Income tax code for influencers announced: What changes for them?
What's the story
The Income Tax Department has introduced a new profession code, 16021, specifically for social media influencers. This is the first time that the department has recognized this category separately. The move is aimed at bringing influencers who earn money by promoting products and services online under India's tax net. The new code appears in the ITR utilities for FY 2024-25 (AY 2025-26).
Tax obligations
Code to be used under ITR-3 or ITR-4
Influencers, bloggers, online coaches, as well as other digital gig workers now have to use this new profession code while filing their taxes. They can do so under ITR-3 or ITR-4 (Sugam), both meant for self-employed people and small businesses. The new code is required for those filing under ITR-3 or ITR-4, regardless of whether they opt for presumptive taxation under Section 44AD or Section 44ADA of the Income Tax Act.
Benefits
No need to maintain detailed accounts
Under presumptive taxation, influencers don't have to maintain detailed accounts. They can declare a fixed percentage of their total receipts as taxable income. This might be 8% of gross receipts (or 6% for digital payments) under Section 44AD if treated as a business or 50% under Section 44ADA, if treated as a profession. However, tax experts say that classifying influencer work as a profession might create confusion about audit limits and applicable sections.
Filing process
How to file your taxes as an influencer?
To file their taxes, influencers first need to calculate their total income earned throughout the year and work out the expenses and deductions. They then have to log in to the Income Tax e-filing portal, choose the right form (ITR-3 for actual income/expenses or ITR-4 for presumptive), enter the latest profession code 16021, fill all the details, and submit. This formalizes the influencer economy within India's tax net.