Why Do Social Media Influencers Have To Pay Tax? How Is It Calculated In India?

Social media is considered to be the most effective source of connectivity and most of the people are using it as a primary resource in their daily lives.

From communication to entertainment to shopping, it’s the only solution we have for diverse requirements. The amount of people who use social media has risen dramatically over the last decade. At present, five-sevenths of the world’s population. It is expected to grow even more. So influencer marketing is now an essential element of a marketing strategy and is considered to be an effective method to reach the intended people and boost awareness. Other factors, like advertising and sponsorship could be appealing to influencers on social media.

Through this post I’ll guide you through why it’s essential to pay taxes even if you’re a social media influencer or a marketer. If that interests you then make sure to stick with the post till the end date it’s going to be a power pack info that’ll excel your knowledge about taxation to the peak.

How Social Media Influencers Are Taxed?

Since the income is regarded as a professional income and taxes are imposed at flat rates The tax on income can be gathered by two methods:

  1. From the Profession and business
    All revenues and expenses are considered The net income is considered to be taxable income. Exemptions, allowances deductions, exemptions and other rules in the Income Tax Act apply. If the declared earnings are lower than 50 percent of total revenue, an audit of tax is required by the Income Tax Act.
  1. Under Presumptive Scheme
    The residents who have gross receipts below INR 50 lakhs during the fiscal year are qualified. The IRS determines that 50percent of the gross revenue is taxable income. This isn’t qualified for additional deductions.

Everything You Need To Know About Influencers Taxation

Social Media Influencers have huge numbers of followers through frequently posting on their preferred platforms like YouTube, Instagram, Facebook and Snapchat. Influencers are taxed the same manner as every other individual or business who earns money. The classification of influencers is Self-employed individuals, or sole Proprietors of a business or business, which excludes partnerships and corporations with respect to tax. Income is regarded as the earnings of the business

Influencer income is typically regarded as earnings of a company that are subject to income tax as standard. However, those who are subject to the final tax or have been exempted from taxation under current rules are not included in the taxation rules. YouTube Partner Program, sponsored social and blog Posts, Display Advertising becoming a brand representative or Ambassador Affiliate Marketing, co-creating Project Lines and promoting your own products, photo and Video sales, digital courses Subscriptions, E-Books and more. amounts earned through podcasts and weblogs. regardless of whether it is in the form of money or in any other way, is business earnings that are subject to regular taxation.

  • What Is SO Tax?

The earnings of influencers are taxed under the heading of “Profits and gains from business as well as profession’. Earnings from individual influencers are taxed according to the current slab rates. Tax audits are carried out by looking at the accounts of influencers that earn more than one crore during a fiscal year. If no more than five percent of all transactions and 5percent of all transactions are in cash during the year in question the maximum amount of earnings for audit is increased to the amount of Rs 10 crore. Tax Deduction At Source (TDS) as defined by the Income Tax Act may be applicable to payments made to influencers. The TDS rate is determined by the nature of the service provided or the kind of transaction performed (TaxSlayer).

  • GST (Goods & Services Tax)

YouTubers, Bloggers, Influencers, and YouTubers have been classified by the government as Online Information and Database Access or Retrieval Services (OIDAR) under the Goods and Services Tax (GST) Act. In simple terms they are considered to be those that make use of technology for distributing information via the Internet or electronic networks. If the revenue of an influencer is greater than $20 lakh during the course of a fiscal year, they must be registered in accordance with GST. GST law. For influencers living in a state classified as a special-category state the maximum turnover is 10 lakh. GST at a rate of 18.5% is charged on the services offered through GST registered Social Media Bloggers and Influencers.

  • Rules Of Export Of Services

Central tax (CGST) and state tax (SGST) are taxed at a rate of 9-9% , based on the type of supply, whether either interstate or intrastate. We can also claim Integrated Tax (IGST) is taxed at 18 percent. When it comes to exporting services and products, the GST rate is zero. Social Media Influencers that want to sell their services abroad have two choices. The option is to either sell their services by supplying a Letter of Undertaking (LUT) or pay IGST and claim it as a reimbursement in the future. Google Inc. And the advertising on platforms such as Google AdSense is zero-rated. These platforms are extensively used by influencers, as they are the users of these services. are outside of India.

Can You Report On Your Tax Return?

You must report your earnings and expenditures on the Schedule C, which is filed alongside your personal tax return. This is not an independent taxpayer tax report if you are either a partnership or a corporation. The net income or profit from your company will count as the sum taxed. Additionally, you could be required to pay self-employment tax on the amount. There are plenty of amazing software and tools available on the market that allow you to track your earnings and expenses like QuickBooks as well as Quicken. The sooner you begin keeping track of these expenses more accurately and efficiently, the easier it will be when tax time.

Remember that your activities may be viewed as a hobby and not a business to the view of the IRS in the event that you aren’t reaching that “business” level. This means that your expenses won’t be tax-deductible.

Additionally, as you are self-employed, you are likely to not have state or federal withholdings on your earnings. You could be required to make each quarter estimated tax due during the course of the calendar year, to pay for your tax obligations.

Final Verdict

Social media is definitely an exciting future for marketing. The job as an influencer changing as a result of changing social needs and tax systems should be following the same pattern. Influencers can have a huge impact on the thinking of their followers, the opinions, and buying patterns of consumers. The Indian government introduced GST in the year 2017 and made an effort to ensure that it was as complete as possible to cover all business operations.

In order to let you know about the influencer’s taxation I’ve shared the preferred information that you require for the betterment of the knowledge. So if you’re someone who’s on the same track of being an influencer then it’s always better to find a way to tax as it plays a crucial role in every single business. 

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