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YouTube income, income from blogging, money from video-sharing apps, etc., are some examples of passive income. It is important to know the tax treatment from both income tax and GST perspectives in India. This article deep dives into the taxability of GST on YouTube income and blogging income.
The YouTube platform is a subsidiary of Google, a US-based company that allows anyone to open a channel and post videos. In turn, the company also earns by running advertisements and other promotional material on the videos hosted on it.
A YouTuber is a person who runs a channel on YouTube. A YouTuber begins earning money when the channel gains a specific number of subscribers and when views on the videos surpass a certain threshold level as per the YouTube policy.
On the other hand, a blogger refers to a person who provides space for brands to place their advertisement. Facilitator agencies mediate between the bloggers and brands to work as advertising channels. Mostly, the bloggers use advertising portals such as Google AdSense to earn income when advertisements placed on their blogs get clicks. Google AdSense functions as a medium, and bloggers will not know the advertisers behind the system.
Section 7 of the CGST Act defines ‘supply’ under GST. Any transaction can come under the scope of GST only if it is covered under the supply definition. Further, the supply of goods or services with consideration to do business will be a supply.
Service is also defined under the CGST Act to mean anything but not goods, money and securities. It also includes activities involving money, or its conversion is separately charged for some consideration.
YouTubers supply services by posting videos and content on their channel with monetisation and providing a platform for advertising. The bloggers supply services by providing a platform to the advertisers to display their advertisements with monetisation. Hence, YouTubers and bloggers are to be considered as suppliers of services.
Services by bloggers can be considered as online information and database access or retrieval services. As per Section 2(17) of the IGST Act, Online Information and Database Access or Retrieval (OIDAR) services refers to services where the information technology is used to deliver information over the internet or an electronic network, including online advertisement services. The nature of supply is automated, involves low human intervention and is impossible to share without information technology.
The GST registration is required by bloggers or YouTubers, where the total PAN-based turnover is more than Rs.20 lakh for a financial year. This limit is Rs.10 lakh for special category states. Note that if service is provided to a recipient registered in a state different from the supplier, YouTuber, or blogger, then it is interstate supply and liable for registration irrespective of the total turnover.
For instance, if Mr Akshay, Delhi, writes food blogs and has annual receipts of Rs.5 lakh. He has contracted a dedicated space on his blog to Pinstorm, an advertising agency registered in Mumbai, for kitchen appliances ads on a pay-per-impression basis. He must compulsorily obtain GST registration due to the interstate supply of service. GST registration limit of Rs.20 lakh applies even when the services are exported.
Youtubers and bloggers may also opt into the composition scheme available for service providers if their turnover is up to Rs.50 lakh and if they satisfy some conditions. Further, if they do not wish to opt into the composition scheme, they can opt into the Quarterly Return filing and Monthly Payment of taxes (QRMP) scheme with less compliance burden.
Export of services is considered as supply under GST when the supplier is located in India while the recipient and place of supply are outside India. The supplier and recipient must not be two establishments of distinct persons, and receipt of consideration must be in convertible foreign currency.
Additionally, since a blogger’s service is of the nature of OIDAR services, the place of supply must be the recipient’s location, either Google Inc and Google Adsense, both of which are outside India.
These conditions are satisfied in bloggers who post content on Google and will qualify as export of services. Therefore, since the recipient and the place of supply are outside the taxable territory, no GST is leviable. Further, as per Section 16(1)(a) of the IGST Act, a zero-rated supply includes exporting goods or services or both.
In other words, a YouTuber renders zero-rated services to Google AdSense for running advertisements on the YouTube video. Therefore, the YouTuber and bloggers rendering services to recipients outside India, such as Google, Youtube, etc., have two options. Youtuber either has to export service under cover of a bond or Letter of Undertaking (LUT) in Form RFD-11 without paying GST or must pay GST and later claim it back as a refund.
The GST rate applicable for services rendered by the YouTubers and bloggers is 18% (i.e., CGST of 9% and SGST of 9% or IGST of 18%). This rate applies only if the YouTuber is liable for GST registration or is GST registered.
Wherever the YouTubers or bloggers are exporting services, it is considered zero-rated supplies and no GST is charged.
A GST invoice is needed to be issued for all services provided, and the invoice must specifically mention the invoice number, date of invoice, the value of services offered, the GST rate, among others.
Even though there is no specific format for raising a GST invoice by YouTubers or bloggers, the law has mandated that some items be mentioned on all GST invoices. The details of all invoices are required to be mentioned in the GST return in Form GSTR-1. All invoices must be appropriately raised as per the GST rules.
YouTubers or bloggers must file GSTR-1 and GSTR-3B just like any other regular taxpayer.