In the last few years, we’ve observed the emergence of people making videos related to education, fitness, tips/ideas/classes related to business, reviews of movies,books, gadgets etc and upload it on online platforms like YouTube. This is termed as Vlogging.
The more people view & engage on the videos, the more money the vlogger makes. Having said this, there are a few vloggers, who are uncertain about their tax implications.
Before we step into that, how do people make money by uploading?
1. Payment from YouTube for audience engagement ( based on reach, views & comments)
2. YouTube ads
3. Consultancy services on video making, designing and optimisation
4. Affiliate sales or other freelance income from YouTube
How does the income of vlogger be taxed?
*Remember, you will be taxed as a sole proprietor unless you register your business as a company, LLP or Partnership Company.
Tax provisions' applicability depends on the source and nature of income. A YouTuber’s income is considered as business income.
Being a service sector business, the assesses can only opt for normal provisions under the Income Tax Act,1961. If the gross total income exceeds Rs 1 crore, then section 44AB i.e., tax audit will be applicable to the YouTuber. Additionally, Tax Deducted at Source(TDS) provisions will also be applicable to you on every receipt of payment. You can view your TDS amount through 26AS, which can be generated electronically.
If your gross turnover is below Rs 1 crore, then you have to follow the normal tax provisions to calculate taxes and maintain books of accounts. But if your gross total income exceeds Rs 1 crore, you must follow all bookkeeping requirements under Rule 6A and get your accounts audited by a Chartered Accountant(CA) under section 44AB of Income Tax Act,1961. You will have to pay taxes on the net taxable income after considering all the business expenses and depreciation as per the income tax slab applicable to you.
You may also have to pay advance tax if your total tax liability is more than Rs 10,000 in a financial year. You have to pay advance tax in four instalments given your tax liability is more than Rs 10,000 in a financial y year (FY).
Starting from June 15 , 15 percent of the advance tax has to be paid. Then by September 15, you should have paid 45 percent, by December, 75 percent of the advance tax liability and by March 15, 100 percent of it.
You have to pay your advance tax liabilities by the due date after considering the amount of TDS that has been already deducted from payments made to you. This TDS can be cross-checked from Form 26AS.
Don’t forget to claim the below expenses
a. General Expenses: If you can submit the required bills, expenses directly related to earning your income are fully deductible. It includes your internet bill, costs incurred for computer or camera maintenance and any other cost for creating and uploading the videos.
b. Other Expenses: Costs to promote and market your video expenses.
c. Depreciation: Please remember that the expenditure of assets cannot be deducted completely deducted against your income. For instance, you can only claim 15 percent depreciation of the camera price and 60 percent depreciation of the cost of the laptop.
In case you have calculated your taxes under normal provisions and tax audit does not apply i.e., your gross total income is less than Rs 1 crore, you will have to file your income tax return by July 31 of the assessment year. For assesses who are subject to tax audit, the return filing deadline is usually September 30 of the assessment year.