GST Implication on Income Received From Blogging

In this article we will try to understand GST implication on the income earned by the bloggers.

There are different types of bloggers like Fashion, Food, Travel, Lifestyle, Music, Fitness, Sports Bloggers etc. which derives income from various services provided by them.

Bloggers can earn handsome amount of money by their creative writing and content therefor it is necessary to understand the tax implication for the same to comply with the provisions of the law.

Before understanding the GST implications, it is necessary to understand the source of Income of the bloggers and then to identify whether the same falls within the criteria as mentioned in the GST Laws. Here are some of the Major income source of the bloggers.

• Google AdSense:

It is one of the most popular source of income for bloggers and individuals who wants to make money online. Here one can make money on either per click basis or per impression basis depending upon which works better for your blog.

• Sponsored Event:

A favorite income stream for bloggers is to create content for companies promoting their products or services. Sponsored posts may be in the form of reviews, roundups, comparisons, product announcements, info graphics, and so on.

• Banner Advertising

Banner Advertising or display advertising is possibly the most common of the different blogging income streams. Banner advertising has many purposes: create brand awareness, generate leads, re-target an audience, and promote a brand. You get paid for every click, and you also earn a commission if someone buys a product from clicking on an advertisement on your site.

Above are some of the main sources of income of the bloggers. Affiliate Marketing, Blog Consulting, Proofreading & Editing, Freelance writing etc. are also source of income of bloggers.

For understanding the GST applicability on Blogging we need to understand definition of supply so that we can understand whether the activity falls within “Supply of Goods” or “Supply of Services”. Definition of supply is given under section 7 of CGST Act, 2017.

Section 7 of CGST Act, 2017.

According to section 7 of CGST Act 2017, all forms of supply of goods or services or both made or agreed to be made for a consideration by a person in the course or furtherance of business are treated as supply under GST.

Bloggers provides services to the advertiser by allowing them to display their advertisement by providing platform as well as services by way blog consulting etc. so the activity undertaken by bloggers is considered as a “Supply of Service”’

Now it is important to know under which category of service blogging activity falls.

For that we need to understand the provision mentioned in Place of Supply rules.

In any transaction there are three important elements i.e.

1. The Location of supplier of Goods & Services

2. The location of the recipient of Goods & Services

3. The Place where goods or services Supplied.

Now you might be wondering why these elements are important. These elements determine whether the supply is Intra-state (Within the state) or Inter-state (Between two states) which decide whether CGST & SGST or IGST will be leviable transaction.

As far as blogging service is concerned the same fall under sub-section 12 of Section 13 of IGST Act 2017 i.e. Online Information and Database Access or Retrieval Services (OIDAR), for this service the Place of supply of service is the Location of the recipient.

Let us try to understand this with following examples:

1. If the Blogger is located in India and he provides service to a person outside India than place of supply will be the location outside India.

2. If the blogger is located in India and he provides service to a person within the India than place of supply will be the location within the India

3. If the blogger and recipient are located within the same state than such supply will be considered as Intra – State supply.

4. If the blogger and recipient are located in different state than such services will be considered as Inter – State supply.

Rate of GST:

After understanding intra-state & Inter-state supply it is necessary to know the rate at which GST will be charged and the bifurcation of the same in CGST, SGST & IGST.  GST is charged at the rate of 18%

Intra-state supply:

If the service is intra-state supply than GST will be bifurcated as follow:

1. CGST: 9 %

2. SGST: 9%

Inter- state supply:

If the service is inter-state supply than GST will be bifurcated as follow:

1. IGST :18%

Services provided outside India:

In case service provided out, tax will be charged at 0% i.e. such service will be treated as an export of service and accordingly will be treated as a Zero rate supply if the following conditions are satisfied:

i. The supplier of service is located in India

ii. The recipient of service is located outside India

iii. The place of supply of service is outside India

iv. The payment for such service has been received in convertible foreign exchange

v. The supplier of service and the recipient of service are not merely establishments of a distinct person

If the above conditions are satisfied than supply will be considered as a zero-rated supply

If your service is covered by zero-rated supply than there are two ways by which you can claim Refund of GST as per Section 54 of the CGST Act, 2017:

1. Supply without the payment of IGST under Bond/Letter of Undertaking by claiming refund of unutilized input tax credit.

2. Supplies with payment of IGST on supply of goods and/or services – claim refund of IGST paid

3. It is important to note that the if person providing export of service wants to claim refund by opting any of the above option then he should register under GST irrespective of the turnover.

Now let us understand the registration requirement under GST.

Threshold Limit for registration:

As per section 22(1) of CGST Act, 2017 if the aggregate turnover of blogger during the financial year exceeds Rs. 20 Lakhs (Rs. 10 Lakhs in special Category states) than he has to compulsorily registered under GST immediately. So if your turnover is less than the limits the limits than you are not compulsorily required to be register, however you can voluntarily registered under GST.

It is important to note that if you are involved in import of export of services then you will be required to get register irrespective of your turnover.

• If the person is liable to pay tax under Reverse charge mechanism (RCM) than he is compulsorily required to get register under GST irrespective of the turnover.
• Normally liability to pay GST lies on the person providing services, however in certain cases liability to pay GST lies of recipient of service.
• Section 5(3) of IGST Act & Section 9(3) of CGST/SGST (UTGST) act explain nature of supply and supplier under which RCM will be leviable.
• Section 5(4) of IGST Act & Section 9(4) of CGST/SGST(UTGST) act deals with transaction where services is provided by unregistered person to registered than liability to pay GTS lies on registered person as a recipient of service.
• It is important to note that once you registered under GST it is mandatory to charge GST on the value of services provided by issuing Tax Invoice.

Returns under GST:

As per the current scenario GSTR – 3B is to be filed on monthly basis which is Summary of GST liability for Tax period.

GSTR 1 can be filed Monthly if the annual aggregate turnover is above Rs. 1.5 Crores and if below than quarterly.

Annual Return in Form GSTR -9 is to be filed and if you fall under GST audit than Form GSTR 9C is also required to be filed.

Disclaimer:

 The information and explanation given under this article is for understanding purpose and it does not constitute legal or expression opinion.