Nowadays, most of us spend hours on social media. Social media is the simplest way to stay connected with friends, family members, and office colleagues. It is also considered the newest way to remain updated about the various things happening around the globe like new product launches, current affairs, and the latest trends. So now, most brands are connecting with various social media influencers to market their product and services to a global audience. Social media platforms like YouTube, Instagram, Facebook, and Twitter are creating thousands of opportunities for these influences to produce various products and services that includes tourism, fashion, cosmetic, lifestyle, etc.
So today, we will be discussing the implication of GST on social media/Instagram influencers.
The various tax implications on social media influencers
Most YouTubers and social media influences get a huge number of followers by hosting regular content on platforms like YouTube, Facebook, Snapchat, etc. So these influences are also taxed in the same manner as any other organization or company that earns money. Influences are considered as self-employed individuals or people who are engaged in trade or business as sole proprietors.
The earnings of these influences are regarded as company earnings which are subjected to Standard Income Tax.
Youtubers and influencers earn money in the following ways:
- Partner programs
- Blog post
- Online donations
- Sponsored social media post
- Becoming a brand ambassador or representative
- Affiliate marketing
- Co-creating project lines
- Promotion of own products like videos, photographs, digital courses, podcasts, and web blogs.
All of these are considered business income and subject to Regular Income Tax.
The earnings of these influences and bloggers are subjected to income Tax under the label ‘Profits and Gains from Business and Profession’. The influencer earning more than INR 1 crore in gross total revenue in a year; has to tax audit their books. Furthermore, The rate of TDS will be calculated depending on the type of service or the type of transaction made. The influencers might also need to do TDS Return Filing wherever applicable.
Understand the Implication of GST on social media/Instagram influencers
The services offered by influencers and YouTubers are considered Online Information and Database Access or Retrieval Services(OIDAR) under the GST law. Basically, information technology is used to deliver news information and other data via the internet when using these services.
So if an influencer or Youtuber is earning INR 20 lacs or INR 10 lakhs in special category states, they have to get GST Registration. As a result, they will also have to do GST Return Filing.. Furthermore, if the influencer is providing services or products to registered customers in a different state, then also GST registration has to be done irrespective of the total earning. The GST rate is applicable to the services and products offered by the influencers18%. This comprises 9% of the Central GST (CGST) and State Tax (SGST) or 18% of Integrated Tax(IGST). THE IGST totally depends on whether the supply made by the YouTuber or influencer is intra State or interstate.
If there is any case of export of services, then the rate of GST is 0%. The YouTuber or the blogger exporting these services will be given two options. Either they can pay IGST and later claim it back directly to the account as a refund, or they can export their services by sharing a Letter of Undertaking, LUT. In most of the advertisements published on Google Inc and Google AdSense, all the supplies made by the Instagram Influencers/ YouTubers are considered zero-rated as the recipients are non-Indian residents.
These influences are also allowed to deduct their business expenses from the total earnings to reduce the overall taxable income, which will therefore reduce the tax payment. But you need to keep in mind that these expenses are only tagged deductible if they are absolutely necessary or “ordinary and necessary” for your business as an influencer.
Some of the ordinary necessities are:
- Subscription and software licensing fee
- Net and communication expenses
- Home office expenses like utility and rent
- Office supplies and business expenses like transportation and travel expenses.
Influencers are also entrepreneurs and earn a good amount of money. Hence, they also need to pay taxes to avoid punishments and penalties and avail government schemes. There is an implication of GST on social media/Instagram influencers that you must know. If you require any further guidance, feel free to contact our business advisors.
Moreover, If you want any other guidance relating to GST Registration for Online Sellers at Flipkart, please feel free to talk to our business advisors at 8881-069-069.
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