Blogging is a very interesting activity for me, but for many, it also works as a source of income. There are bloggers who treat their blogs as a serious business. A question that I have seen being asked and discussed by many bloggers in India is about which taxes apply to them. A number of discussions, thorough and multiple readings of the income tax act and GST acts have contributed to this article.
Answering this question was and is both exciting and challenging. As this affects me on a personal level, research was very exciting. But I found myself too invested which made writing a concise article difficult, as I always found something more to tell. So let’s address our query, what taxes are applicable to Indian bloggers? Income tax applies to all Indian bloggers. You calculate all the earning you made from your blog then you subtract all the expenses related to the blog. On the final income, you pay income tax. GST is a little more complex. Blogger is the supplier of a service or good (if you sell a physical product). If the receiver of that service/good is in India. You have to pay GST at 18%. But, if the receiver of that service/good is located outside India. You don’t have to pay GST.
Why pay taxes at all?
This question is a very normal one. Whenever a question about taxes arise, the question of why pay taxes at all follow. The most important reason is that it is the law. Many laws in India makes it compulsory for its citizen to pay certain taxes. But there are a few more practical reasons for paying your taxes.
- When you pay income tax you file an income tax return (ITR). This ITR is considered as a valid proof of income. If you apply for any loan, personal or business, ITR becomes even more important.
- By paying taxes you make a positive contribution to the development of your country. There are many expenses which the government has to bear. Taxes are the major source of income for the government.
- Almost the entire earning of a blogger is cashless. This means that your exact earning can be determined by the tax authorities. It is quite impossible for a blogger to hide their income. In such a scenario nonpayment of taxes can lead to a lot of trouble.
What taxes can apply to bloggers?
Exactly like everyone else the income tax applies to bloggers too. The bloggers pay income tax if their annual income is above a certain level (above Rs. 2.5 lakh currently). Bloggers can claim the same rebates just like a salaried person. The calculation of tax is also quite similar to a salaried person. We will discuss the entire procedure in the next part.
The second tax that may apply to bloggers is GST. Back in 2017 when GST was introduced there was a general sense of confusion among people. But, today things have become quite clear. A blogger earns money by selling services (ad space, affiliate, sponsored content, etc), selling digital products or by selling some physical products. Depending on the location of the buyer of these a GST at 18% or 0% applies to bloggers.
Let’s address income tax and GST in a more detailed manner.
Income tax is a direct tax which is paid by individuals or nonindividual on their annual income. In India income tax is charged on an incremental basis. The lower your income lower will be the income tax, although for certain nonindividual entities income tax rate is fixed. The tax is calculated on the income of the entire financial year (1st April to 31st March).
How to calculate taxable income for bloggers?
A blogger can earn income in the following ways.
- Selling advertisement space
- Affiliate marketing
- Sponsered and paid contents like product reviews
- Offering services like consultation, designing, etc
- Selling digital products like e-books, digital courses, etc
- Selling physical products like T-shirts, watches, etc
You add up all the income you earn from any or all of these sources. Income generated by your blog through other ways should also be added up. This forms your gross income. From this, you deduct various expenses that you incur directly for running your blog. These may include electricity, internet, hosting service, etc.
When you buy a fixed asset like a laptop, camera, etc you cannot deduct the entire amount as an expense in one go. These assets are used for a very long duration. Thus, only a certain percentage of their cost is allowed to be deducted as an expense each year. This is called depreciation. The government of India determines the rate of depreciation of various assets.
This gives you your net income. Income tax is calculated on the basis of this net income. Thus,
NET INCOME = GROSS INCOME – EXPENSES – DEPRECIATION
But, income tax is not levied on your entire net income. Income tax act permits certain deductions from your net salary. Section 80 of the income tax act covers these deductions. The details of various deductions are explained clearly in an article of Economic Time (here). After subtracting these deductions from the net income you get your taxable income. Thus,
TAXABLE INCOME = NET INCOME – DEDUCTION UNDER SEC 80
Your total tax is calculated on the basis of this taxable income. The tax is a certain percentage of this taxable income. The higher your income more is the rate of income tax.
Payment of Income Tax
You pay income tax for a financial year which starts on 01 April. If your income tax is more than Rs. 10,000 you have to pay advance income tax. You pay this advance income tax in the following way.
- At least 15% advance tax before 15th June
- At least 45% advance tax before 15th September
- At least 75% advance tax before 15th December
- 100% before 15th March
You can very easily pay advance income tax online. The procedure for doing this is as follows.
- Go to https://tin-nsdl.com/
- On this website go to Services > e-payment: Pay Taxes Online or you can click here.
- Select challan no. ITNS280.
- On the next page, select 0021 for ‘Tax Applicable’. Select 100 for ‘Type of Payment’.
- In ‘Assessment Year’ enter the year next to financial year you are paying tax for.
- Fill up the rest of your personal details.
- Click on the proceed. A confirmation page will open. Recheck the information you have provided. Click to confirm if everything is correct.
- After you make the payment a challan will be generated. Save this challan as proof of payment.
Income Tax Return is a self-declaration for income taxpayers. You provide all the details about your income and other details like deductions under Sec 80. You file ITR after the financial year in the assessment year. You can file your ITR online on the website https://incometaxindiaefiling.gov.in
GST stands for Goods and Services Tax. It replaced a large number of indirect taxes with a single tax. This tax is applied to the sale of goods and services all over India.
For bloggers, there are two main concerns. When does GST apply to bloggers? Is GST registration compulsory for bloggers?
When does GST apply to bloggers?
There are only three conditions that apply to bloggers.
- No GST at all
- GST at 18%
- GST at 18% on some income and zero GST on remaining
To determine which category you come under we have to understand certain concepts.
- Supplier: The seller of goods/services. In our case, the blogger is the supplier.
- Receiver: The buyer of the services like Google AdSense, or customer of goods sold.
- Place of Supply: The place where the receiver is located.
This place of supply plays a very important role. Place of supply determines the rate of GST for bloggers.
- If the place of supply is outside India. GST is @0% i.e. you pay zero GST
- If the place of supply is in India. GST is to be paid @18%
So if we take the case of advertisements as an example. If ads are displayed through Google AdSense, the place of supply is outside India. No GST is to be paid on earnings from AdSense. But, if an Indian company run their ads on your website. The place of supply is inside India. So you have to pay GST @18%.
In simple term all income, you make from Indian entities. You pay GST @ 18% on this. But, all the income you make from foreign entities is GST free.
Is GST registration compulsory for bloggers?
There are three conditions for bloggers, which makes the GST registration optional.
- If you pay zero GST. There is absolutely no need for GST registration
- If you sell services in India and your income is less than 20 lakh per year (Rs. 10 lakh for some states).
- If you sell goods only in your state i.e. only intrastate trade. Your income is less than 20 lakh per year (Rs. 10 lakh for some states).
Thus the condition in which GST registration becomes compulsory for bloggers is as follows.
- You have to pay GST
- Either your income is more than Rs 20 lakh per year. OR. You sell goods in other than your home state i.e. interstate trade of goods
If you satisfy both of these points. GST registration becomes compulsory.
Some relevant articles of GST acts
I have tried my best to explain the GST application to bloggers in the simplest way. But, if you want to do your own research. Or, you want to have further clarity. I am mentioning some relevant articles of GST acts.
- Section 2 of IGST act 2017: nature of service, the export of services
- Section 13 of IGST act 2017: Place of supply
- Section 16 of IGST act 2017: zero rate of GST
- Section 2 of CGST act 2017: Definitions of various terms
Articles related to registration of GST.
- Section 20 of IGST act 2017
- Section 22 of CGST act 2017
- Section 23 of CGST act 2017
- Section 24 of CGST act 2017
If you have any doubt, you can ask it in the comments. I will try my level best to help you