database Access or Retrieval Services) under the GST Act of 2017. There is an 18% GST charge for these services. However, only if the yearly revenue surpasses Rs. 20 lakhs is GST applicable.
Is money received from Google Pay taxable?
Google Pay is not a source of income in and of itself; rather, it is a way to make it easier to send and receive money. The same rules that apply to non-UPI receipts also apply to money received through Google Pay.
Do content creators pay GST?
If a content creator's total yearly revenue surpasses Rs. 20 lakh (Rs. 10 lakh for states in specific categories), they must register for GST. As long as all required paperwork is kept up to date, services rendered to clients outside of India are considered exports and may be eligible for zero-rated GST.
What is the TDS for content creators?
A new section 194R was added by the Finance Bill 2022, and it applies to perks and privileges that are worth more than Rs. 20,000 annually under section 194R of the Income Tax Act.
What is the GST rate for social media promotion?
If your yearly sales surpass the designated threshold (Rs. 20 lakh or Rs. 10 lakh for special category states), GST will be applied to the payments you receive when you provide social media marketing services. Marketing services are subject to an 18% GST charge.
Which ITR Form should Influencers file?
ITR-3 or ITR-4 are the options available to influencers.
ITR-3: If the influencer has not chosen the presumptive income plan, he should file ITR-3.
ITR-4: The influencer must submit an ITR-4 if he has chosen to use the presumptive income scheme.
Comments