Tax on Twitter (X) Income

People worldwide were waiting for the changes introduced on Twitter after Elon Musk acquired the social media platform in October 2022. The business magnate and investor changed Twitter’s legal name in April 2023. Now, this famous social media platform is officially known as X Corp. 

Soon after, Musk made a business decision to share ad revenues with content creators who are active on the rebranded platform. The payment of ad revenues depends on the engagement that creators generate. 

Read on to know how the income earned by Indian users from X will be taxed. 

How Content Creators’s Earnings from Twitter Will Be Taxed? 

Let’s explore how the content creators will earn from X in detail. Musk has recently announced that people who have subscribed to X Premium (blue) are entitled to receive the company’s share. The officials made another crucial announcement about this micro-blogging social media platform. A portion of the earnings from advertisements would be shared with the subscribers as well. 

Content creators must have a minimum of 500 followers, and their posts must receive nearly 5 million organic impressions if they want to join X's revenue-sharing programme. 

Where Does the Aspect of Taxation Step In? 

In India, the indirect taxation aspect of Twitter income steps into the frame if an individual’s turnover exceeds Rs 20 lakh in a financial year and the direct taxation aspect comes in when the total income of individual exceeds Rs. 2.5 lakh in case he opts for the old tax regime and Rs. 3 lakh if he opts for the new tax regime. If a content creator receives this amount from Twitter, they must pay taxes. 

But there are certain important points to consider: 

• Content creators and influencers who dedicatedly develop content for X must consider their earnings from X as their ‘Profits and Gains from Business or Profession’ or ‘business income’. 
• For any other person whose posts are not as consistent or systematic as professional creators but who receives remuneration from X, the income will fall under the category of ‘other income’. 

A lot depends on how creators engage with the platform. 

An important factor to consider is that people must file Income Tax Returns (ITRs) for either of the cases mentioned above. If the creator has incurred any expense while creating content in the two cases mentioned above, they can seek a deduction. As a result, people can reduce the expenses related to promotion, travel and subscriptions related to developing their content. 

Will GST Be Applicable for Income from X? 

Social media content creators must remember that if their income exceeds Rs 20 lakh in a financial year, they must mandatorily register themselves under the GST Law and file GST. 

The content creation services rendered by influencers fall under the category of Online Information and Database Access or Retrieval Services (OIDAR). It will be subject to 18% GST. 

Tax experts have stated that taxation with respect to GST depends entirely on whether the creators receive their income from Twitter India or Twitter's branches abroad. In the second case, the income creators earn would be seen as an export of services. Even if this is the case, content creators must register under GST. They also need to have a valid Letter of Undertaking (LoU). 

What is to be done if a LoU doesn’t exist? In this case, the service export must be undertaken with the payment of Integrated Tax. One can apply for refunds for these taxes. 

Calculation of Tax on Income from X 

Income from X will be calculated according to the income tax slab rates of content creators. If the income falls under ‘business income’ or ‘Profits and Gains from Business and Profession’, taxpayers are eligible for deductions as well, as already mentioned above. 

If you’re a content creator, you can calculate the tax applicable to your earnings from X with the help of the following steps: 

1. Calculate your ‘Total Income’: Add up all your income from X and every other source applicable. 
2. Consider the 'deductible expenses: Consider the expenses you’ve incurred while developing content for the social media platform. Deduct the said amount from your ‘total income’. 
3. Calculate ‘gross total income’: Calculate your gross total income, which is the amount that remains after you deduct the expenses. 
4. Consider the deductions: Consider the applicable deductions under Sections 80C and 80D and subtract them. 
5. Consider the taxable income: After following each of the steps mentioned till now, you’ll receive your taxable income. 
6. Check the tax slabs: Check the tax rate depending on the income tax slab of your income. 
7. Proceed towards tax calculation: Multiply the applicable tax rate with your taxable income. 
8. Check whether you’ll get tax credits or rebates: Consider any tax credits or rebates. It will bring down your tax burden. 
9. Add health and education cess: After considering applicable rebates, add 4% health and education cess. 
10. Calculate the final tax payable: Once you add the cess to the tax, you’ll arrive at the final amount, payable as tax. Finally, don’t forget to check whether TDS will be applicable. 

Can You Claim Deductions on Income from X? 

Content creators should take into account the deductions they can apply for if the expenses relate to content development for X: 

• Internet charges
• Depreciation of computers, cameras, microphones and other equipment 
• Interest on loans used to buy computers, laptops or other equipment 
• Salary of the team members 
• Administrative expenses, if any 

How Can Salaried Individuals Report Their Income from Twitter in ITR? 

Salaried individuals who receive an income from X will also have to mention it while filing ITR, as already mentioned above. They would have to state the details in Schedule OS under ‘any other income’. They can also file the details in either Form ITR-1 or Form ITR-2. 

Final Words

To sum up, creators and influencers active on X must know the taxation rules for income received from social media content generation. Revenue earned by professionals would fall under the category of ‘Profits and Gains from Business and Profession’. But, if salaried individuals receive income from X, it would fall under ‘income from other sources’. 

The details of such income must be mentioned clearly while filing an ITR. Moreover, if their income from X exceeds Rs 20 lakh in a financial year, they must register under GST.