Ever wondered how income from YouTube is taxed in India? In India, income is Generally taxed for Direct Taxes under Income Tax Act, 1961 and Indirect Taxes under Central Goods & Services Tax, 2017. Below Article will provide how YouTube Income Is taxed in India
Applicability of Income Tax Act
Section 4 of Income Tax Act,1961 Creates charge of Income tax and Section 6 lays down the requirements for considering a person Resident and Ordinarily Resident in India (Click here to view the rules). Once a Person is determined to be Resident and Ordinarily Resident in India any income earned by the said individual all over the world is taxable in India, except for country having Double Taxation Avoidance Agreement with India which would be taxable according to the agreement. In short any Indian YouTuber is liable to pay Income Tax in India.
Applicability of GST Act
Under Chapter III - Levy and Collection of Tax under Central Goods and Service Tax,2017 (Click here to view the rules) YouTube income will be considered as Supply of Service, hence would be in scope to tax under GST laws.
Income Sources
You can make money on YouTube through the following features:
Advertising revenue: Get ad revenue from display, overlay, and video ads.
Channel memberships: Your members make recurring monthly payments in exchange for special perks that you offer.
Merch shelf: Your fans can browse and buy official branded merchandise that’s showcased on your watch pages.
Super Chat & Super Stickers: Your fans pay to get their messages highlighted in chat streams.
YouTube Premium Revenue: Get part of a YouTube Premium subscriber’s subscription fee when they watch your content.
Sponsorships: YouTuber can get payments for tying up with Brands for Promoting their Products/Services
Besides Sponsorships every other income mentioned above is received, by Indian YouTuber, from a Foreign Company Google Asia Pacific Pte. Ltd. hence, it will be considered as Export of Service. Sponsorships can be both by Domestic Companies as well as Foreign Companies, hence can be considered as domestic or Export income Respectively.
Tax under Income Tax Act
As Income Tax Act is applicable to Indian YouTuber any income received by him by Foreign Company Google Asia Pacific Pte. Ltd. or others will be taxed in India. YouTubers income can be Considered under 'Income from Business and Profession' if its the main source of income, otherwise it can be Considered under 'Income form Other Sources'. All other provisions of Income tax will be applicable to the Youtuber and he would be required to file his Income Tax Return if his Income Exceeds his Basic Exemption limit i.e Rs. 2,50,000 / 3,00,000 / 5,00,000. YouTuber having Income Rs. 1,00,00,000 and above would be liable for Tax Audit by a Chartered Accountant as per Section 44AB.
Tax under GST Act
Most of the States in India have a Turnover Limit of Rs. 20,00,000 for Registration under GST. Hence as per Section 22 of CGST Act,2017 any youtuber having Turnover / Gross Receipts of Rs. 20,00,000 or more would be liable get himself register under GST Act and collect/pay GST.
But as we discussed above YouTubers receive most of the Income from the Foreign Company Google Asia Pacific Pte. Ltd. which would constitute to be an export of Service and as per Chapter VII Section 16(1) of IGST Act (Click here to view the rules) it will be considered as Zero Rated Supply.
So what is Zero Rated Supply?
In simple words if supply is considered to be zero rated then person need not charge GST or if GST is Charged and paid then person can claim the refund for the tax paid.
Even though the above income is considered to be export and is applicable for Zero Rates Supply YouTuber is still liable to get Registered if he wants his export service to be treated as Zero Rated.
Thus Having Zero rated Supply means YouTuber Need not Collect and pay GST but has to file Monthly/Quarterly Returns of GST.
Now as for Sponsorships, if its provided by a foreign company it would continue to be considered as Zero Rated Supply and above treatment is applicable. But what if its a Domestic company paying or Domestic income from Sponsorship? It can be summarized below -
Sponsor is a Private Limited or limited Company or Partnership Firm, Reverse charge under Section 9(3) of CGST Act and Section 5(3) of IGST Act is Applicable and GST is liable to be paid by the sponsor itself. No Liability for YouTuber, but YouTuber still has to File GST Returns.
Sponsor is not among above mentioned point, YouTuber is liable is collect and pay GST along with filing GST returns.
Any Other Income by Youtuber as will be liable to GST as per normal Provisions of GST Act.
Conclusion
YouTube Income is taxable in India and YouTubers should have compliance for both Direct Taxes and Indirect Taxes. It and be summarized that YouTubers having Income above Rs. 2,50,000 should comply with Income Tax Act and Youtubers with Turnover/ Receipts Above Rs. 20,00,000 should Comply with GST Act along with Income Tax.
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