Taxation of YouTuber or Vlogger in India

How Youtube & Google generates their revenue ?

YouTube is a subservient unit of Google and completely synonymous with its parent body Google which controls it thoroughly. Accounts on both sites are linked up, search algorithms match each other. If given the option, Google will provide video results to YouTube before any other video hosting site. The two works seamlessly, the world's most powerful search engine matched with the world's most popular video hosting site. YouTube gives YouTuber (any person who uploads it's content at YouTube Platform) an option to monetize its content which if it opts for, then content gets commercialized in nature, meaning hereby that the content is available for advertisement spots. YouTube system streamlines displaying advertisements of third parties or sponsors in these slots by over lapping ads upon the original content for few seconds.

This entire process triggered post after execution of an agreement with Google containing certain terms and conditions to which a YouTuber has to agree. By having agreed to such agreement Google initiate placing ads over the content so monetized at YouTube platform, emphatically the YouTube in turn confers the right and yields the permission to its parent entity Google to access the monetized content and allows it to place ads overlapping the monetized content for predetermined slots. YouTuber while agreeing to monetization of content authorizes and vests right to Google(YouTube) to place and overlap the advertisements of third parties or of sponsors on such content which remains live over YouTube Portal.

This entire authority transmission as mentioned before executed by opening an Adsense account through an instrument agreeing the Monetization terms and conditions by Google enunciated in very same instrument of covenant. Once all set by agreement then the revenue sharing model between YouTuber and Google comes into picture. Google charges the spots to the sponsors or advertises and a certain percentage of revenue so generated by Google thereafter shared with the content owner or say YouTuber. This is how Google and YouTuber both earns the money.

Tax Implications for Income from YouTube

You will be taxed as a sole proprietor unless you register your business as a company, LLP or Partnership Company. Tax provisions applicability depends on the source and nature of income. Here, a YouTuber’s income is considered as business income.

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 your gross turnover is below Rs 1 crore, then you have to follow the normal tax provisions to calculate taxes and maintain books of accounts. But if your gross total income exceeds Rs 1 crore, you must follow all bookkeeping requirements under Rule 6A and get your accounts audited by a Chartered Accountant(CA) under section 44AB of Income Tax Act,1961. You will have to pay taxes on the net taxable income after considering all the business expenses and depreciation as per the income tax slab applicable to you.

You may also have to pay advance tax if your total tax liability is more than Rs 10,000 in a financial year. You have to pay advance tax in four instalments given your tax liability is more than Rs 10,000 in a financial y year (FY).

Starting from June 15 , 15 percent of the advance tax has to be paid. Then by September 15, you should have paid 45 percent, by December,  75 percent of the advance tax liability and by March 15, 100 percent of it.

You have to pay your advance tax liabilities by the due date after considering the amount of TDS that has been already deducted from payments made to you. This TDS can be cross-checked from Form 26AS.

Don’t forget to claim the below expenses

a. General Expenses: If you can submit the required bills, expenses directly related to earning your income are fully deductible. It includes your internet bill, costs incurred for computer or camera maintenance and any other cost for creating and uploading the videos.

b. Other Expenses: Costs to promote and market your video expenses.

c. Depreciation: Please remember that the expenditure of assets cannot be deducted completely deducted against your income. For instance, you can only claim 15 percent depreciation of the camera price and 60 percent depreciation of the cost of the laptop.

In case you have calculated your taxes under normal provisions and tax audit does not apply i.e., your gross total income is less than Rs 1 crore, you will have to file your income tax return by July 31 of the assessment year. For assesses who are subject to tax audit, the return filing deadline is usually September 30 of the assessment year.

Meaning of Supply

Meaning of Supply The word 'Supply' has been defined under Chapter III, section 7 of CGST Act 2017 to be read as under :

Section 7

1. For the purposes of this Act, the expression 'supply' includes-

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business; and

(c) the activities specified in Schedule I, made or agreed to be made without a consideration and

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

2. Notwithstanding anything contained in sub-section (1),-

(a). activities or transactions specified in Schedule III; or

(b). such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. 

3. Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.

On a critical analysis of definition of Supply it becomes so conspicuous that the law makers wanted to cover wide range of transactions into the term Supply and thus they came up with a definition which is Inclusive definition in nature and therefore carries a wide scope. Would like to heed at clause (a) of sub-section (1) of section 7 which cites as under -

'all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business'

Under the definition following combination of words has played a decisive vital role, to identify those basis de rigueur prerequisites in an act to decide whether such an act is supply or not:-

1. All Forms of Supply

2. Made or Agreed to be Made

3. For a Consideration

4. In Course or Furtherance of Business

While framing an interpretation of the definition it can be concluded that any act or action which is sort of a supply, delivery, contribution, tendering, furnishing or any other act by whatever name called or known as similar in nature, if has been under taken or has been promised to be undertaken for a consideration or in lieu of something in return or having an identity of quid pro quo, either in course of a business or in furtherance or perpetual run of a business then such an act or action has significant potential to be termed as Supply.

If any of the element among these four elements is missing then such an act cannot be tantamount to Supply. For constituting ‘Supply' occurrence of all these four elements is an exigency and thus an act cannot be construed as supply unless all these four elements not been conjured together.

So when a content owner uploads its content on online YouTube Portal then it means handing over and delivery of the content to YouTube. And when the same content is been monetized after opening an Adsense account with Google followed by agreeing to the terms & conditions of the agreement in place then it implies commercial intention on the part of Content Owner, which is a order of furtherance of Business.

As earning form YouTube starts after reaching a certain amount of viewership so at the moment content surpasses the stipulated viewership, revenue starts generating in hands of YouTuber. As soon as revenue in hands of YouTuber starts accruing then all four components as discussed above eventually coalesces and brings Supply in legal terms into existence, as all these four factors like Making Supply under the cover of Agreement, in Furtherance of Business and for a Consideration gets over at the very moment when revenue in hands of Youtuber had accrued. Therefore at the point where YouTuber starts generating revenue from YouTube post after monetization process of content at the same very point ‘Supply' of content said to be accomplished.

Meaning of Service

As per Sec 2(102) of CGST Act

"services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

Service definition signifies that service nature is intangible unlike goods which have physical existence. As content is online media that is on YouTube server so it do not have Tangibility in its nature ipso facto it is not a commodity or a good rather a service.

When all these explanations put together then it postulates and makes it very clear that uploading content and monetizing same on YouTube portal is Supply of Service undertaken in computerized environment by way of online Information and Database Access or Retrieval Services .. And when it is Supply of Service then defiantly Indirect Taxability has to creep in.

Whether Such Uploading of Content on YouTube and Monetization of the same is Taxable Supply with in GST Regime?

How much GST shall be levied on Export of Service?

As this service has been provided to a person which is neither in taxable territory nor the place of supply of service is situated in taxable territory so no question of levying GST on such service arises. However, section 16 of IGST Act has articulated the subject as under:-