Tax on YouTube Income in India

YouTube, in recent years, has emerged as a significant source of income. This social media website has transformed from a video-sharing platform to a content-creation platform, opening a lucrative income option to all. Budding vloggers are making money from this social media, but most are unaware of whether this income is taxable as per the Income Tax Act 1961.

In this article, we will provide you with a comprehensive guide on taxes applicable to your income from YouTube.

It is such a social media platform where there is no age constriction regarding vlogging or content creation. Creative minds can come together to share their experience and knowledge and earn a significant sum. 

Nature of YouTube Income

The nature of income of YouTubers varies as per the posts they make. 

Here are the types of income earned by YouTubers - 

• YouTube advertisements
• Affiliate sales or freelance income from the content created
• Payment from YouTube for engaging viewers - assessed mainly as per the number of views, comments and reach
• Consultancy service for video design, creation, and optimisation, assisting to reach a big audience

Income Tax Implication on YouTube Earnings

The income tax payable on your YouTube business can be classified under 'Income from Other Sources' or 'Income from Business and Profession'. However, in most cases, the earnings are regarded as professional income. Since this falls under the service sector, you can choose the standard provisions outlined in the Income-tax Act of 1961.  

If an individual is involved in full-time content creation on YouTube and earns their main income from it, the earnings will be classified as income from business or profession for tax purposes. Additionally, if the income from YouTube surpasses earnings from their primary source of income, it will also be considered business or professional income and taxed accordingly under the applicable business income tax rates.

If an individual’s YouTube earnings are not their primary source of income or not substantial and are earned on a casual basis, this income is categorized as income from other sources.

If your gross total income surpasses Rs 50 Lakhs or Rs 75 lakhs, you have to undergo a tax audit according to section 44AB. The increased limits of Rs. 75 lakh is subject to a condition that 95% of the receipts must be through online modes.

Also, according to Section 44AB of the Indian Income Tax Act, your accounts must be audited by a Chartered Accountant (CA). Your net taxable income will be generated after deducting business expenses, followed by factoring any depreciation.

If the content that you upload in your video requires you to have professional skills as mentioned in the Section 44AA then it would be treated as professional income. You can opt for presumptive scheme of taxation if your gross receipts from professional income is under Rs 75 lakhs (w.e.f.  01.04.2024, erstwhile limit was Rs 50 lakh).  The increase in limits is subject to a condition that the 95% of the receipts must be through online modes.  

Moreover, if tax liability from your income exceeds Rs.10,000 for a particular financial year, you may also need to pay advance tax. The instalment period of advance tax is - 15% by 15th June, 45% by 15th September, by the end of December 75% and by the end of the financial year, that is, March 100%. You must pay advance tax on or before March 15th if you have selected a presumptive taxation system under section 44ADA

You must remember while paying advance tax, you need to consider any TDS and TCS deducted from payments. It must be verified using Form 26AS.
Note: It is compulsory for youtuber to file ITR for financial year even if you are not liable to pay tax or not subject to audit, the due date for filling ITR is before 31 July (Non-Audt Case) or 30 October in case of audit.

Rate of Tax Applicable to YouTube Income?

There is no specific tax rate applicable to YouTube income. The tax shall be computed at the applicable slab rates whether it’s categorized as income from business or profession or income from other sources.

Individuals earning income from YouTube are required to file their Income Tax Returns (ITR) annually and report their earnings. According to the Income Tax Act, any benefits or gifts received from brands exceeding ₹20,000 are subject to Tax Deducted at Source (TDS).

How To Pay Tax on YouTube Income? 

Taxes on your YouTube income are payable according to Section 44AB, as discussed above. Nonetheless, if you have advertising revenue from your YouTube channel, it gets considered as business income. This income from ad revenue is subject to a GST of 18%, that is, 9% CGST and 9% SGST. 

YouTube content creators are required to obtain their GST registration before filing for periodic returns. It will help them to declare their ad revenues and pay GST as applicable.

According to the GST Act, 2017, if an individual’s annual income exceeds ₹20 lakhs (or ₹10 lakhs in certain specified states), GST registration becomes mandatory. Once registered, the services they provide are subject to GST at the rate of 18%. GST registration is required only when the individual's income crosses the specified threshold of ₹20 lakhs.

The services offered by bloggers, YouTubers, and influencers fall under the category of OIDAR (Online Information and Database Access or Retrieval Services). These services involve the use of technology to deliver content or data over the internet.

Furthermore, since no age limit applies to becoming a YouTuber, minors can also have income from this social media platform. Generally, the income of minors is taxed in the hands of their parents. 

Nonetheless, in the case of minor YouTubers, it is viewed as income accrued due to their personal skills and thus gets taxed in their name only. This income is not clubbed with parents' income to assess tax payability.

Deductions which are allowed in Income from YouTube

Under the Income Tax Act, the rules for claiming deductions differ depending on whether the income is classified under "income from business/profession" or "income from other sources." If the income falls under "income from other sources," only those expenses that are directly and wholly incurred to earn that specific income are allowed as deductions.

In contrast, for income classified as business income, a broader range of expenses can be claimed. This includes both direct expenses related to income generation and other costs incurred for running the business.

For instance, the cost of setting up equipment to record a YouTube video or create an Instagram reel is considered a business expense and is deductible under both income heads. On the other hand, expenses like acquiring a blue tick on X (formerly Twitter) are not directly linked to income generation. As such, they do not qualify as deductible expenses under the head "income from other sources."

Final Words

Earning income from content creation and vlogging on YouTube can be rewarding. However, if you do not have a thorough knowledge of its taxability, you can face issues during tax assessment. Understanding the tax implications and seeking professional guidance can help YouTubers profitably navigate their earnings. 

Hence, whether you are a young content creator or an experienced YouTuber, tax knowledge will only help to manage your income effectively. It will also help in fulfilling your tax responsibility towards the country.