Income Tax Department Focuses on Social Media Earnings

Content creators earning through reels and videos on platforms such as YouTube, Instagram and Facebook need to pay attention to their tax obligations. With August 31 being the deadline for filing ITRs for non-audit cases, the Income Tax Department is also focusing on income generated through social media. Under income tax rules, earnings of influencers and content creators are generally treated as income from business or profession. A dedicated profession code, 16021, has been provided for such activities. Income from AdSense, sponsorships and affiliate marketing can fall under this category.

Benefits received from brands, including free smartphones, foreign trips and gift vouchers, may also have tax implications. Under Section 194R, if the value of benefits or perquisites provided by a brand exceeds ₹20,000 in a financial year, the company may deduct 10% TDS. If the creator retains a free product, its value may have to be treated as income. Such details can also appear in the Annual Information Statement (AIS) and Form 26AS.

Creators may claim eligible business-related expenses, including depreciation on camera equipment, software subscriptions, internet bills, editor salaries and studio rent. Depending on their circumstances, they can choose ITR-3 or ITR-4. Missing the August 31 deadline may attract a late filing fee under Section 234F along with applicable interest. GST registration may also be required when the applicable annual turnover threshold is crossed. Creators are advised to consult a tax professional and file their returns on time.