Do YouTubers and Influencers Pay Tax in India?

The number of influencers on YouTube and other social media channels has increased significantly during the last couple of years. With the pandemic limiting face to face marketing interactions, brands had to find innovative ways to get their message across and build deeper connections. 

Consumers, as well, spend much more time on social media now than ever before. Social media is a way to stay connected with friends and families, given the travel restrictions imposed around the globe. But more importantly, social media is the new way to remain updated about current affairs, changing trends, and new products. 

Brands have found that working with social media influencers help them market their products and services to a wider audience. Social media platforms such as YouTube, Instagram, Facebook, Twitter, etc., have created numerous opportunities for influencers to promote products and services across fashion, cosmetics, lifestyle, travel and tourism, etc.

In this article, we discuss the tax implications on YouTubers and influencers in India.

Income tax implications on YouTubers and influencers

The income earned by YouTubers and influencers is chargeable to income tax under the head profits and gains from business and profession. For individual influencers, the income is chargeable at the slab rates in force. 

YouTubers and influencers earning a gross total income in a financial year that exceeds Rs.1 crore are liable to get a tax audit done on their books of accounts. This limit has been increased to Rs.10 crore if not more than 5% of the aggregate of all payments received in that financial year is through cash.

Under the Income Tax Act, tax deducted at source (TDS) could also apply to payments made to YouTubers and influencers. The rate of TDS applicable will depend on the nature of the service rendered, or the type of transaction entered into.  

GST on income earned by YouTubers and influencers

Services by YouTubers, influencers and bloggers are considered Online Information and Database Access or Retrieval Services (OIDAR) under GST Law. In simple words, these are services where information technology is used to deliver information over the internet or an electronic network.

A YouTuber or influencer must get registered under GST if their turnover exceeds Rs.20 lakh in a financial year, or Rs.10 lakh if they are based in special category states. However, if a service is provided to a registered recipient in a state different from the YouTuber or influencer, then registration is mandatory irrespective of the total turnover.

The GST rate applicable on services rendered by GST-registered YouTubers and bloggers is 18%. This is 9% each of Central Tax (CGST), and State Tax (SGST) charged or 18% of Integrated Tax (IGST), depending on whether the supply made is intrastate or interstate, respectively. 

In the case of export of services, then the rate of GST applicable is 0%. The YouTuber or influencer exporting services have two options to export their services. Either they can export service by furnishing a Letter of Undertaking (LUT), or they can pay IGST and later claim it back as a refund. In advertisements run on platforms like Google Inc and Google AdSense, which most YouTubers use, the supplies are zero-rated as the recipient of services is located outside India. 

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in