Income tax on social media income: The income tax department has lately disclosed a list of famous social media influencers who may have engaged in tax fraud. Although the identities of these people are kept a secret, it is clear that tax officials are taking action against influencer tax avoidance.
To avoid any legal repercussions, it is essential for social media influencers to be aware of their tax requirements and commitments.
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The following are the main things about social media income of influencers should know about taxation.
Income tax obligations For social media influencers
Social media influencers are regarded as self-employed people, and their taxation is handled in a manner similar to that of other self-employed professionals. Influencers must submit an income tax return (ITR) each year in which they must disclose all of their income, including money they get for sponsored content, brand endorsements, and product placements.
“The social media income are taxed in India. The income tax department has been cracking down on tax evasion by social media influencers in recent years, and there have been a number of high-profile cases of influencers being caught and penalised.” said by Sanjiv Bajaj, joint chairman and managing director.
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Tax rates for social media income
Every year, influencers must submit an income tax return (ITR) in which they must disclose all of their earnings, including those from sponsored content, brand endorsements, and product placements. Additionally, the income tax office mandates that influencers pay tax deducted at source (TDS) on any freebies or perks they receive from firms that total more than Rs 20,000.
The Income Tax rate under old tax regime for social media influencers in India depends on their income bracket.
- Individuals with an annual income of up to Rs 2.5 lakh: nil.
- Individuals with an annual income above Rs 2.5 lakh up to Rs 5 lakh: 5 per cent.
- Individuals with an annual income above Rs 5 lakh up to Rs 10 lakh: 20 per cent.
- Individuals with an annual income of more than Rs 10 lakh: 30 per cent.
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Additional tax implications for social media income
Social media influencers may also be required to pay other taxes, such as the Goods and Services Tax (GST), in addition to income tax. According to the GST rules, social media influencers who make more than Rs 20 lakh in a fiscal year must register their services. Influencer services fall under the category of Online Information and Database Access or Retrieval Services (OIDAR), which have a GST charge of 18%.
Influencers may also be liable to pay this tax, which is levied on the value of services they provide, including consulting services and training services.
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Deductions
Influencers should keep proper records of their business expenses, travel expenses, and other pertinent expenses in order to claim deductions and reduce tax liability. These documents can lessen their overall tax liability and are necessary for completing the income tax return.
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