YouTubers need to pay income tax? Rate on income earned by YouTubers and bloggers

Tax Implications for YouTubers and Influencers: Understanding the Income Tax and GST Rules

YouTube video blogging, or vlogging, has become immensely popular, with many content creators earning income from their online presence. However, the tax implications surrounding this form of income generation are often misunderstood. In this blog post, we will delve into the tax regulations applicable to YouTubers and influencers, shedding light on key aspects that they need to consider.

Income Tax Considerations:

Under the Income Tax Act, the income earned by YouTubers and influencers is classified as business income and falls under the category of “profits and gains from business and profession.” Individual influencers are liable to pay income tax based on the applicable slab rates. However, there are certain thresholds and requirements that need to be met.

For instance, YouTubers and influencers earning a gross total income exceeding Rs.1 crore in a financial year are required to undergo a tax audit on their books of accounts. However, if not more than 5% of the aggregate of all payments received in that financial year is made in cash, the threshold for tax audit increases to Rs.10 crore.

Section 44AB of the Income Tax Act deals with the audit of accounts for specific individuals. Individuals meeting the requisites as prescribed under this section must ensure that their accounts are audited by a certified chartered accountant.

Alternatively, YouTubers and influencers can opt for presumptive taxation under section 44AD. In this case, they are exempted from the audit requirement mentioned in section 44AB. The taxable income is determined based on the net income after considering business expenses and depreciation, as per the income tax slab rates.

GST Implications:

When it comes to the Goods and Services Tax (GST), the services rendered by YouTubers and bloggers fall under the purview of GST. The applicable GST rate for their services is 18%, which includes 9% CGST (Central Goods and Services Tax) and 9% SGST (State Goods and Services Tax) or 18% IGST (Integrated Goods and Services Tax).

Classification of Income:

The income earned by YouTubers and influencers may be categorized as business income or income from other sources, depending on factors such as the time and effort they invest on a day-to-day basis. If they engage in additional activities like conducting online courses or one-off sessions for a fee, their income could be considered as consultancy income. This classification is relevant as the tax schemes and audit limits differ for businesses and professions. The income is taxed at the slab rate applicable to the individual, and expenses incurred for earning such income can be deducted to arrive at the net taxable income.

Minors and Taxation:

In the case of minor YouTubers and influencers, their income is generally taxed in the hands of their parents. However, since their income is derived from their own skills, it can be treated as accruing to the minors themselves. Hence, their income should be taxed in their hands only and not clubbed with their parents’ income. This allows them to benefit from the slab rates applicable to their own income.

It is crucial for YouTubers and influencers to understand and comply with the income tax and GST regulations applicable to their earnings. Seeking professional guidance from qualified tax experts or chartered accountants can help ensure proper compliance and minimise any potential tax liabilities.

Disclaimer: This blog provides general information about the tax implications for YouTubers and influencers in India. It is advisable to consult with a qualified tax professional to understand the specific tax requirements based on individual circumstances.

Looking for expert tax guidance? Contact Inside Tax today to ensure compliance with income tax and GST regulations as a YouTuber or influencer. Our team of qualified professionals will help you navigate the complexities and maximize your tax benefits. Take the first step towards financial peace of mind and reach out to us for personalized assistance. #InsideTax #TaxCompliance #ExpertGuidance