What Is The Taxability Of Youtube Earnings?

                             What Is The Taxability Of Youtube Earnings?

Over the last few year's , we all have observed that many people has comes to video platform like youtube and making various videos related to education, fitness, technical gadgets, gaming, review of movies/books etc. and uploading it in youtube thereby making lakhs of money.

Generally  youtuber earns money by getting views on their videos. The more people give views on the video , the more money the youtuber makes. Having said this, there are people (specially youtubers) who are uncertain about their tax liability.

                                               

          Let’s understand, How does the income of youtuber be taxed?

First of all remember that you will be taxed as sole proprietorship unless you registered your business as a company, LLP or partnership firm. Tax provisions are applicable as per the nature of income.

Nature of income of youtuber is BUSINESS INCOME and hence head of income will be PGBP. Gross income would be the total amount of money received from youtube during the relevant assessment year.

 If your gross turnover is below Rs 1 crore, then you have to follow the normal tax provisions to calculate taxes and maintain books of accounts.

 If the gross total income exceeds Rs 1 crore, then section 44AB i.e., Tax audit will be applicable to the YouTuber. Tax Audit refers to the independent verification of the books of accounts of the assessee to form an opinion on the matters related to taxation compliances carried out by the assessee. Tax audit shall be conducted by a Chartered Accountant who ensures that the taxpayers

has maintained proper books of account and complied with the provisions of the Income-tax Act.

But there is one relaxation from getting your books of accounts audited by chartered accountant(CA) only if you opt for presumptive taxation.

Presumptive taxation for businesses is covered under section 44AD of the Income tax act 1961. Any business which has a turnover of less than Rs 2 crore can opt to be taxed presumptively. They must declare profits of 8% for non-digital transactions or 6% for digital transactions, whichever one is applicable. In your case it would be 6% only. 

If it is the only income you earn and your gross receipts from Youtube are less than Rs. 2 crores, you just need to pay tax on 6% (minimum, can be higher if you want to) of the total receipts.

Tax = Total Receipts x 6%( minimum) x Tax rate applicable.

If the gross total income crossed 2 crores i.e more than 2 crores then assessee has to compulsorily get its books of account audited by the CA.

                          Don’t forget to claim the below expenses

A)  General Expenses: If you can submit the required bills, expenses directly related to earning your income are fully deductible. It includes your internet bill, costs incurred for computer or camera maintenance and any other cost for creating and uploading the videos.

B)    Other Expenses: Costs to promote and market your video expenses.

C)   Depreciation: Please remember that the expenditure of assets cannot be deducted completely deducted against your income. For instance, you can only claim 15 percent depreciation of the camera price and 40 percent depreciation of the cost of the laptop/Desktop.

                                          Compliances procedure

In case you have calculated your taxes under normal provisions and tax audit does not apply i.e., your gross total income is less than Rs 1 crore, you will have to file your income tax return by July 31 of the assessment year. For assesses who are subject to tax audit, the return filing deadline is usually September 30 of the assessment year.

Thanks for reading!

CA Somay Garg