The recent years have witnessed the emergence of a new profession i.e. video blogging more popularly called vlogging.
Vlogging is the new trending Profession in the Online Market. Youtubers are also niche-based creative people who create the channel on a particular niche like comedy, entertainment, education, tech, fashion, stock market, etc, and create a large audience as subscribers.
The Vlogger may earn various kinds of income namely Payment from YouTube for audience engagement, which is assessed on the basis of the number of reaches, views, and comments; YouTube advertisements; Consultancy services on video making, designing, and optimization and Affiliate sales or other freelance income from YouTube.
The YouTuber can be taxed as a sole proprietor unless an individual registers the business as a company, LLP, or Partnership Company. Tax provision’s applicability depends on the source and nature of income.
The income from YouTube can be treated as Income from Business or Profession and Income from Other Sources.
Being a service sector business, the assesses can only opt for normal provisions under the Income Tax Act, 1961. If the gross total income exceeds Rs 1 crore, then section 44AB i.e., tax audit will be applicable to the YouTuber.
Additionally, Tax Deducted at Source (TDS) provisions will also be applicable to you on every receipt of payment. You can view your TDS amount through 26AS, which can be generated electronically.
If the gross turnover is below Rs. 1 crore, then the normal tax provisions to calculate taxes and maintain books of accounts must be followed.
However, if gross total income exceeds Rs. 1 crore, then all bookkeeping requirements under Rule 6A and get your accounts audited by a Chartered Accountant (CA) under section 44AB of Income Tax Act,1961 must be followed.
The Vlogger has to pay taxes on the net taxable income after considering all the business expenses and depreciation as per the income tax slab.
There are basically three types of expenses that the vlogger can claim during the ITR filing.
Firstly, general expenses which mean expenses directly related to earning, income are fully deductible. It includes internet bills, costs incurred for computer or camera maintenance, and any other cost for creating and uploading the videos.
Secondly, other expenses which include costs to promote and market video expenses.
Thirdly,
For Example, Mr. X earns Rs. 40 lakhs during the Financial Year 2020-21 by doing travel vlogs. He has various expenditures to earn the income namely Marketing Expense, Advertisement Expense, Travelling expenses, Internet expenses, Camera (Capital expenditure), and Car (Capital expenditure).
Mr. X needs to pay tax only on the Net Profit made during the year. Since assets like a camera and car can be used over a period of time, only depreciation (40% on camera and 15% on the car) can be claimed as expenditure as per income tax laws. However, the balance amount can be claimed as expenditure in the coming years.
If vlogging is just a part-time job or a hobby and the earnings are not huge, then an individual may opt to offer his income under Income from Other Source for taxation.
For example, Mr. Y is employed in ABC Ltd and earns Rs. 50,000 Per month. He is interested in cooking and started a vlog. He started uploading cooking recipe videos on weekends and made 1,00,000. Mr.Y incurred expenses of Rs.30,000 attributable directly for making the videos excluding capital expenditure. Here, he can show Rs.6,00,000 under Income from salary and Rs. 70,000 from Income from Other Source while filing the Income Tax Return (ITR).
It is noteworthy that to offer the income under Income from Business and Profession if there is a capital expenditure like purchase of Camera, Computer etc. exclusively for this purpose.
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