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Tax authorities crack down on social media influencers evading taxes. Income must be declared categorically. Penalties apply for non-compliance. Stay informed and proactive!

Additional tax implications for social media income

In a recent development, income-tax authorities have taken action against social media influencers who attempted to dodge paying taxes for income from social media. It's a reminder that paying taxes for income from social media is obligatory. When it comes to income tax filing, there are two distinct methods of income declaration: self-employed social media professionals can classify it as business income, while those who earn from social media as a side hustle may categorise it under other sources of income.

Highlights:

  • Social media income tax is based on the applicable income tax slab rates in India.

  • Social media platforms may deduct TDS on payments made.

  • If the total income from social media exceeds the specified limit, tax audit provisions may apply.

  • Evading taxes on social media income can call for legal action and penalties.

Tax slab and rates on any income earned

Under the new tax regime FY 23-24 

  • Up to Rs.3 lakh - 0% (Nil)

  • Rs 3 lakh to 6 lakh - 5%

  • Rs 6 lakh to 9 lakh - 10%

  • Rs 9 lakh to Rs 12 lakh - 15%

  • Rs 12 lakh to Rs 15 lakh - 20%

  • Above Rs 15 lakh - 30%

Under the old tax regime FY 22-23

  • Up to Rs. 2.5 lakhs – Nil

  • Rs. 2.5 lakhs – Rs. 5 Lakhs – 10%

  • Rs. 5 lakhs – Rs. 10 Lakhs – 20%

  •  Rs. 10 lakhs and above – 30%

With foreign income, it is mandatory to file a return even if income is less than Rs. 2.5 lakhs. Additionally, for any gifts and perks received through social media that exceed Rs. 20,000, one must pay Tax Deducted at Source (TDS). These deductions are listed in the Annual Income Statement (AIS).

Also Read: Nil in ITR and its importance

Additional tax implications for social media income

For social media income exceeding Rs. 20 lakhs in a fiscal year, registration of services under GST law is mandatory. These services are classified as Online Information and Database Access or Retrieval Services (OIDAR) and are subject to an 18% GST rate. Also, if the total income from social media exceeds the specified limit, tax audit provisions may apply.

To claim deductions and minimise tax liabilities, one should maintain accurate records of business expenses, travel expenses, and other relevant expenditures which can reduce the overall tax burden.

Also Read: Filing ITR? Here are some common mistakes to avoid 

Popular social media income streams

Activities that generate income from popular platforms like YouTube, Instagram, Twitter handles, and Facebook are: 

  • Influencer marketing

  • Sponsored content

  • Affiliate marketing

  • Selling products or services

  • YouTube ad revenue

  • Facebook advertisement breaks

  • Sponsored live streams

  • Instagram shopping posts

Parting thoughts

 Accurate income tax filing, considering TDS implications and referring to the AIS, is essential for social media professionals and salaried with a side hustle. This applies to various platforms, including income from YouTube and Instagram.\

Click here for the latest articles related to Wise Up.

In a recent development, income-tax authorities have taken action against social media influencers who attempted to dodge paying taxes for income from social media. It's a reminder that paying taxes for income from social media is obligatory. When it comes to income tax filing, there are two distinct methods of income declaration: self-employed social media professionals can classify it as business income, while those who earn from social media as a side hustle may categorise it under other sources of income.

Highlights:

  • Social media income tax is based on the applicable income tax slab rates in India.

  • Social media platforms may deduct TDS on payments made.

  • If the total income from social media exceeds the specified limit, tax audit provisions may apply.

  • Evading taxes on social media income can call for legal action and penalties.

Tax slab and rates on any income earned

Under the new tax regime FY 23-24 

  • Up to Rs.3 lakh - 0% (Nil)

  • Rs 3 lakh to 6 lakh - 5%

  • Rs 6 lakh to 9 lakh - 10%

  • Rs 9 lakh to Rs 12 lakh - 15%

  • Rs 12 lakh to Rs 15 lakh - 20%

  • Above Rs 15 lakh - 30%

Under the old tax regime FY 22-23

  • Up to Rs. 2.5 lakhs – Nil

  • Rs. 2.5 lakhs – Rs. 5 Lakhs – 10%

  • Rs. 5 lakhs – Rs. 10 Lakhs – 20%

  •  Rs. 10 lakhs and above – 30%

With foreign income, it is mandatory to file a return even if income is less than Rs. 2.5 lakhs. Additionally, for any gifts and perks received through social media that exceed Rs. 20,000, one must pay Tax Deducted at Source (TDS). These deductions are listed in the Annual Income Statement (AIS).

Also Read: Nil in ITR and its importance

Additional tax implications for social media income

For social media income exceeding Rs. 20 lakhs in a fiscal year, registration of services under GST law is mandatory. These services are classified as Online Information and Database Access or Retrieval Services (OIDAR) and are subject to an 18% GST rate. Also, if the total income from social media exceeds the specified limit, tax audit provisions may apply.

To claim deductions and minimise tax liabilities, one should maintain accurate records of business expenses, travel expenses, and other relevant expenditures which can reduce the overall tax burden.

Also Read: Filing ITR? Here are some common mistakes to avoid 

Popular social media income streams

Activities that generate income from popular platforms like YouTube, Instagram, Twitter handles, and Facebook are: 

  • Influencer marketing

  • Sponsored content

  • Affiliate marketing

  • Selling products or services

  • YouTube ad revenue

  • Facebook advertisement breaks

  • Sponsored live streams

  • Instagram shopping posts

Parting thoughts

 Accurate income tax filing, considering TDS implications and referring to the AIS, is essential for social media professionals and salaried with a side hustle. This applies to various platforms, including income from YouTube and Instagram.\

Click here for the latest articles related to Wise Up.