Income Tax For Social Media Influencers And Content Creators: Managing Online Income – The new guidelines issued by the Central Board of Direct Taxes will come into effect from July 1
If the person holds the product, it will have to be declared in the tax return and 10% TDS will have to be paid on it under Section 194R of the Finance Act, 2022.
Income Tax For Social Media Influencers And Content Creators: Managing Online Income
The Central Board of Direct Taxes (CBDT) has issued new guidelines stating that social media influencers and doctors who receive free goods to promote sales will have to pay 10% tax deducted at source (TDS) on these benefits.
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The new guidelines will come into effect from July 1, 2022. The guidelines are part of the Finance Bill, 2020 to broaden the tax base and ensure that people benefiting from sales promotion declare the same in their tax returns and pay 10.% TDS on cost per dose.
The Government has amended the Finance Act 2022 to accommodate the same by including Clause 58 which seeks to insert Section 194R into the Act.
“The proposed new section provides that a person responsible for the provision of any benefit or advantage, whether or not exchangeable for money, arising from the business or exercise of a profession by such resident shall, before providing such benefit or to that resident, ensure that the tax is reduced with in consideration of this benefit or necessary condition at the rate of ten per cent. the value or aggregate of the value of such benefit or advantage,” the section states.
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However, the CBDT has defined the term “advantage” as something that a person uses the business to promote sales for the said business.
“Whether it (a product offered for a social media promotion activity) is a benefit or a benefit depends on the facts of the case. In the case of a benefit or premise that is a product such as a car, mobile, clothing, cosmetics, etc. and if the product is returned to the manufacturing company after it has been used for the purpose of rendering the service, it will not be treated as a benefit or provision for the purpose of Section 194R of the Act (provision of TDS),” the CBDT said.
This means that if the social media influencer retains the benefit (retains the product), they will have to report it while filing their tax return and pay 10% TDS on it under Section 194R of the Finance Act, 2022. On the other hand, if the product is returned after promotion, TDS will not be required to be paid.
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TDS is not applicable if the benefits availed by an individual do not exceed INR 20,000 as per Section 194R of the Finance Act, 2022.
The CBDT has also clarified that sales discounts, cash rebates and rebates allowed to customers by businesses will not count as “benefit” and therefore customers will not have to pay TDS equally.
However, free samples are subject to 10% TDS. Therefore, every person who receives free samples from the company has to pay 10% TDS. Apart from this, TDS would also include benefits in cash or in kind like cars, electronics and so on.
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In the case of doctors and hospitals, TDS will also attract drug samples which will be provided to them free of cost. In case the doctor is an employee of the hospital, the TDS will have to be paid by the hospital and if the doctor has a private practice, then he will have to submit the TDS. Hospitals can also deduct TDS from the salary of the appointed doctor as an expense under CBDT.
“In that case, it is first taxable in the hands of the hospital and then left as a deduction as a payroll expense. So the amount is ultimately taxed in the hands of the employee and not in the hands of the hospital. A hospital can get reduced tax credit under section 194R of the Act by submitting its tax return,” the CBDT said.
The government is trying to expand its tax base. Earlier this year, it introduced a TDS of 1% on all cryptocurrency transactions above INR 10,000 in a bid to collect more taxes. The government is also considering bringing several verticals such as online gaming, online gambling and casinos under the GST gambit, along with cryptocurrencies.
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Influencers, Doctors Will Have To Pay 10% Tds On Freebies From July 1
Business News / Money / Personal Finance / The Income Tax Department has cracked down on social media tax evasion. Details here
Income tax summonses have been issued to 15 influencers for not paying tax on luxury purchases and foreign holidays.
The Income Tax Department doesn’t just monitor your finances and your Income Tax Return (ITR) filed. In fact, they also look at your social media posts. In fact, your social media posts can also be a tax evasion tip for the Income Tax Department. According to information available on the official website of CA Club of India, the Income Tax department has issued notices to 15 social media influencers who have posted their luxury purchases and foreign vacations but pay zero or substantially low income tax. While issuing notices to these 15 social media influencers, the Income Tax department has asked them to clarify their sources of income tax and the reason for not paying it – income tax.
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The Income Tax department is reportedly using data analytics to scan the accounts of social media influencers to detect any discrepancy in their social status and ITR filed. Using data analysis, they determine whether social media influencers are reporting their income or not. 15 social media influencers from various fraternities like Bollywood, fashion, lifestyle, travel etc have received income tax notices.In their notice, the income tax department has asked the influencers to share their details of income from sponsored content, brand endorsement. , etc. The Income Tax Department also sought details from these 15 taxpayers to provide details of money spent on travel, cloth and clothing, accommodation, etc.
This move by the Income Tax department on media influencers is aimed at increasing income tax compliance among high income individuals who evade income tax while uploading their ITR.
Here are some new income tax rules that apply to social media influencers. A media influencer needs to be aware of these new taxes that apply to them if they want to avoid future income tax notices:
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1] Income tax rule applies to all social media influencers earning more than ₹ 2 lakh in one financial year;
2] The income tax rate is fixed at 30 percent of the gross income of social media influencers;
3] Social media influencers can claim tax deductions for their expenses such as purchasing equipment, travel, etc.; and
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Income Tax Department Cracks Down On Tax Evading Social Media Influencers. Details Here
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The Income Tax Department has issued notices to 15 such influencers who boasted about their foreign vacations and luxury purchases that they were paying zero or “substantially
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