These days it has become a trend of being social and maintaining one’s identity on the digital platform. One of the social media example is Youtube which in the present scenario giving lot of opportunities to the people all around the world to not only explore but also showcase talents, knowledge, experience, capabilities in order to assist the others if any information is required. However, will all such benefits when become profitable is then liable to various tax implications. Hence, in this article we will cover the impact of GST on revenue which a person earns from Youtube.
Since You tube is gaining popularity these days, people are preferring it over other search options as it is helping them to easily understand about anything they want to know, therefore the tax department has after looking over the demand and supply chain has initiated a tax structure on the Income earned through You tube.
Threshold Limit for Applicability of GST on You tube
GST is applicable to Bloggers, Youtubers, Service Providers and other types of freelancing jobs on exceeding the threshold limit of registration.
If the total turnover of a Youtuber exceeds Rs 40 lacs in a financial year or Rs 20 lacs (this limit is for special category states),GST registration shall be required to be obtained.
If the services are provided in the same state, CGST and SGST shall be charged otherwise IGST shall be levied if service is provided from one state to another. The supplier is eligible to claim the Input Tax Credit of the GST paid by him. But Such service providers cannot opt for composition scheme.
GST on Income from You tube
GST is applicable on Revenue earned through You tube. Though GST is not chargeable on Google as it is export of services but the details of income earned from You tube is required to be given under GST along with payment of taxes.
You tube after analysing the skills of such people and looking into the increment in number of subscribers and viewers after reaching a milestone starts paying them therefore boosting them to perform much much better in their areas of work.
So, the Government will definitely like other businesses or services ask for the tax on the income earned by the Individual from social platform because after all the services are provided online so it is the right of the government to ask for the levy to be deposited in the Treasury.
It is not easy to become a Youtuber as even casually if you do and start earning through your content, don’t forget to pay your taxes and file your returns.
Under which head the service provided under You tube falls?
Apart from subscribers and no of views, a Youtuber by providing online services earns from not only Google adsense i.e from advertisement and marketing but also from sponsored reviews therefore the online service provided shall be called as supply of service(OIDAR) under GST.
Meaning of OIDAR
You tube will be classified under Online Information Database Access and Retrieval services (hereinafter referred to as OIDAR) as per cbic.gov.in which is a category of services provided through the medium of internet and received by the recipient online without having any physical interface with the supplier of such services. Under You tube all services are related to any activity shown or talent depicted. Some of the services under OIDAR are:
advertising on the internet;
providing cloud services;
provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;
providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
online supplies of digital content (movies, television shows, music and the like);
digital data storage; and
From the above- mentioned list, You tubing is related to supplying of digital content which is included in the services mentioned in OIDAR.
Google places ads on the videos prepared by the Youtubers who gives the permission to the Google to monetise content by showing ads and this way a youtuber earns from ads and hence has to deposit taxes within reasonable time.
Supply of OIDAR services through an intermediary: If any mediator located outside India arranges the supply of OIDAR services from the service provider to the non-taxable online recipient the intermediary shall be deemed to be the recipient of such services
How the rule of place of supply be satisfied?
Place of supply should be the location of the recipient for taxability to attract in case both the supplier of OIDAR services and recipient of such service is in India but if the supplier is located outside India and recipient in India, the place of supply would be in India. To further clarify:
If the location of both supplier and recipient is in India, GST shall be applicable
If the location of supplier is outside India and recipient is in India, the provisions of RCM(Reverse Charge Mechanism) shall be attracted i.e. GST shall be paid by the recipient.
If the supplier is in India and the recipient is outside India then provisions of GST shall not be attracted.
How can the Invoice be raised?
Mostly youtubers receive payments through bank transfers, amount is inclusive of tax, still invoice should be raised mentioning the invoice number, date, value of services, rate of GST , etc and books of accounts should be maintained.
If the invoice has been raised but payment is not received yet, still GST is to be deposited in the month in which invoice is raised.
All the returns like GSTR-3B, GSTR-1 and Annual Return are required to be filed after raising invoice as per their respective due dates.
What are the Penalties covered?
If youtubers covered under GST do not obtain registration, straight penalty will be of Rs 25000/-.
For late filling of GST return, late fee shall be Rs 100 per day per return.
If the youtuber earns income only from Google Adsense, he/she shall not be liable to GST. Due to the pandemic, it is forcing people to stay safe at homes. Hence, the culture of vlogging and maintaining Youtube channels has improvised and is giving new opportunities to people who want to excel in it.
Still want to know more about the taxation liablities on digital platforms? Give a call to us.
CA Pulkit Goyal, is a fellow member of the Institute of Chartered Accountants of India (ICAI) having 10 years of experience in the profession of Chartered Accountancy and thorough understanding of the corporate as well as non-corporate entities taxation system.
His core area of practice is foreign company taxation which has given him an edge in analytical thinking & executing assignments with a unique perspective. He has worked as a consultant with professionally managed corporates. He has experience of writing in different areas and keep at pace with the latest changes and analyze the different implications of various provisions of the act.
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