What is the tax implication on Income From YouTube, Google Adsense, Blogging, and Affiliate Marketing in India?
We all are aware that Online Platforms like YouTube, Netflix, Instagram, Facebook, and many other online Platforms are growing day by day and the number of users of these platforms is increased drastically. In the current Era Youtuber, Blogger, Online Content Writer, and Creator are very Trending Profession in the Indian Market. Youtuber and Blogger is not just a Profession but it is a big platform for earning Money in Dollars and Bloggers and Youtubers are the new full-time profession in India.
Many Bloggers and Youtubers are earning lakhs of rupees per month but many of them are not aware of the tax implications on their income and likewise, they want to know:-
- How much Income Tax will be paid on Blogging Income, YouTube Income, Google Adsense Income?
- Is GST applicable on Youtube Income, Google Adsense Income?
- Which type of ITR Form is required for Youtuber or Bloggers?
- Income from Youtube is Business Income or Other Source Income?
- Audit under any Act is required for Blogger or Youtuber?
- Tax Implications on other online earnings?
- How to pay taxes on Youtube Income and Google Adsense Income?
Income Tax (Direct Tax) Implication on Bloggers & YouTubers?
First, we understand Why Income from YouTube and Google Ad-sense is Taxed in India?
As per the Indian tax laws, if any income is received in India, it will be taxable as per Income Tax Act,1961. Many of us are thinking that these incomes are coming after all deduction of taxes. So, why we are paying taxes again in India.
Here we are sharing a copy of the contract between Google or content creators (Advertisers). In that contract Point, No. 7 (Taxes) clearly mention that “All payments to you from Google in relation to the Services will be treated as inclusive of tax (if applicable) and will not be adjusted”. which means all payments received from google are gross receipts and not the net off Taxes.
and one more point is clearly mentioned in the contract that “If Google is obligated to withhold any Taxes from its payments to you, Google will notify you of this and will make the payments net of the withheld amounts. Google will provide you with original or certified copies of tax payments (or other sufficient evidence of tax payments) if any of these payments are made by Google”
Means if Google deduct any taxes they will notify to us and provide certified copies of tax payments.
So, in simple language, we can say that if you earn any amount of income from YouTube, Blogging or Google Ad-sense are taxable (required to pay tax) in India under the income tax Act as a Business Income.
Now, Question arises is that How is YouTube and AdSense Income treated under Income tax law?
We have two options for Income from YouTube and Google AdSense treated as:-
- Income from Business or Profession
- Income from Other Sources
(1.) Income from Business or Profession:-
If YouTube or Blogging is your full-time business or the main source of income, then you may offer your income under the head of “Income from Business or Profession”.
So, for the purpose of Business, You can run your business as a Sole Proprietorship Business, Partnership Firm, or Register as a legal entity like a Private Limited Company or LLP.
In each type of Business different tax rates and different compliance is applicable. Let’s try to understand tax compliance under Sole Proprietorship Business.
Under Sole Proprietorship Business YouTuber or Blogger has to maintained a List of all expenses incurred for earning Income Like:-
- Hosting Charges
- Advertisement charges
- Domain Charges
- Software purchased
- Subscription purchased
- Internet expenses
- Travelling Expenses
- camera related expenses
- Tools purchased
- Travelling Expenses
- any other related expenses
Under the Income tax act, you can claim the above expense as an expenditure from your income from YouTube or AdSense and pay taxes on net income (after setting off the above expense).
For Example:- let’s assume Mr. A Earn Rs. 10 lakh from Google AdSense in a year and he also incurred expenses as above let say Rs. 2 lakh then, the net profit of Mr. A is Rs. 8 lakh. tax should be computed on Rs. 8 Lakh as per income tax law.
Note:- To claim the expenditure as above, the business should maintain proper documents or Books relating to the same like Invoice copy, Payment details, etc.
Alternatively, Under the income tax act, Individual has one more option you can take the benefits of Presumptive taxation under section 44AD of the income tax act and declare 6% of gross receipts (as the receipt is through an electronic medium) as Net Profit. under this No Books of accounts need to be maintained if presumptive taxation has opted. This is in fact the best option to save tax if your business makes a consistent profit. you have to pay taxes only on 6% of your total earnings before expenses. under presumptive taxation benefits of claiming expenses not available, this provision is available up to Rs. 2 Crore Gross receipts.
(2.) Income from Other Sources:-
If YouTube or Blogging is your part-time activity as of your Hobby or it’s not your main source of income, then you may opt to offer your income under the head of “Income from other sources”. Nowadays It’s very common for many people are doing blogging and YouTube just to earn an additional income.
For Example:- Mr. A doing Job in XYZ company and he takes Rs. 50,000/- p.m. as a salary. He also interested in Travelling and adventure activity and he started a YouTube Channel and uploading a review video of his travelling and from that videos, he made 100,000/- during the year after deducting all expenses related to making video.
Here, now under Income tax Return(ITR), he will show his income from salary is Rs. 6 Lakh and Income from other source are Rs. 1 Lakh, Total income is Rs. 7 lakh, and tax will be calculated at applicable rates after considering tax savings.
Is GST applicable to YouTubers & Bloggers?
Now, we have come to the GST Implementation on the YouTuber or Bloggers. As per the general rule of the GST Act, 2017, if Services or goods Provided by any person exceeds Rs. 20 Lakh Rupees in a Year (10 Lakh for special category states) are covered under the GST Act, and Registration under GST is required.
In our case, first, we have to understand how income is generated through YouTube or Blogging?
In India, Most YouTubers and bloggers use advertising portals like Google AdSense. Google Adsense works there as the facilitator agencies, who place ads on their video and blogs and they receive clicks. AdSense works as a medium and bloggers do not know the advertisers behind the system. from that they earn dollars and receive payment through PayPal.
GST Applicability on Youtubers & Bloggers:-
As per section 2(17) of IGST Act 2017:- Online Information and Database Access or Retrieval services(OIDAR) means services whose delivery is mediated by information technology or over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronics services such as advertisement on the internet.
as per the above definition Nature of service provided by Youtuber or Blogger is considered as OIDAR services and GST is applicable like OIDAR services.
Note:- As per the GST Act, any services provided to outside India (Google is from outside India) and service provider is from India(Bloggers & YouTubers) and Payment received in convertible foreign exchange then this will be considered as Export of services under GST law.
and as per provision of Section 16(1)(a) of IGST Act 2017, export of services is considered as zero-rated supply. That means YouTubers & bloggers are providing Zero Rated (0%) services to Google Ad Sense. In case, if such services provided to any company who registered in India, it will not be considered as zero-rated and GST Rate will be 18%
So, It is mandatory for YouTubers & bloggers to registered in GST if their total receipts (aggregate turnover) exceed the upper limit of Rs 20 lakhs(10 lakhs in special category states) which is the prescribed limit for registration for service providers under the GST Act 2017.
Bloggers & YouTubers are required to file GST Returns such as GSTR-1, GSTR-3B, and Annual Return GSTR-9. and they are also required to generate GST invoices and keep them along with books of Accounts. That will help for GST compliance.
Further, YouTubers & blogger services are considered as export of services and they will get their payment directly in the bank account, for that, a Foreign Inward Remittance Certificate (FIRC) is required to claim any refund. FIRC is a certificate issued by the bank against any inward remittance received against an export. You can collect your FIRC from your Bank.
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