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The income earned by social influencers from creating YouTube videos, or vlogging, is considered to be business income and is therefore taxable. Read for more details.
YouTube video blogging, popularly known as vlogging, is scaling new heights of popularity. The trend of googling for content has shifted to YouTube search. Many budding vloggers are making money from YouTube. However, most of us are not aware of the tax implications around it. So, let us try to explore this in detail.
A YouTuber’s income is considered as business income. Being a service sector business, the assesses can only opt for normal provisions under the Income Tax Act, of 1961, chartered accountant Ruchika Bhagat, MD, Neeraj Bhagat & Co told CNBC-TV18.com.
“If the gross total income exceeds Rs 1 crore, then section 44AB i.e. tax of audit will be applicable to the YouTuber. All bookkeeping requirements will fall under Rule 6A and vlogger need to get their accounts audited by a Chartered Accountant (CA),” Bhagat said.
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Section 44AB of the Income Tax Act deals with the audit of accounts of certain individuals. In other words, if certain individuals meet the requisites as prescribed under Section 44AB, then they will have to ensure that their accounts are audited by a certified chartered accountant.
However, if vloggers are opting for 44 AD presumptive taxation, then they are exempted from audit under section 44AB. “The vlogger has to pay taxes on the net taxable income after considering all the business expenses and depreciation as per the income tax slab,” Bhagat told CNBC-TV18.com.
GST rate on income earned by YouTubers and bloggers
The GST rate applicable for services rendered by the YouTubers and bloggers is 18 percent (i.e., CGST of 9 percent and SGST of 9 percent or IGST of 18 percent).(ads2)
Are their income considered as business income in all cases?
No. Sandeep Sehgal, Partner, Tax, at AKM Global, said YouTubers or other social media influencers can be viewed as entrepreneurs or freelancers. Hence, their income can be taxed as business income depending on the time and effort they spend on a day-to-day basis.
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What about income of minors in this case?
The income of minors is ordinarily taxed in the hands of parents. However, in the case of minor YouTubers/influencers, it can be viewed as accruing to their own skills and hence shall be taxed in their hands only and not be clubbed in the parents’ income, as per Sehgal.
Hence, they would get the separate benefit of the slab rates in this regard.
