Do Youtubers Need To Pay Taxes?
How Youtubers make Money?
After creating the channel, you have to fulfill the Google Adsense or YouTube Adsense eligibility criteria. After that Google adsense shows the ads during your video & share the revenue with the Youtubers from advertiser based on the clicks.
Apart from this, Youtuber also makes money through affiliate marketing & sponsorship where they promote any products or unboxing any product & people buy products or service through affiliate links.
Taxation Impact on Youtubers Income
Let’s see how the income from this profession attract tax. There are 2 type of taxation which will be imposed on any business or on this profession;
1) Indirect Tax i.e GST
If we talk about the GST Implementation on the Youtubers, then in most of the cases GST is not applicable on them because, they are earning from the Google Adsense which is the supplier of the Ads & advertiser. Contact only to google adsense to place the ads, not the bloggers.
Even each month without raising any invoice by Youtubers, Google adsense transfers income to Youtubers account. So, you can say only Google adsense or Advertiser exchange the invoice or bills & charge the GST for the same. In this scenario, only Google adsense raise the invoice with the GST to the advertiser.
But if we talk about the Private placement of the Ads where advertiser contact directly to Youtubers & pay them for the service, then GST is applicable when their Ads invoice is more than 40 lakh rupees in a year (As per new Rule from 1st April 2019). Even in case of affiliate marketing, companies raise the GST Invoice for the same.
So if any Youtubers wants GST Credit on their invoice like Web Hosting, Internet charges, Advertisement charges, affiliate commission etc then they can apply for the GST Registration for the same.
2) Direct Tax i.e Income Tax on Bloggers & Youtubers
Youtuber earn thousands per month which will be credited in their saving bank account. So all these income chargeable under Income Tax as Sole Proprietorship unless they are not registered as legal entity like Private Limited Company or LLP or Partnership etc.
Youtuber business are covered under the service-based business so as per the Income Tax Act 1961, if their gross income is more than 1Cr+ in a year then they are liable for the Tax Audit under the section 44AB. Even they are liable for the TDS Provision which will be deducted by Google and the Advertiser.
How Income Tax is Imposed on Income?
Income Tax will be imposed on Youtuber’s Net Income which will be considered after the deduction of several expenses. In the simplified words, similar to any kind of normal service based business, income tax imposed is on Net Profit (Sales + Other Income – All Expenses = Net Profit).
There are various expenses which can be deducted i.e.,
- Video Editing Software or other software Expenses
- Rent Expenses for Office
- Telephone/Internet/Electricity Expenses
- Payment to any other party or freelancer expenses
- Patrol or convenience charges expenses
- Depreciation on the Assets like PC/Laptop or Mobile or Camera etc.
- Any other expenses which are incurred for the purpose of generating revenue.
Apart from these expenses from the income there are some deductions regarding the specific investment is allowed. Investment from the popular Investment forms like LIC, Mutual Funds, PPF Account, Health insurance etc are allowed as a deduction from the Net Income.
Requirements During the Filing of Income Tax Return as Youtuber
5 Steps for Filing Income Tax as a Youtuber
- Youtubers need the Pan Card to file their income tax return, even these days some Youtuber are under 18 age but they can still apply for Pan Card Online in simplified way with Aadhaar card on e-KYC basis.
- After getting pan card, you have to create the Account on the Income Tax Official Website.
- Now You have to Choose the ITR-3 Form or ITR-4 Form. Here you need some technical knowledge on the same. (Suggest you always hire a Tax Expert if you have income more than 3 lakh+)
- Even if your TDS is more than your tax liability then you can claim your refund from the government in your bank account.
We hope that this guide is useful for all Youtubers to understand the importance of the Taxation system in India. If you have any query you can mail us at [email protected]