A Guideline To File Your Taxes As A Social Media Influencer

A Guideline To File Your Taxes As A Social Media Influencer

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Social media is floating with requests for deadline extension as the last day for filing income tax returns approaches. For those of us completing the task in a hurry or panic, it is important to realise the need to not commit any forgery or mistakes on our returns. The income tax (I-T) department has been using artificial intelligence tools to track individuals filing false returns reporting lower or negligible income. 

Recently, the income-tax (I-T) department raided some social media influencers. As reported by The New Indian Express, the department conducted raids at the residences and offices of 13 major YouTubers and content creators in Kerala last month. The department asked some of these influencers to justify the negligible income on their tax returns despite their social media filled with accounts of their foreign trips and high-end lifestyle.

Eligibility For Taxation

This might not be common knowledge but if your annual income is below Rs 2.5 lakh and generated from foreign countries, it is mandatory to file your income tax returns in such a case. Also, any income generated from social media is supposed to be declared.

If your income falls under the exemption limit, you must file your return if you fulfill any of these conditions.

  • Deposited more than Rs 1 Crore in ‘Current’ bank account
  • Deposited more than Rs 50 Lakh in ‘Savings’ bank account
  • Spent more than Rs 2 Lakh on foreign travel
  • Incurred more than Rs 1 Lakh in Electricity Expenses
  • TDS or TCS is more than Rs 25,000 annually
  • Business turnover of more than Rs 60 lakh
  • Professional income is more than Rs 10 lakh

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To understand what to file and how to file in your returns as a social media content creator, one needs to understand the types of income taxed by the I-T department. 

A social media influencer can receive income in the form of remittance, money from promotions, subscriptions and workshop fees, and merchandise commissions, along with gifts and review products in PR packages. 

From July 2022, the tax department has levied a deduction at source (TDS) of 10 per cent on gifts worth Rs 25,000 or more annually. This covers any gifts, material sponsorship or gift vouchers above the value of Rs 25,000. The deductions made under TDS are listen in the annual infomation statement (AIS).  

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Along with TDS, all income should be mentioned under the major categories, namely business income (if you are self-employed or in a partnership firm) or income from other sources (if you are a salaried individual and pursue social-media part-time). Income from YouTube channel ads, website sales, subscription fee, etc can be filed under business income. Other major categories of income include income from house property, income from capital gains and income from salary. 

Declaring Expenses And Claiming Exemptions

Filing tax returns allows you to declare losses/expenses incurred in creating your content. If you declare your income made from social media under business income, expenses like cost of hiring a make-up artist or a PR team can be claimed as expenses on your returns. But, declaring income under other sources limits your options in claiming expenses. As a principle, always make sure to keep a record of all your receipts. 

Another step in filing your returns is claiming exemptions. Income tax exemptions can be claimed for payment of home loans, life and health insurance premiums, tax-saving fixed deposits or mutual fund investments, conveyance, and many other expenses. 

Income From Foreign Sources

Indian law requires its residents to file tax returns for income earned from foreign sources. However, in certain situations, you can claim credit from the tax department if you have paid tax on your foreign income in the source country. 

So, the important thing to keep in mind is to make sure to file your returns correctly and on time to keep the tax department at bay. 

Also Read : What To Do When You Get An Income Tax Notice — A Guideline

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