In recent times, blogging has become one of the trending professions in the market. One of the major reasons behind it is income generating capacity of this profession. Bloggers can earn lakhs of rupees per month but most of the time they are unaware about the tax implications on their income. Hence today we are writing this article to enlighten you all about taxation perspective of this well-known blogging profession.
Bloggers are mainly those people who share their knowledge & passion through words by way of a full-fledged website or sometimes they create platform for other people as well to come and share their views on that website.
The main sources of income for bloggers are as under:
This is one of the most common ways of earning for bloggers, whereby they earn revenue when advertisements placed on their blogs receive clicks. Google AdSense works as a medium between the bloggers and the advertisers. The bloggers do not have to worry about finding out and contacting the advertisers individually.
Affiliate marketing is where you refer any company product(s) and/or service(s) by placing unique links on your blog and once the reader of the blog purchases the company’s product/service using that link, the blogger gets a fixed percentage of Commission for the same.
Bloggers can also earn through Sponsored Post/Ads Placement. In this medium, companies directly contact bloggers and offer them sponsorship on paid review or place advertisement banner on the website sidebar or even in any article.
The above mentioned are the main sources of income for any blogger. Other sources may include freelancing, blog consultancy, blog designing, etc.
Mainly there are four types of tax compliance which a blogger needs to take care of. They are as under:
The in-depth discussion of the above tax implications is as under:
In order to understand the tax implication under GST, first we need to find out answers to some of the basic questions such as whether blogging is supply of goods or services, what is the exact nature of the transaction, what is the place of supply, etc.
Hence, if we take the example of income source from Google AdSense, where the location of the supplier (i.e. Blogger) of services is in India and the location of the recipient (i.e. Google AdSense) of service is outside India. Then in such situation the place of supply will be outside India.
In order to answer the above question, we need to check five basic rules. If these five rules are satisfied, then that service will qualify as export of service. These rules are as under:
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
All the above mentioned five rules are satisfied in case of services provided to Google AdSense. Hence such service is qualified as export of service under GST.
Place of supply plays the most significant role for determination of rate of GST for the blogger.
Such registered person making zero rated supply can claim Refund of GST under either of the following options, in accordance with the provisions of section 54 of CGST Act:
a) Supplies without payment of IGST under Bond/Letter of Undertaking– claim refund of unutilised input tax credit
b) Supplies with payment of IGST on supply of goods and/or services – claim refund of IGST paid
If the person providing export service, and wants to claim refund by opting for any one option then he should register under GST irrespective of turnover.
Generally, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. Reverse Charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.
There are two type of reverse charge scenarios provided in law. First is dependent on the nature of supply and/or nature of supplier. This scenario is covered by section 9 (3) of the CGST/SGST (UTGST) Act and section 5 (3) of the IGST Act. Second scenario is covered by section 9 (4) of the CGST/SGST (UTGST) Act and section 5 (4) of the IGST Act where taxable supplies by any unregistered person to a registered person is covered.
A person who is required to pay tax under reverse charge has to compulsorily register under GST and the threshold limit of Rs. 20 lakhs (Rs 10 lakhs for North Eastern and hilly states flagged as special category states) in case of service provider, is not applicable to them.
Any amount payable under reverse charge shall be paid by debiting the electronic cash ledger. In other words, reverse charge liability cannot be discharged by using input tax credit. However, after discharging reverse charge liability, credit of the same can be taken by the recipient, if he is otherwise eligible.
Invoice level information in respect of all supplies attracting reverse charge, rate wise, are to be furnished separately in the table 4B of GSTR-1.
Advance paid for reverse charge supplies is also leviable to GST. The person making advance payment has to pay tax on reverse charge basis.
One of the most common questions among the blogger community is whether income tax will be levied on gross income or certain expenses will be allowed to the blogger and net income will be taxed?
The answer to the above question is very simple. Income Tax will be imposed on Blogging Net Income which will be considered after the deduction of certain expenses.
Now readers might be thinking what are the expenses which are incurred by the bloggers that can be allowed against the income earned by them under Income Tax Act. Well some of the expenses are as under:
Bloggers should also note that like any other assessee they are also eligible for Chapter VI deductions on account of their investments in LIC premiums, ELSS Mutual Funds, PPF Account, Health insurance etc.
In short the computation of income for a blogger will be as under:
|Less: Deductions, If any||(XXX)|
If a blogger is liable to get TAN Registration, such person will have to deduct tax at source on certain transactions. Such tax amount deducted by the blogger will have to be deposited with the Central Govt. on a regular basis. Also, the blogger will have to file quarterly TDS Return(s) in order to give tax credit to the parties from whose income the tax has been deducted.
In case the blogger receives services from a Resident employee or any other Resident service provider, the provisions of Sec. 192 and Sec. 194 shall be applicable.
However, If the service is provided by a Non-resident or a foreign entity then TDS will be deducted in accordance with Double Tax Avoidance Agreement (DTAA) signed between India and the country of the service provider. In such cases, Sec. 195 of the Income Tax is applicable.
This is the most ignorant tax provision applicable to bloggers but it is indeed one of the most important one as well.
The equalisation levy will be applicable on following services:
a) Sum received or receivable by a non-resident for the online advertisement services or other related services such as provisioning of digital space rendered to a specified person [Section 165 of the Finance Act, 2016]
If a blogger uses any digital advertisement say via Google or Facebook then in such scenario, he will be liable to pay equalisation levy at 6%.
Further, please note that, Equalisation levy shall not be applicable in the following cases:
a) The non-resident providing specified service has a permanent establishment in India and the specified service is connected with such permanent establishment or
b) The specified service is not for the purpose of carrying out business or profession (i.e. for personal purpose) or
c) The aggregate amount of consideration payable for the specified service received or receivable does not exceed Rs. 1 Lakh in a Financial year.
b) Sum received or receivable by an e-commerce operator from e-commerce supply of goods or services to specified persons [Section 165A(1) of the Finance Act, 2016]
In the above situation, equalisation levy at 2% shall be charged on the sum received or receivable by an e-commerce operator from e-commerce supply of goods or services made or provided or facilitated to-
1. A person resident in India; or
2. A person who buys such goods or services or both using internet protocols located address in India; or
3. A non-resident person in the following circumstances:
(i) Sale of advertisement which targets a customer who is resident in India or a customer who accesses the advertisement through internet protocol address located in India; and
(ii) Sale of data collected from a person who is resident in India or from a person who uses internet protocol address located in India.
Further, it is to be noted that in the following cases equalisation levy at 2% shall not be applicable:
1. where the e-commerce operator making or providing or facilitating e-commerce supply or services has a permanent establishment in India;
2. where the equalisation levy is leviable u/s 165 of the Income Tax Act at 6%;
3. if the sale, turnover or gross receipts of the e-commerce operator from e-commerce supply or services made or provided or facilitated to the persons mentioned above is less than Rs. 2 crores during the previous year.
1. How should one file tax return when he has multiple sources of income including salary and blogging income? Is it necessary to file tax return with disclosure of one’s secondary income as well such as blogging?
Ans: While filing the Income Tax Return you have to disclose all the income earned by you during the previous financial year. In case of blogging income, while filing your Income Tax Return show your salary income (from Form 16) under the head Income from Salary and regarding your blogging income show it under the head Income from Business and Profession. Please note that only the Net income of blogger will be taxable i.e. after allowing relevant business expenses and deductions.
2. As an individual blogger, how can I save tax?
Ans: Tax saving options for blogger or digital marketer:
a) You can claim business expenses from your gross income. Some of the eligible business expenses are as under:
b) Make your investment wisely – Like any other assessee you are also eligible for Chapter VI deductions on account of your investments in LIC premiums, ELSS Mutual Funds, PPF Account, Health insurance etc.
c) Tax Planning – A good tax planning will always help you to save your taxes. You can take help of tax professionals for planning your taxes. Tax planning helps with timing income and expenses, as well as optimizing investment and retirement accounts.
3. As a blogger, is it mandatory for me to file Income Tax Return? And what are the consequences if I don’t file it?
Ans: In any of the following situations (as per the Income Tax Act), it is mandatory for you to file an Income Tax Return in India:
a. Your gross total income (before allowing any deductions under section 80C to 80U) exceeds Rs 2.5 lakhs in FY 2019-20. This limit is Rs 3 lakh for senior citizens (aged above 60 but less than 80) or Rs 5 lakhs for super senior citizens (aged above 80).
b. You are a company or a firm irrespective of whether you have income or loss during the financial year.
c. You want to claim an income tax refund.
d. You want to carry forward a loss under a head of income.
e. If you are a Resident individual and have an asset or financial interest in an entity located outside of India. (Not applicable to NRIs or RNORs).
f. If you are a Resident and a signing authority in a foreign account. (Not applicable to NRIs or RNORs)
g. If you are in receipt of income derived from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
h. If you are a foreign company taking treaty benefit on a transaction in India
In case you are mandatorily required to file your Income Tax Return but you do not file the same within the specified time limit, then penalties for non-filing of Income Tax Return shall be as follows:
a. A penalty of Rs 5,000 is applicable if the return for FY 2019-20 is filed after the due date but by 31 December 2020.
b. A penalty of Rs 10,000 is applicable if the return for FY 2019-20 is filed after 31 December 2020 but by 31 March 2021.
Note: Penalty is limited to Rs 1,000 for those with income up to Rs 5 lakhs. These provisions are covered under Section 234F.
4. Is it compulsory for the blogger to obtain TAN? If not, then what are the eligibility criteria for TAN applicability? Is it based on turnover?
Ans: Every person liable to deduct tax at source or collect tax at source is required to obtain TAN. Turnover is not the sole criteria for TAN applicability.
However, a person required to deduct tax under section 194-IA (TDS on Property Purchase of Value Higher than Rs. 50 Lakh) can use PAN in place of TAN as such person is not required to obtain TAN.
Please note According to Section 194IB, it is mandatory for any person, i.e. individuals/HUF not liable to audit u/s 44AB, to deduct taxes for a rent paid to a resident, exceeding Rs 50,000 per month.
5. Can we collect GST from a client who does not have GST Registration?
Ans: It does not matter whether the client has GST Registration or not. If you are a having GST Registration, then you have to compulsorily charge GST to all your clients, collect the tax from them and then make the payment of GST to the Govt.
6. What is Advance Tax? Should bloggers know about it? Is there any benefit on paying such Advance Tax?
Ans: Every taxpayer is required to make payment of income tax during the year itself in which the income is earned. He/she is required to make the payment in four instalments during the year if the total tax payable during the year is more than Rs. 10,000. Such payment of Income Tax during the year is called Advance Tax.
Since income earned by bloggers is taxable in India, the advance tax provisions will also be applicable on them.
The benefit of paying advance tax is that you will save yourself from paying unnecessary interest u/s 234B and 234C.
Due dates of Advance Tax:
a) for taxpayers other than those covered u/s 44AD or u/s 44ADA
|ADVANCE TAX DUE DATES||PERCENTAGE OF ADVANCE TAX PAYABLE|
|On or before 15th June||15% of advance tax|
|On or before 15th September||45% of advance tax less advance tax already paid|
|On or before 15th December||75% of advance tax less advance tax already paid|
|On or before 15th March||100% of advance tax less advance tax already paid|
b) for taxpayers covered u/s 44AD or u/s 44ADA
|ADVANCE TAX DUE DATES||PERCENTAGE OF ADVANCE TAX PAYABLE|
|On or before 15th March||100% of advance tax|
7. I am a blogger and I have formed a Limited Liability Partnership (LLP). My question is how can I file forms such as Form 11, Form 8, etc. on Ministry of Corporate Affairs (MCA) website? Considering I am in start-up phase, there is no profit as such, so can I file these returns by myself without the help of any professional?
Ans: For filing the Forms on MCA portal, you can visit the website and download the form with Help option. It will give you step by step process and you can do the filing yourself of with help of a Professional.
8. Is it mandatory for a blogger to register under GST?
Ans: If the Aggregate Turnover of the blogger during a financial year exceeds Rs. 20 Lakhs (Rs. 10 Lakh for North East and Hilly States) than he/she has to compulsorily get GST Registration done immediately. Also, kindly note that while calculating the Aggregate Turnover, export turnover is also included.
9. Can individuals get their own GST registration done without forming a company? If yes, how to get the GST Number? Is it a simple Do it Yourself (DIY) Process?
Ans: Yes, you can take GST Registration on your Individual PAN. The person would be called a Sole Proprietor and the business would be called a Sole Proprietorship business.
Normal threshold limit for service provider under GST is Rs 20 lacs but if you are a blogger, youtuber or related to any form of online business wherein export or import of services is involved, then you will be required to register under GST, even if your annual turnover is less than Rs 20 lakh.
The registration process under GST is pretty simple, actually. All you need to do is visit www.gst.gov.in and start the process (You can also get the pictorial step by step guide on that site).
10. What can be the consequences if a blogger (earning and spending more than Rs. 1 lakh per month) is not having GST Registration?
Ans: Since the aggregate turnover is below 20 lakhs and assuming that the blogger is not located in a special category states as defined under the Act, there should be no consequence for not taking GST Registration. However, in case the bogger has paid GST on services availed or goods purchased that have been used in connection with the blogging business, than he/she will not be able to claim GST Input Credit/Refund.
11. If I am earning more than Rs. 20 lakhs through Google AdSense and the relatable business expenses are only about 5%, then in order to save income tax is it fine if I purchase new land or transfer some money to other person? How this will impact in my tax return?
Ans: Buying land or any other property is an Investment, not a business expense. Also, giving money to someone not in the nature of a business payment, can be treated as a Loan/Gift, etc., but not a business expense. For how to save tax, please refer FAQ No. 2 above.
12. Do we have to pay GST for the digital services payment received from a college which is an education trust and they don’t have GST Registration?
Ans: Non-registration of the college does not affect the GST chargeability for the person providing the services to such college. If a person having GST Registration provides any services, it does not matter whether the recipient of such services is having a GST Registration or not. The provider of such service will have to charge GST in the invoice, collect the same from the recipient (i.e. the college in this case) and then pay the same to the Govt. Similar question has been covered earlier in FAQ No. 5 above.
13. I have GST registration and I receive payments from outside India via PayPal. At the time of remittance, Paypal charges its commission plus GST. Now my question is that will I be liable to pay GST on the remaining amount?
Ans: PayPal charges GST on their Fees/Commission, etc only. That has no co-relation to the amount of GST payable by you on your sales. If you have GST registration, you will have to charge GST on your sales invoices and pay the GST to the Govt. In case of export of goods/services, you may apply for LUT/Bond and then export your goods/services without charging GST. In that case the remittances that you will receive from outside India shall not be liable to GST.
14. Facebook Ads has started charging GST as they are now accepting payments in INR not in USD. So, whether I can get refund of GST that I am paying to Facebook?
Ans: If you are eligible to claim GST Refund under the GST Regime, then you can claim the Refund for such GST payments made to Facebook as well.
15. Is it mandatory for Indian E-commerce to register under GST?
Ans: E-commerce aggregators are responsible under the GST law for collecting and depositing tax at the rate of 1% from each transaction. Any dealer/trader selling goods/services online would get the payment after deduction of 1% tax.
All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than Rs. 20 Lakhs (Rs. 10 lakhs in case of special category states) for claiming the tax deducted by aggregators.
Note: Supplier of services, who is not supplying through an e-commerce operator liable to collect tax at source, having a turnover below threshold limit is exempted from obtaining registration under GST.
16. I have 2 brands say AB & YZ. Do I need to have different GST registrations for both?
Ans: No, you need not have two separate registrations for two different brands. You can mention both the brands under Trade Name at the time of GST Registration.
17. Whether buying a domain name is considered as buying an asset or whether it is considered an expense?
Ans: It really depends on the nature of business whether buying a domain will be considered as purchase of an asset or as a business expense. In case you deal in purchase and sale of domain name and this is the major source of income for you, you can consider the domain name cost as an asset (Stock in Trade). Whereas, if your major business income does not consist of dealing into domain names, you should consider domain name cost as a business expense.
Also, please note that, if you buy Domain from any foreign provider for your business purpose e.g. GoDaddy, Dynadot, Namecheap, etc. you will have to get GST Registration compulsorily and pay GST under Reverse Charge Mechanism on such purchase.
18. Can we get GST Registration done without any shop or particular place of business? If yes, how?
Ans: No, you will need a Place of Business without which GST registration is not possible. The place of business need not be a commercial establishment. You can get the GST Registration done at your residential address as well.
19. For bloggers, what are the advantages/disadvantages of GST Registration?
Ans: Some of the advantages of GST Registration are as follows:
With regard to disadvantages, there is none except that there is a requirement of regular (monthly, quarterly, annual) compliances which people may find as a burden. However, it is always better to take some pain if you want to gain in your business. Therefore, having GST registration will always be a better option.
20. It is compulsory to submit Letter of Undertaking (LUT) in case of Nil GST, i.e. no GST liability due to no invoicing?
Ans: LUT is a document to be submitted by an Exporter with the GST Dept, whereby the exporter undertakes the following:
a) Export of goods/services will be completed within a period of three months from the date of issue of Export invoice or further period allowed by the Commissioner if any; and
b) To abide by GST law in respect of exports; and
c) To pay IGST along with Interest if failed to export.
LUT has to be filed separately for each financial year. And, it has to be filed prior to the issue of export invoice. Accordingly, if there has been no invoicing then there is no requirement of filing LUT as well.
21. I am a Non-Resident Indian (NRI) and I am a blogger by profession. I have following queries:
a) If I send money to my Indian bank account, should I pay tax for that?
b) If I earn money from Google AdSense and assuming that the amount earned is more than Rs. 2.5 lakhs in a financial year, would I be liable to pay tax on this income which has been deposited in my Indian bank account?
c) Do I need to register under GST since I have PAN card as well?
Ans: The answers to your questions are as follows:
a) There shall be no tax in India on your money which you transfer to your Indian bank account from abroad.
b) In case you earn income in India and such income exceeds the basic threshold limit provided for that financial year, you will be liable to file your Income Tax Return in India and pay taxes accordingly.
c) GST Registration shall not be compulsory just because you have a PAN Card in India. Registration under GST is a separate issue and you need to read the article below to determine whether you are liable for GST Registration or not.
22. As a blogger, do I have to file GST Return every month or once in a year? Can I file the return by myself or whether having a CA is necessary?
Ans: GSTR-3B has to be filed on monthly basis as per the current procedure. However, GSTR-1 filing can be monthly/quarterly based on your annual aggregate turnover. If the annual aggregate turnover is above 1.5 crores the filing is monthly, else it is quarterly.
Annual GST Return filing is also to be done separately in Form GSTR-9. In case you fall under GST Audit, GSTR-9C will also have to be filed.
The GSTR Filings are simple and you can try to file them yourself as well. However, in case of GST Audit, you will definitely need the help of a Professional.
23. Say I paid Rs 1 Lakh plus 18% GST to an Ad company and I earned Rs 2 Lakhs from my client. Should the entire amount of earning i.e. Rs 2 Lakhs be liable for taxation or just the net revenue (after deduction of Rs 1 Lakh of expense) will be taxable? What about the GST that has already been charged to me by the Ad Company? Will I get any tax credit for the same?
Ans: GST and Income Tax are separate taxes. Accordingly, for Income Tax purpose your gross income will be 2 lakhs and net income liable for taxation will be Rs. 1 lakh.
As far as GST is concerned, GST paid to the Ad Company is an Input Tax for you. Accordingly, if you are registered under GST, you will charge GST on Rs. 2 lakhs to your customer and claim Input Tax Credit of GST paid on Rs. 1 lakh of expense.
24. We have a partnership firm which has GST Registration. We are doing import of services like foreign content writers, web hosting services etc. Do we need to pay GST under RCM? If yes, can we get Refund of such GST paid since 100% of our income is from export of services. Kindly note that we have already filed the LUT. Also please mention what documents will be required for obtaining the GST refund?
Ans: The Partnership Firm will have to pay GST under RCM for Import of services. Since the income is 100% export oriented, you shall be eligible for refund of such GST paid.
In order to claim the GST Refund, the firm will have to file Form RFD-01 on the GST Portal. At the time of filing the application, kindly upload the export invoices alongwith corresponding FIRCs for the remittances received. Please note that digitally signed copies as well as scanned copies of signed invoices both are accepted by the GST Dept.
25. I am a blogger. I do regular transactions from my savings account like paying my writers, photo takers, promoters and all. So, should I convert my savings account to current account? Will this help me in tax filing? For taking a loan how many years’ tax returns are necessary?
Ans: It is not compulsory but definitely advisable to open a current account for such business-related transactions. Having or not having a current account does not in any way help with your tax filings. For disbursement of loan, every financial institute has its own set of requirements. However, in general it has been observed that having a history of continuous IT Return filing for atleast 3 previous years is given preference for loan application.
26. Say I earn an amount of USD 30,000 from Google AdSense. After conversion into Indian Rupee, it comes to around Rs. 22 lakhs. How will the tax liability be determined? Will it be according to the tax slabs set by the Government or will it fluctuate? What are the legitimate ways or measures to save on taxes?
Ans: Income Tax will be calculated on the basis of slabs determined by the Govt. only. There are many ways in which you can save taxes on your income (refer FAQ No. 2 above).
Also, kindly note that since your gross income/aggregate turnover during the financial year exceeds Rs. 20 lakhs, you will have to get registered under GST.
27. To save tax, can I buy items for my friends using my bank balance and take cash from them, in return showing those purchases as my business expenses?
Ans: The answer to this question is simply No. Basically, such kind of transaction is not related to your business and accordingly it will be against the law to claim such transactions as business related expenses. This would lead to tax evasion, which is illegal. We suggest you to never indulge in such a transaction.
28. Can I take my Google AdSense income every month in my savings account? Is there any risk?
Ans: As such there is no rule or bar on maximum amount that can be deposited in any Savings bank account. So, it is allowed to deposit your AdSense income in savings account. However, just ensure that you are disclosing all such income while filing your Income Tax Return. Your bank account is already linked to your PAN and all the international transactions happen through the banking channel. Hence the Govt. and the Income Tax Dept. can track all the transaction details through your PAN.
Also, in our opinion, keeping very high balance in your savings bank account is not a wise decision because of the following reasons:
We hope the above discussion will clarify all doubts and confusion regarding tax implications relating to blogging profession.
(CA Sandeep Kanoi is assisted by CA Harsh Bubna and CA Prapti Raut.)
Disclaimer: The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.