Various prominent social media influencers would come under investigation from the income tax department concerning tax fraud, as revealed in the list. Although the identities of these people are kept a secret, it is clear that tax officials are taking action against influencer tax avoidance.
To prevent any legal repercussions, it is essential for social media influencers to be aware of their tax requirements and commitments.
Most-important Income Tax Implications for Social Media Influencers
Following are the key points that social media influencers should keep in mind when implementing income tax:
Income Tax Liabilities for Social Influencers
Social media influencers are deemed independent contractors, and their taxation is structured likewise to that of other independent contractors in the workforce. Influencers are needed to provide an income tax return (ITR) every year in which they are needed to disclose all of their income, including money made through sponsored content, brand endorsements, and product placements.
The joint chairman and managing director, Sanjiv Bajaj, highlights the need for tax compliance for social media influencers:
Yes, social media influencers’ income is taxed in India. Social media influencer tax evasion has been a target of the income tax department’s recent crackdowns, and there have been several high-profile instances of influencers being discovered and punished.
Income Tax Slab Rates for Social Influencers
In India, social media influencers are taxed in the same manner as any other self-employed individual is.
According to Bajaj, influencers must submit an income tax return (ITR) every year and detail all of their income, including earnings from sponsored posts, brand endorsements, and product placements. The income tax authorities now compel influencers to pay a tax deducted at source (TDS) on any freebies or incentives worth more than Rs 20,000 received from businesses.
In India, the tax rate for social media influencers would be laid on the income bracket.
- The Individuals securing an annual income of up to Rs 2.5 lakh: nil.
- The individuals posing an annual income exceeding Rs 2.5 lakh up to Rs 5 lakh: 5%.
- The Individuals holding an annual income exceeding Rs 5 lakh up to Rs 10 lakh: 20%.
- The Individuals having an annual income exceeding Rs 10 lakh: 30%.
Influencers should carefully calculate their income and pay the appropriate taxes. Penalties and legal repercussions may ensue from underreporting income or avoiding taxes.
Tax and GST Payment Requirement for Social Influencers
Social media influencers may also be required to pay other taxes, such as the Goods and Services Tax (GST), in addition to income tax.
As per GST regulations, social media influencers whose income exceeds Rs 20 lakh in a fiscal year must register their services under GST. Influencer services are under the category of Online Information and Database Access or Retrieval Services (OIDAR), GST at a rate of 18% is applicable.
The tax, which is assessed on the value of the service provided by influencers, including consulting and training services, may also be liable here.
Influencers should keep proper records of their business expenses, travel expenses, and other related expenses in order to claim deductions and reduce the tax burden. These documents can lower their overall tax liability and are necessary for filing the income tax return.
Tax Laws for Social Influencers
Social media influencers must comprehend and abide by tax regulations if they are to fulfil their tax duties and stay out of trouble with the law and fines. It is wise to seek the advice of a certified tax specialist or chartered accountant(CA) who can offer advice tailored to their financial circumstances and guide them through the complexity of taxation.
Social media influencers may create a long-lasting, legally-compliant company while providing their fair amount to the nation’s revenue by maintaining knowledge of and observing tax laws. Being proactive and in compliance is always preferable to suffering the effects of non-compliance.
