How earnings from YouTube videos are taxed
YouTube has become the go-to platform for sharing creativity and knowledge with people all over the globe. And it has empowered content creators by fetching them money. But hold on, taxes come into play too. Oh! This part sounds complex, right? Don't worry, we are here to make it easy for you to understand how taxation in India works on YouTube earnings.
YouTube as your main income
If YouTube is your main and only source of income and earns you a substantial income it falls under the "Profits and Gains of Business or Profession" category. Now, we need to examine whether this would be treated as business or profession. So, if your videos require technical expertise and special training, it's treated as a profession. Otherwise, it is considered business income.
YouTube as part-time or small income
If YouTube earnings are a part-time activity with not much substantial income, they will be taxed under "Income from other sources" and not as "Profits and Gains of Business or Profession."
Eligibility for GST compliance
You must register for GST if your turnover exceeds Rs. 20 lakh in a financial year, or Rs. 10 lakh if you are based in special category states. Special category states include Assam, Arunachal Pradesh, Manipur, Jammu & Kashmir, Meghalaya, Mizoram, Tripura, Nagaland, Sikkim, Himachal Pradesh, and Uttarakhand. Earning above Rs. 10 lakh in these states? You must register for GST.
Income over Rs. 1 crore requires tax audit
If your gross total income exceeds Rs. 1 crore, section 44AB, which requires a tax audit, is applicable. All bookkeeping requirements will be governed by Rule 6A, and you need to get your accounts audited by a Chartered Accountant (CA). However, if your gross turnover is below Rs. 1 crore, you must follow normal tax provisions for calculating taxes and maintaining books of accounts.
YouTube earnings are taxed at 18% GST
Normally, YouTube earnings are taxed at 18% (9% CGST and 9% SGST). But, if you're providing services to people outside India (foreign viewers), you won't be charged any GST on those earnings. To get this special treatment, your location must be in India, your audience must be outside India, and, the money you earn from these foreign viewers should be in foreign currency.
Which cases have no GST?
When YouTubers use platforms like Google Inc and Google AdSense for advertisements, the supplies are zero-rated because the recipients of these services are located outside India. This means no GST is charged on these transactions.
Sources of income from YouTube and their GST rates
The three main sources of income from YouTube are advertisements placed on platforms like Google AdSense, sponsored videos (where brands or companies pay content creators to feature their products or services), and affiliate marketing (earning a commission from promoting products or services through their unique affiliate link). All of these revenues are considered business income and are subject to 18% GST.
Which ITR form should you fill?
If you treat your YouTube earnings as business income, use Form ITR 4. Depending on whether you have more than one house property or income taxable under the head capital gains, choose between Form ITR 1 or ITR 2. To enjoy the benefit of presumptive tax under Section 44AD or 44ADA, and have only one house property, file ITR 4S.
What is presumptive tax?
Presumptive taxation lets you pay tax based on an estimated income, without calculating expenses from your revenue. Instead, you apply a percentage to your total revenue and pay tax on that. It's a simpler way to handle taxes without detailed income calculations.
