Social Media, an evolution of the 21st Century has given rise to many career options, one such is being an, “Influencer” especially on Instagram. Generally, as the social media followers increases on Instagram, the income earned by them through this also increases. But how do they earn? Influencers on Instagram in India earn through marketing, brand deals, collaborations, etc. With every income earned, it also gives rise to numerous compliances, one such being GST.

One question here which arises is that, if they earn income, they should pay income tax on it but why GST would come? The main reason is, the influencers who earn just through social media are like proprietors running their own businesses. Whenever there is a requirement of levying GST, one of the essential point is that, whether the content posted by the influencer is a supply?

According to Sec (7) of CGST Act, 2017, deals with the scope of supply, supply includes all forms of supplies which are done for consideration in course or furtherance of business. Hence, content posted by the influencer under any contract or any arrangement is a supply. As there is no physical selling and it’s just posting the content online, the supply would be termed as supply of service. Posting of the content online is a service provided by the influencer to the agency or any of its client whose product or offer it is promoting and not to the general public. Posting the content is not a supply provided by the Influencer to the general public as the general public does not provide any consideration to the influencer nor does there is any scope of furtherance or course of business.

Implication of GST on Social Media-Instagram Influencers

Further, influencers in India are also classified under person providing OIDAR services. Sec 2(17) of IGST Act, 2017 describes OIDAR services as services where information technology is used to distribute data through internet or by any electronic means.

As the service provided by the influencer is supply under GST, whether the influencer would be required to be registered under the act? The supplier would be liable to be register only if its aggregate turnover crosses Rs 20 Lakhs or Rs. 10 Lakh in special category states.

As per Sec 2(6) of CGST Act.2017, Aggregate turnover is aggregate value of all taxable supplies, exempt supplies, export of goods and services and inter-state supplies of person having same PAN to be computed on all India basis but excludes Central, State, Union and Integrated Goods and Service tax.

Further, if the client is outside India, export would be classified only if it satisfies the definition of export of services under the Act.

If the influencer is registered, it will have to issue invoices to its clients and regularly file their GST Returns. The government has given leverage in it to those whose aggregate turnover is up to Rs. 5 Cr to fill quarterly return and not monthly. The rate at which GST is charged is 18% (IGST) or 9% (CGST & SGST). If the influencers who are liable to be registered but failed to do so and not complying with GST provisions would compulsorily be leviable to interest, late fees, penalty and other penal charges as per the situation.

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Qualification: CA in Job / Business
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Location: Mumbai, Maharashtra, India
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6 Comments

  1. Sudip Sharma says:

    Well, i think posting does not tantamount to supply as Consideration is Variable and payment is made by Social Media Company not by Users. And OIDAR ,social Media giants is responsible to pay GST under RCM.

    1. Ronak Banka says:

      Agreed. not always payment is variable. It’s under contract or an agreement to , so the sponsered posts are sponsered by brands. brands basically play to the influencers

  2. vswami says:

    “Posting the content is NOT A SUPPLY not a supply by the Influencer to the general public AS THE GENRAL PUBLIC DOES NOT PROVIDE ANY CONSIDERATION TO NOR does (?) THERE IS ANY SCOPE OF FURTHERANCE OF or course of business”
    FONT < Logic ?

    courtesy

    1. Ronak Banka says:

      Ofcourse posting a content for general public is never a supply but there are sponsored contents as well. Sponsored by brands to advertise or market their product and the brand pays them so that comes under the scope of supply.

    1. Ronak Banka says:

      Influencers are also paid by Brands. Brands connect with Influencers for their promotions and pay them. Even If they are paid by Instagram or youtube, it isnt some fixed income which we can classify as a salary. It’s based on their followers and insights which changes frequently. Hence it will then also be a supply

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