India’s Tax Rules for Influencers: What to Know Before Paying

By Mr. Gaurav Bakshi, CEO & Founder of talent management and influencer marketing agency, Flickzilla Entertainment. 

Understanding the Tax Landscape for Influencers

The rise of social media influencers has created a new economic landscape, with many individuals earning substantial incomes through their online presence. However, with this growth comes the responsibility of fulfilling tax obligations. In India, influencers are subject to both Income Tax and Goods and Services Tax (GST) on their earnings.

Income Tax

● Taxable Income: All income earned through influencer activities, including brand endorsements, sponsored content, merchandise sales, and other monetization methods, is generally considered taxable income.
● Tax Slabs: The applicable income tax rate depends on the total taxable income. As of 2023-24, the tax slabs in India are as follows:

● Deductions: Influencers can claim deductions for expenses incurred in relation to their influencer activities, such as equipment, travel, and marketing costs.

Goods and Services Tax (GST)

● GST Registration: Influencers earning more than Rs. 20 lakh in a financial year are required to register under the GST law.
● GST Rate: The GST rate for influencer services is typically 18%.
● Services Covered: GST is applicable on services provided by influencers, including sponsored content, brand endorsements, and online consulting.

Tax Deducted at Source (TDS)

● TDS on Brand Endorsements: Under Section 194R of the Income Tax Act, a 10% TDS is mandated on any benefits or perquisites provided to a social media influencer if the value exceeds ₹20,000 in a financial year.

Key Considerations for Influencers

● Maintain Proper Records: Keep detailed records of all income and expenses to accurately calculate your tax liability.
● Consult a Tax Professional: Seek advice from a qualified tax professional to ensure compliance with tax laws and optimize your tax planning.
● Stay Updated on Tax Changes: The tax landscape can evolve over time. Stay informed about any changes in tax regulations that may affect influencers.
● Comply with GST Regulations: If you are required to register under GST, ensure timely compliance with GST filing and payment requirements.

Additional Tips

● Consider Tax Planning Strategies: Explore tax-saving options like investments in tax-saving instruments to reduce your overall tax burden.
● Leverage Digital Tools: Utilize accounting software or apps to streamline your financial management and tax compliance.
● Be Transparent with Your Audience: Communicate openly with your followers about your tax obligations and financial transparency.

By understanding the tax implications of influencer earnings and taking proactive steps to comply with tax laws, influencers can manage their finances effectively and avoid potential penalties.