One crucial point is that YouTubers and influencers cannot alter their tax regime annually since their revenue comes from their businesses and professions.
The YouTube creative economy in India is expanding, with thousands of young professionals resorting to YouTube and other media platforms to develop careers.
However, the need to pay taxes accompanies income, and many new producers often lack the knowledge necessary to properly submit their Income Tax Returns (ITR).
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Tax Filing for Creators
YouTubers and influencers are required to disclose their income as earnings from their company or profession, in contrast to salaried workers, whose employers deduct taxes at the source and file a Form 16.
This implies that they must maintain track of the funds they get from commercial partnerships, YouTube, Instagram, and other platforms, as well as the costs associated with content production.
Influencers and YouTubers may submit their ITR by demonstrating the money they make from their jobs and businesses. One’s earnings via YouTube or other sites may qualify as professional income.
Sujit Bangar, the founder of Taxbuddy.com, states that if someone is making money by selling goods or other items, it is considered commercial income.
ITR Options for Professionals
People who earn money from their businesses may utilize either ITR 3. You may only utilize ITR 4 if you are qualified to use the presumptive taxation plan and your annual taxable income is less than Rs 50 lakh.
Professionals such as doctors, lawyers, chartered accountants, company secretaries, cost and management accountants, engineers, architects, and some individuals working in the film industry are among the only individuals who can choose to use the presumptive taxation scheme under Section 44ADA of income tax.
Tax Regime Choice Restrictions
According to Mumbai-based tax analyst Balwant Jain, “If a YouTuber is also a professional, such as a lawyer and a chartered account, then they may also pay income tax as a professional.”
One crucial point is that YouTubers and influencers cannot alter their tax regime annually since their revenue comes from their businesses and professions. Bangar emphasizes that they must use extreme caution while selecting a tax scheme.
Old vs New Regime
This is an important difference. The decision between the old tax regime and new tax regime is less flexible for creators than it is for paid people.
Professionals and corporations are obligated to their original decision, although salaried taxpayers have the option to change regimes each fiscal year.
A YouTuber cannot readily return to the previous tax scheme in later years if they choose the new one, which has lower slab rates but no significant deductions.
Deductions Reduce Taxable Income
The fact that costs are deductible is another crucial consideration. YouTubers are able to deduct costs for things like camera gear, editing software, internet fees, and even studio rent while creating material.
It is possible for these deductions to significantly reduce taxable income. The simple truth is that as a content producer, paying taxes requires careful preparation in addition to compliance.
The amount of money that remains in your pocket might vary significantly depending on the appropriate tax system, precise spending monitoring, and timely reporting.
Calculate your tax burden under the old and new tax regimes, accounting for house loans, 80C and 80D deductions, and investing, among other things.