Topic: How a YouTuber/freelancer file ITR (Income Tax Return) online?
An article by Kohal Dev Sharma, Advocate, Punjab and Haryana High Court
The past decade has seen a lot of activity online and a large number of people have come forward as they make videos related to different fields such as education, fitness, tips/ideas/classes related to business, reviews of movies, books, gadgets etc. and such videos are then uploaded to online platforms like YouTube. Apart from this a lot of people are into writing and they write blogs and articles on different fields. The people who do such activities are known as freelancers. Freelancers make money off of their videos so uploaded on Youtube or other platforms and writers earn from their articles and blogs.
As more and more people view these videos or read such articles or blogs, the freelancers who uploaded those videos or wrote those articles, make money. Although most of these freelancers know how to make money off of these videos or blogs, they are not aware of the tax implications that follow. So in order to understand the tax implications it is important that the concept of earning through these Vlogs and Blogs is understood first and foremost.
For example, a freelancer uploads a video on Youtube this is how they would make money:
- Based on the reach, views and comments, Youtube makes payment for audience engagement.
- Payment received through YouTube ads
- Money earned from providing Consultancy services on how to make videos, designing them and optimisation of those videos.
- Income from Youtube based on affiliate sales.
Now let’s understand how the income of a freelancer can be taxed?
Since we took an example of a Youtube vlogger, we will take into consideration the case of a vlogger only. The most important thing to remember is that a freelancer will be taxed as a sole proprietor unless and until they register themselves as a company, LLP or Partnership Company.
An income earned through a Uoutube video or an article is considered as an income from business and the tax provisions are applicable depending upon the source and nature of income.
Since such an income is considered as an income from a service sector business, opting for normal provisions under the Income Tax Act,1961 is the only way for assesses to go with. In case the gross total income exceeds Rs 1 crore, then tax audit applicable under section 44 AB will be applicable to the freelancer. Apart from this, Tax Deducted at Source (TDS) provisions will also be applicable to a freelancer on every payment so received by the said freelancer. Apart from this one can view their TDS amount that can electronically be generated.
In case the gross turnover of a freelancer is below Rs 1 crore, then they have to follow the normal tax provisions in order to calculate the taxes applicable to them and maintain account books. However, when the gross total income of a freelancer exceeds Rs 1 crore, then they must follow all bookkeeping requirements as mentioned under Rule 6A and need to get their accounts audited by a Chartered Accountant under section 44AB of Income Tax Act,1961. As per the income tax slap that is applicable to them, freelancers will have to pay taxes on the net taxable income after considering all the business expenses and depreciation.
A freelancer may have to pay advance tax also in case their total tax liability is more than Rs 10,000 in a particular financial year. In case the tax liability is more than Rs.10000 in a financial year, they will have to pay advance tax in four instalments.
After taking into consideration the amount of TDS that has already been deducted from payments made to a freelancer, they will have to pay your advance tax liabilities by the due date and the said TDS can be cross-checked from Form 26AS.
Expenses that can be claimed
(i) General Expenses: In case a freelancer can submit the bills that are required, then in that case the expenses that are directly related to earning that income, are completely deductible. These expenses include internet bills, costs incurred for maintenance of a computer or a camera and any other cost incurred for creating and uploading the videos or blogs.
(ii) Other Expenses: the costs that have been incurred for promoting and marketing of a video or blog can also be claimed for tax deduction.
(iii) Depreciation: Freelancers need to remember and understand the fact that the expenditure of assets cannot be deducted completely deducted against your income. For example, one can claim 15 percent depreciation of the cost of the camera and 60 percent depreciation of the cost of the computer or laptop, only.
In your total income is less than Rs 1 crore and a freelancer has calculated his or her taxes under normal provisions and tax audit does not apply then in that case they will have to file their income tax return by July 31st of the assessment year. On the other hand, assesses that are subject to tax audit i.e. their gross total income is more than Rs 1 crore, the date of filing returns is September 30st of the assessment year.
About the Author:
Kohal Dev, is a lawyer by profession and has a penchant for writing and his ability to juggle several tasks at a time, in the most effective and efficient manner is something that allows him to deliver content fresh out of the box. His extensive experience in the field of Law, Finance, Real Estate and Marketing allows him to write some of the most amazing blogs and articles in exactly the way they are required to be done. When not at work, he can be found reading and of course, writing.