How YouTube Creators Can Save Tax?

YouTube can be profitable and you can further improve your earnings by utilizing available tax benefits and exemptions

With cheap internet, people in India are consuming content in a big way. Among the beneficiaries are streaming platforms like YouTube. Things have never been so good for Indian YouTubers, as they can easily access millions of viewers. For Indian YouTubers, let us take a look at how they can enhance their income via tax saving measures.

Declare nature of income – Indian YouTubers can declare their earnings as business income or income from other sources. Choosing business income will be better since more deductions are available for this income source. It will be taxed under ‘Profits and Gains from Business or Profession’.

Earnings to be taxed – YouTubers in India can make money from sources such as Google AdSense, brand deals, sponsorships and affiliate income. Applicable GST is 18%, in case the turnover is more than Rs 20 lakh. Some states have set a limit of Rs 10 lakh. Earning coming from US viewers will be subjected to 15% withholding tax, whereas worldwide earnings will be taxed at 24%.

Claim expenses – YouTubers in India can show various expenses to reduce tax burden. It includes direct expenses such as internet and electricity and general expenses such as travel cost and payment to editors and collaborators. YouTubers can also claim depreciation on their assets and applicable rent for the portion of their home used for YouTube content creation.

Presumptive taxation (Section 44AD/44ADA) – Business income comes under Section 44AD, whereas Professional income falls under Section 44ADA. These sections free you from the need to maintain account books and expenses registers. Under Section 44AD, you can declare 6% of your turnover as taxable income. For cash receipts, the declaration should be 8%. Section 44AD applies in case of gross receipts of up to Rs 3 crore. Section 44ADA, 50% of gross receipts can be declared as taxable income.

Tax saving options – YouTubers can utilize various tax saving options such as Section 80C, 80D, 80G and 80TTA. With these options, YouTubers can reduce their taxable income by up to Rs 1.5 lakh per annum.

Claim GST Input Line Credit (ITC) – GST is mandatory for turnover of more than Rs 20 lakh. You can claim ITC on the GST amount linked to your business purchases.

Leverage Double Taxation Avoidance Agreement (DTAA) – If you have already paid tax on income earned from US viewers, you can claim foreign tax credit (FTC) while filing your income tax return. This eliminates the issue of double taxation.

Avoid cash payments – A tax audit will not be mandatory if turnover is less than Rs 1 crore. However, this limit can be increased to Rs 10 crore if you reduce the cash component to less than 5%. You can thus avoid expenses related to tax audits.

As is evident from above, YouTubers in India have various options to save tax. All of these are completely legal and covered under Income Tax rules.