With the pandemic and people being locked inside the house, new channels with vloggers are popping up on a rapid note. To understand the GST impact on revenue generated from You tube channel it is very much important to understand the pattern of hosting a channel and posting videos and earning revenue out of it.
The YouTube platform being owned by Google (subsidiary of google), an American based company allows anyone to open a channel and post videos in it. In turn the company also earns through ads and other advertisement material on such videos.
Now the channel earns money both when it reaches a certain level of subscribes and as well on the videos which also would earn based on the number of views after a threshold limit.
Now let’s analyze in tax terms:
Whether it is a supply:
In terms of the GST Act, any transaction shall be subject to GST only if it covered under the supply definition.
In terms of S.7 of the CGST Act, any supply of goods/service made for a consideration shall be a supply.
Further in terms of s.2(102) of the CGST Act, this supply shall fall under the definition of Service.
Hence this transaction shall be supply of service.
Whether it is a domestic supply/export:
In order to understand whether this supply is a domestic service or export, it is required to analyze the provisions of Place of supply under the IGST Act.
In terms of S. 13(12) read with S.2(17) of the IGST Act, this service shall be online information and database access or retrieval services and the place of supply shall be the location of the service recipient.
In this case the Service Recipient is Google which is located outside India
Further in terms of S.2(6) of the IGST Act, to qualify as zero-rated supply/ export of service few other conditions shall be complied which shall be as below:
a) The supplier of service is located in India
b) The recipient of service is located outside India
c) The place of supply is located outside India
d) The payment for such service has been received in convertible foreign exchange
e) The supplier and recipient are not merely establishments of a distinct person.
The supplier of service shall be the channel owners in India, the recipient shall be Google which is outside India, place of supply as determined above shall be outside India, and payment also is received in Foreign Exchange and they are not establishments of distinct persons.
With the above, it shall qualify for export of services and GST shall not be applicable on such export of services.
Registration, billing and refunds:
Now the million-dollar question, whether all vloggers/channel owners are registered under GST Act. Are they issuing bills to Google. Will they be able to claim refund?
In terms of GST Act, if a service provider has a turnover of more than 20 Lakhs per annum, he shall be liable to be registered and raise bills for which returns also shall be filed. In case of accumulated ITC, the same shall also be claimed as refund.
Hence any channel owners who earn more than 20 Lakhs per annum shall be registered and be compliant with the GST Laws.