New Delhi: Are you a social media influencer? Do you get paid for endorsing products and services on social media such as YouTube, Twitter, Facebook, Instagram and LinkedIn among others? If this is the case then you are required to disclose this income to tax officials and pay income tax on the same.
Income Tax Act provides that if anybody has income in excess of Rs 2.5 lakhs in the last financial year then he is required to file income tax on or before July 31. The Income Tax Act levies the income tax on income from five sources. These are income from salary, income from business or profession such as profits and gains, income from real estate such as rental income, income from capital gains and income from other sources.
If an individual or entity has income above the tax exemption limit then he is required to pay income tax as per the tax rate fixed for the relevant slab for that particular financial year. A social media influencer is required to pay income tax on his earnings from social media even if he or she has been already paying income tax on his salary or profits and gains from business or profession.
Also read: Nearly 6 crore ITRs filed for 2022-23 fiscal, Monday last date to file returns
Income Tax officials last month raided several social media influencers in Uttar Pradesh and Kerala and detected undisclosed income that was not declared to tax authorities. In Uttar Pradesh tax officials raided a YouTube content creator and recovered a huge amount of cash from his residence. According to officials, the department decided to conduct a search and survey on social media influencers as data analytics used by the department flagged under-reporting of income by them.
Tax officials found out about these social media influencers due to the TDS deducted by social media companies on the payments made to them. Tax officials also identified some of the social media influencers as they posted photos of their foreign trips abroad, but their income tax returns did not reflect such income from foreign sources.
How is income from social media classified?
Income from social media handles, online workshops or endorsements does not fall in the first four categories and it is classified as income from ‘other sources’. Moreover, if the income from social media endorsements has been paid by way of gifts or products even then tax authorities have been able to detect it as the IT department has been levying a 10 per cent TDS from July last year on gifts worth over Rs 20,000.
In the last financial year’s budget, the government introduced a new section, Section 194R in the IT Act of 1961. The newly inserted section requires TDS to be deducted if any person or entity gives a gift or benefit worth over Rs 20,000 to a resident Indian. Therefore, even if the income from social media endorsements has been received by way of a gift or some other kind of benefit then tax authorities will be able to detect it.
