Tax on YouTube Income in India

Introduction:

 YouTube has become a significant source of Income and livelihood for many Individuals especially during and after the covid. Most of the people are unaware whether these Income are Taxable or not?

Tax applicability on YouTube Income.

Many Indians are now generating income from YouTube through Vlogging such as Travel vlog, Business Vlog, Cooking Vlog. And from other Contents such as Games, Education, Entertainment.

These incomes are Taxable to Individual based on their source.

Income under head PGBP: If the income generated from YouTube is a main source of income for the Individuals, then it is treated as Business Income and the same should be taxable under the Head Business or Profession at the Slab rate.

Income under head other sources: If the Income generated from YouTube is a side income for the Individuals, then it is treated as Income from Other sources and the same is Taxable under the Head Income from Other Sources at the rate of 20%.

Other important points:

• The assessee will be taxed as sole proprietor unless he registered himself as a company, LLP, Partnership or other.
• If the Income of the Assessee exceeds 1crore or If cash transactions are up to 5% of total gross receipts and payments, the threshold limit of turnover for tax audit is increased to Rs.10 crores then he is liable to get his books audited under section 44AB. Applicability of TDS provisions will arise.
• Every person whose estimated tax liability for the year is more than or equal to 10,000 is liable to pay advance tax.

How YouTubers save from Income Tax.

Content creators on YouTube can potentially reduce their tax liabilities by deducting certain expenses based on the provisions of the Income Tax act.

Direct Expenses: These expenses include payment directly made by the YouTubers to run their channels such as Internet cost, Chips, drives etc.

General/other Expense: These expenses include payments to other youtubers for Promotions, Recommendations etc.

Depreciation: The YouTubers can claim depreciation on the assets used by them for producing the required Content. Asset such as computer, furniture, and other electrical fittings. However, the YouTubers cannot claim full value of asset as Depreciation. The percentage of claim is mentioned in Income Tax Act 1961.

Types of YouTube Income:

• Income for Posting video or Content creation based on their criteria
• Income from Advertisement
• Affiliate sales or Freelance income from Content Created.

GST on YouTube Income:

The YouTube service is subject to an 18% Goods and Services Tax (GST), which comprises 9% Central Goods and Services Tax (CGST) and 9% State Goods and Services Tax (SGST).

Classification of YouTube services.

Content creation services involve when the taxpayer generates their own content and retains ownership rights to that content.

Content sharing services refer to situations where the taxpayer distributes content that is already created or owned by others.

Ad revenue from YouTube: 

Once a YouTube channel fulfills the requirements set by YouTube, it becomes eligible to monetize its content and receive a share of revenue from advertisements displayed on YouTube. These advertisements are facilitated through Google AdSense. The recipient of this ad service is Google Asia Pacific, located in Singapore. Given that the service provider, the YouTuber, is based in India and the recipient is in Singapore, this scenario may fall under the category of exporting services.

Export of Services:

In GST sec 2(6) of IGST ACT lays down the conditions for Exports of services.

• The Supplier of services is located in India
• The Recipient of Services should be Outside the India
• The Place of Supplier of Service should be outside the India
• The payment for such service should be received by the supplier of service in either Indian Currency or Convertible Foreign Exchange.

Thus, if the above-mentioned Criteria is satisfied then it is said to be Export of Service.

Benefit of Export of Services to YouTubers:

If a YouTuber has claimed his service as Export of service, then his services are considered as Zero-Rated Supply in Accordance with Sec 16 of IGST ACT. It also allows refund of Input Tax Credit that has been Accumulated by the Service Provider. (YouTuber)

Letter of Undertaking:

This system has been introduced to avoid the method of First Paying tax on Export of Service and then claiming Refund. By this method the assessee can avoid blockage of fund. To avail such benefits, the Assessee should obtain Registration under GST.