Tax on Blogging Income Under the Income Tax Act

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Today Blogging and freelancer is the fast emerging profession in the world. Any one from any core of the world can join this profession. No much investment is required. Blogging requires good written skills & knowledge of the area to which your blog relates and freelancing required knowledge of Google AdSense. Blogging can make maximum output with minimum input. Most of Bloggers and freelancer earns huge income but they didn’t know much about Income tax, benefits of paying Tax on their income. In Blogging no age limit is required.

Meaning of Blogging Profession in India

Bloggers are mainly freelancers or Individuals who share their knowledge & passion through the words by way of a full fledged website or Photos etc & earn mainly through ads & affiliate marketing (refer other products & service) etc.

In the recent times there are many  popular bloggers coming from India like Harsh Agarwal from shoutmeloud, Shraddha Sharma from Your Story who make million from the blogs. These bloggers are creating a web platform where they write about the niche topics and engage with the millions of audience. Even some bloggers share their income report openly, for ex – shout me loud earn on an avg Rs 20-25 lakh per month for the same.

Source of making money for Bloggers

  • Google Adsense & other Ad Networks – In the starting most of the blogger apply for the Google Adsense Account (a Google Product which work as mediator and supply ads from advertisers to all network websites & share the revenue with the networks sites). For ex – if you are reading this article then there are some ads between the article or bottom or top or sidebar of the web page, Most of the ads shown by the Google adsense account on the basis of user past activity or interest etc. So when users click on these ads, Google adsense share the per click revenue which is earned from the Advertiser with website owner. So there are a lot of Ad networks like media.net (India Billionaire divyank turakhia company), Infolinks, revenuehits etc.
  • Affiliate Marketing – Apart from the Google Adsense bloggers earn mostly from the Affiliate Marketing. In simple terms, affiliate marketing is way, where you refer any company products or services by placing unique links on your blog, after the success of the conversion like a sale or signup etc., the blogger gets a fixed percentage of Commission for the same. Even leading ecommerce companies like Amazon or Flipkart booked 20-25% revenue through affiliate marketing way.
  • Sponsored Post/Ads Placement – Apart from adsense or affiliate marketing, Bloggers are earn through Sponsored Post/Ads Placement. In this medium, companies contact directly to niche based bloggers and offer them sponsorship on paid review or place ads banner on the website sidebar or in any article.
Tax on Blogging under ITA

Taxation Impact on the Bloggers & Youtubers Income 

Now Let’s talk about how the income from both these professions attract tax. There are 2 type of taxation which will be imposed on any business or on these 2 professions;

1) Indirect Tax i.e GST 

  • If we talk about the GST Implementation on the Bloggers then in most of the cases GST is not applicable on Bloggers or Youtubers. 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 bloggers, Google adsense transfers income to bloggers 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 bloggers & paid 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 blogger 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

Bloggers & 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.

Bloggers & Youtber 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 the Google & Advertiser.

How Income Tax is Imposed on Blogging Income?

Income Tax will be imposed on Blogging Net Income which will be considered after the deduct 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).

Similarly, from the Blogging income there are various expenses which can be deducted i.e.,

  • Domain Hosting Expenses
  • Email Marketing or any other Video Editing 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 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.

File your Income Tax Return in just Rs. 500/- (ITR for Individuals)

Requirements During the Filing of Income Tax Return as Blogger

  • Blogger or 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 ekyc 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.

Takeaway

In the recent years, Bloggers and Youtubers are the new full time profession in India. These bloggers and Youtubers are earning in lakhs per month but they may not have a clear idea about the taxation system in India which is imposed on their income & services. Hence we hope this article has answered all your queries about the Blogging & Youtubers Profession & how their income is taxable in India. For more queries and information, reach out to our experts at Legal Window.

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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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