Tax Planning For Influencers: Everything You Need to Know

The ITR filing season is here and like all earning individuals, eligible influencers are also liable to pay their taxes. With the rise of social media and the creator economy, many people are interested in becoming influencers. If you're already an established influencer or just a beginner, it's essential to understand the tax implications of your profession to minimise liability, maximise deductions, and stay compliant with regulations.

Before filing your Income Tax Return (ITR) for the financial year 2024-25 (AY 2025-26), it's important to gather information about which ITR form to use, how to compute total tax liability and the deductions you can claim.

What Taxes Are Applicable For Influencers?

The income earned by any influencer in a particular financial year may be subject to taxes and even audit in some cases. Typically, the earnings from different sources for an influencer are treated as income from a business or professional income.

Hence, the overall income is subject to taxes based on the tax slabs. Influencers can choose whether they want to opt for the old or the new income tax regime, depending on their eligible deductions. 

Additionally, influencers are also liable for goods and services tax on their earnings if the gross annual income crosses Rs 20 lakh. The same threshold is Rs 10 lakh for the northeastern states. As influencers offer their services (such as sponsored content), they are required to charge GST at 18% on them.

Hence, it is important to generate proper invoices for their services to keep track of the financial transactions. To be clear, GST is a separate tax from the one applicable to the earnings of a business professional. 

Moreover, if the influencers receive non-monetary benefits exceeding Rs 20,000 in a particular financial year, they are subjected to 10% Tax Deducted at Source (TDS).

These taxes differ from those applicable to investments like capital gains. Capital gains, either short or long term, are currently taxed in India based on their holding period.  

Beyond these, an influencer may be subjected to separate tax on foreign income, state-specific taxes, among other things. It is advisable to consult a financial expert to understand the specifics of one's tax liability depending on the income sources.

Which ITR Form Should Be Used By Influencers?

While the Income Tax Department gives the option to file returns using four different ITR forms, influencers typically require either ITR-3 or ITR-4. 

ITR-3: For those with income from business or profession.

ITR-4 (Sugam): This form is meant for the influencers opting for presumptive taxation under Section 44ADA. The influencers with annual earnings from different sources up to Rs 2 crore and professional income up to Rs 50 lakh can opt for the presumptive taxation scheme.

Under this scheme, 50% of the gross receipts are considered as taxable income and there is no need to maintain detailed accounts.

Tax Audit For Influencers

Influencers must undergo a tax audit if their annual gross income surpasses Rs 1 crore. However, if their cash transactions remain below 5% of total payments and receipts, the threshold for mandatory tax audit increases to Rs 10 crore.