I-T dept issues notices to 15 social media influencers over low tax payment

New Delhi, June 29, 2023

The Income Tax (I-T) department has sent notices to 15 social media influencers for paying zero or "substantially low" tax despite receiving hefty fees from companies whose products they promoted through their posts, according to a report in The Economic Times (ET).

These social media influencers came under the radar of the I-T department after posting their travel to exotic locations and luxury shopping on social media platforms.

The list includes a high-profile fashion influencer, a lifestyle and fitness coach, travel influencers and an influencer who posts on Bollywood.

An official said that three of these people had not filed any returns, while the rest had underreported their income.

The official added that another 30 influencers are under the scanner.

The official said that one Mumbai-based fashion influencer was receiving between Rs 50,000 and Rs 1 lakh for a single post on Instagram for endorsing luxury makeup brands.

“After receiving over Rs 30 lakh for various posts from a single company, the influencer had declared an annual income of just Rs 3.5 lakh,” the official said.

Last week, I-T officials conducted searches on 10 YouTubers in Kerala.

The Influencer Marketing Report 2022 stated that the social media Influencer market in 2021 was at Rs 900 crore, which is projected to touch Rs 2,200 crore by 2025, according to the ET report.

The influencers that earn over Rs 20 lakh in a fiscal need to register their services under the goods and services tax (GST) law as such services are classified as Online Information and Database Access or Retrieval Services (OIDAR). Under GST, services are taxed at 18 per cent.

From July 1, 2022, under Section 194R of the Income Tax Act, a 10 per cent tax needs to be deducted at source (TDS) on freebies and perks worth over Rs 20,000 received for promotion, according to the ET report.

[The Business Standard]