In the world of content creation, lakhs of creators are earning crores of rupees. In such a situation, the government also has to pay tax on this income. YouTubers and other creators earning from content creation need to take care of tax rules. If you are also a content creator, then you should know under which form ITR is filed on the earnings from YouTube. Also, what is the rule of tax calculation?
Rules for tax calculation for social media influencers in India?
Tax rules in India are the same for everyone, although farmers are exempted from this rule. In India, income up to 3 lakhs has been kept tax-free. Also, if you choose the old tax regime while filing ITR, then the income of 5 lakhs will come under the tax-free category, while in the new tax regime, income up to 7 lakhs will come under the tax-free category. Just one thing to keep in mind while filing income tax is that the income from YouTube cannot be filed under the ITR-1 or ITR-2 form like the salaried class.
Choosing the ITR form for YouTubers
Your income as a YouTuber is taxed like a freelancer or businessman, not like salaried individuals. Therefore, you cannot use ITR-1 or ITR-2 form. Apart from this, you cannot claim the standard deduction of Rs 50,000 available to salaried class taxpayers, as your income does not qualify as salary. However, you can claim tax deductions based on your professional expenses.
Which form to fill?
YouTuber's income is treated like a freelancer or business, so they can use the ITR-3 form. If you have opted for the Presumptive Taxation Scheme, then the ITR-4 form should be used. This form is simpler and does not require a balance sheet or a detailed profit and loss statement. However, if your income is more than Rs 50 lakh or if you want to carry forward losses, you are required to use the ITR-3 form.
Details of income from YouTube
The Income Tax Department classifies YouTubers' income based on the nature of content they create. If you create professional content or your channel is a registered business, your income will be classified as business income. If you are just creating content for entertainment and earning from it, it can be classified as “other sources”.