YouTube has become a wonderful source of income for people across the globe. You can earn money on YouTube through various sources such as Advertisements, Affiliate sales or freelance projects, Payments based on engagement metrics (views, comments, etc.) and much more. However, you must not forget about tax on YouTube income. Let’s understand about tax on YouTube income through this article.
Understanding YouTube Income Sources
YouTube income is classified mainly into two categories:
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Income from Other Sources
YouTube income is considered income from other sources when it is incidental or not a regular part of your business or professional services.
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Income From Business or Profession
Most YouTubers will fall under this category as their earnings are considered business income. Earning through YouTube falls under the service sector, so you can choose the standard provisions outlined in the Income Tax Act, 1961. For example, YouTube advertisements, affiliate sales, freelancing, payments for engagement from YouTube, consultancy services, etc.
Tax Compliance you have to do as YouTubers
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Classify your income
The first step is to decide your income classification. It will most likely be classified as “Business Income” if you earn YouTube income consistently much like a business.
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Track your Expenses
You can track your expenses and use the eligible ones as deductions. For example, you can use expenses done for camera equipment and editing software as deductions. It’s best to use our bookkeeping and accounting services along with income tax return filing so that you do not miss any deductions and pay less in taxes.
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GST Registration
If your YouTube income exceeds the threshold of Rs. 20 lakhs annually, you will need to mandatorily get GST Registration and do GST Return Filing. Also, you must know that you will need to pay 18% GST on ad revenue.
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Advance Tax Payment
Youtubers also have an option to pay an advance tax. You are eligible to pay advance taxes if your annual tax liability is exceeding Rs. 10,000/-. You can pay your advance tax in instalments that are as follows:
- 15% by June 15
- 45% by September 15
- 75% by December 15
- 100% by March 15
Important Note: TDS return filing and using Form 26AS are essential to adjust advance taxes accordingly.
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Tax Audit and Compliance
If your annual gross income exceeds ₹1 crore, your accounts must be audited under Section 44AB. For incomes below ₹75 lakhs (presumptive scheme), you can simplify tax filing with presumptive rates (if 95% of transactions are digital).
Is there any taxation for minors earning through YouTube?
Yes, young YouTubers also need to pay taxes and parents need to monitor financial and tax compliance for minors. Income earned through YouTube by minors through personal skills (e.g., video editing or vlogging) is taxed in the minor’s name, not clubbed with their parents’ income.
What’s the best way to stay compliant and utilize taxation for your benefit as a YouTuber?
The best way to stay compliant and utilize taxation benefits is to seek professional guidance. Online CA Consultancy can assist you in maximization of deductions, complying with legal requirements and also save you time and money.
Conclusion
In conclusion, YouTube income is highly rewarding however ignoring the taxation aspect can be a daunting risk and damage your business as well as income. By understanding your obligations and planning ahead, you can focus on creating impactful content while staying compliant with Indian tax laws. If you have any other doubts, do not hesitate to talk to our experts.
Moreover, If you want any other guidance relating to quick commerce business or GST registration, Income tax filing, please feel free to talk to our business advisors at 8881-069-069.
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