Income Tax liability on Blogging and YouTube Income

Income Tax Implication on Blog Earning, YouTube (Vlog) Earnings in India

Let’s understand Income Tax Liability on Blogging and YouTube income in India.

Table of Contents
Basics of Blogging or YouTube Earnings
Who is the Primary Service Provider & Receiver
Sources of Earnings to Bloggers and YouTube Channel owners
Who is the Secondary Service Provider & Receiver
What are Income Tax Implications
Deduction from Blogging/Vlogging Income
Blogging Income & Section 44AD
Consequences of Non-Filing of Return of Income for Bloggers/Vloggers
Advance Tax liability
TDS liability for Bloggers/Vloggers
Final Thoughts

Basics of Blogging or YouTube Earnings:

Let’s understand only the Income Tax implications of ‘Blogging Income’ or ‘YouTube Earnings’ in India.

Let’s understand How this works?

Google Ads and Google AdSense are two Products of Google.
Google Ads is a Service where Businesses place their Advertisements in Digital Space.

Google Ads can be in various forms like Ad Placement directly on Search Engines, Google Display Network Ads, Video Ads etc.

Google Ads earns through Ads Service provided to Businesses.
Google AdSense is another Product of Google.

Google AdSense is a Platform for the Distribution of Profits Earned through Google Ads to Individual Blogging Website owners or YouTube Channel owners.

Because Businesses choose the option to display their Ads on Google Display Network Ads, Bloggers and YouTubers get their distributed profit in the form of Google AdSense.

Google AdSense chooses selective Blogging Websites or YouTube Channels which have a good amount of Traffic every day or where Content is good, Google Ads will be displayed.

Business owners do not have much options while placing their Ads on selecting each Blogging Website or YouTube Channel where their Ads will be Displayed. (This is explained in the FAQ Section of Google AdSense)

On the other hand, Bloggers or YouTube Channel owners also do not have much control to choose from which Individual Businesses they can Accept Ads or Video Ads.

The Primary income of Ads is received by Google Ads whether it is from Non-Resident or Resident Business owners.

So, Bloggers and YouTube Channel owners cannot differentiate whether Income received to them through AdSense is from Resident Businesses or Non-Resident Business owners.
They can differentiate only if they are getting Ads directly for their Blogging Website or Sponsors to their YouTube channel.

Source of Earnings to Bloggers and YouTubers:

• Google AdSense Earnings to your Blog
  • Earning from Google Display Network Ads.
  • Overlay Ads on your Blogs.
  • Video Ads on your Blogs.
    
• Affiliate Earning (if any)
  
• Direct Ads to their Blog Website.
  
• For YouTube (YouTube Partner Programme)
  • Direct Monetisation by YouTube India upon Reaching the Minimum Number of Subscribers.
  • Advertisement income from YouTube channel. (Display, Overlay, Video Ads)
  • Channel Memberships: Extra payment on Perks you offer to your Subscribers.
  • Super Chat and Super Sticker income from YouTube.
  • YouTube Premium Revenue: When YouTube Premium Subscriber views your channel. etc.
  • Sponsors to their particular video etc.

Who is the Primary Service Provider & Service Receiver:

Here, the Primary Service Provider is Google Asia Pacific Pte. Ltd. (Contracting Entity for Google AdSense in India). We will call for referring purpose “Google AdSense” instead of Google Asia Pacific Pte. Ltd which is our Contracting Entity.

Service is provided by Google Ads for providing Digital Space to Businesses to place their Ads on their Search Engine. They Distribute their income through Google AdSense (another Product of Google LLC.)

Service is Received by Business owners is, that they are getting Digital Space for Displaying their Ads to Advertise their Products or Services on various Platforms of Google Search Engine like directly on a Search Engine, inside the Blog Websites (called Display Network Automated Ads.) etc.

Google AdSense and YouTube Income is distributed as Profit Share in Google Partner Programme or YouTube Partner Programme.

Who is the Secondary Service Provider & Service Receiver:

Here, Secondly, Bloggers/YouTube Channel owners are providing Secondary Service to Google AdSense or YouTube for providing their Digital Space of Blogging website or YouTube Channel Time.

Here, the Service Agreement is between Google AdSense (Google Asia Pacific Pte. Ltd. -> Contracting Entity) and Bloggers or YouTubers for providing Service to Google AdSense.

There is a Written Contractual Agreement at each Individual Level between the Blog Website owner/Youtuber Channel owner and Google AdSense because at the time of connecting the site/YouTube Channel to Google AdSense there is a Checkbox of Agreement which Everyone has to agree before proceeding further.

Bloggers or YouTube Channel Owners get paid in Google/YouTube Partner Programme as their Profit Share. (Original income is Earned by Google Ads, they are just Distributing their Profit among Bloggers and YouTube Channel owners because they are providing Space/Time of their Blogging Website/YouTube Channel respectively.)

What are Income Tax Implications:

The first Question that comes into mind is whether this Business is taxable under Income Tax Act,1961?

The main intention of the Primary Service Provider i.e. Google Ads is to do Business and that comes under Business Income. Google Ads is just distributing their Business income to Bloggers/YouTubers. So, the Primary intention is Business therefore income received by Bloggers/Youtubers is considered as Business income.

Chargeability of Income Tax also depends on the Residential Status of Bloggers/YouTube Channel owners:

If Bloggers or YouTube Channel owners pass the Residential Status criteria depending on No. of days stayed in India, they will be Resident and Ordinarily Resident.
And, for Resident and Ordinarily Resident whole Income is Taxable in India.

Deduction from Blogging/Vlogging Income:

Some examples of deductions from Business incomes of Bloggers:

1. Website Design/Development Expenses (if any)
2. Site Maintenance Expenses
3. Domain Registration and Renewal Expenses.
4. Hosting Expenses.
5. Professional Services have been taken if any for Site Speed Improvement.
6. Depreciation on PC/Laptop
7. Partial or Full Electricity/Maintenance Expenses depending on Space occupied.
8. Salary Expenses (if any)
9. Professional Charges to Content writers
10. Payment to Graphic Designers etc
11. Internet Charges.

Some examples of Deductions from Business Incomes of YouTube Channel owners:

1. Depreciation on PC/Laptop/Mobile
2. Payment to Graphic Designers
3. Partial or Full Electricity/Maintenance Expenses depending on Space occupied.
4. Depreciation on Camera, Mic, and other tools required for recording Video and Audio.
5. Salary or Contract payment to a Video editor
6. Depreciation on Video-editing Software purchased.
7. Payment to Writers or Actors acting in the video (if any).
8. Payment to Content writers if any.
9. Internet Charges.

Blogger’s or YouTuber’s Earnings will be chargeable to income from Business or Profession irrespective of whether they are doing Blogging or Vlogging whether Part-time or Full time or they themselves are Professionals as refereed in Section 44AA because the moment they add their Website or Channel to Google AdSense their intention is clear to make Profits.

Here, Income will be charged under the head Income from Business.

Bloggers or YouTube Channel owners may choose to pay Income Tax on Normal Provisions:

Blogging/Vlogging Income & Section 44AD:

The Blogging or Vlogging Profession is not in the list of “Specified Profession” even if you are a Specified Professional like a Lawyer, Doctor, Architect, etc.


Even if you are included in the Profession specified in Section 44AA(3) of the Income Tax Act, 1961, your Income from Blogging or YouTube CAN NOT be considered as Professional because the Primary income of Google Ads is Business income ( NOT Professional income) and they (Google Ads) are just Distributing their Profit to you through Google AdSense.

So, Bloggers or YouTubers CAN NOT file their Return under Section 44ADA.
Blogger or YouTube owners have to File their Income u/s 44AD or as per Normal Provisions of the Income Tax Act i.e. Section 28 for Income received from Platforms like Google AdSense etc.

If Bloggers or YouTubers received Direct income on their Website or Channel like Sponsors their Head of income will be decided depending upon their intention to Earn profit.

Calculate from which Method is Profitable to you (Section 44AD OR Section 28 – Normal Provisions) and Pay Income Tax.

When do you have to File a Return of Income?

When your Gross Total Income (GTI) exceeds the Basic Exemption Limit (BEL) you are liable to File a Return.

If you are not a Senior Citizen current Basic Exemption Limit for A.Y.2022-23 is ₹ 2,50,000.

If you are a Senior Citizen current Basic Exemption Limit for A.Y.2022-23 is ₹ 3,00,000

When you cross your Gross Total Income of ₹ 2,50,000 or 3,00,000 (for Senior Citizens), you are liable to File a Return of Income.

You are eligible to get Deductions from your Net Total Income (NTI) u/s 80C, 80D, 80G, etc.

Consequences of Non-Filing of Return of Income for Bloggers/Vloggers:

Read in detail Consequences of Non-Filing Return of Income before Due date –> Click Here

Advance Tax Liability on Bloggers or YouTubers:

If your Annual Income Tax payable as an Individual Resident in India exceeds ₹ 10,000 you will be liable to pay Advance Tax on the 15th Day of Each Quarter in instalments.

If you have formed another Entity like Partnership or Company, LLP, etc then you have to Mandatorily pay Advance Tax on the 15th day of Each Quarter in instalments.

TDS Liability for Bloggers/Vloggers:

While doing Business of Blogging or as a YouTuber if you have paid Salary, Professional fees, Contract payment, Rent payment etc for Business, and if the amount exceeds as stated in the respective Section of Section 192, 194J, 194C, 194IB Respectively, and if you have Formed Partnership, LLP, Company etc then you are liable for TDS Deduction from payment.

If you are doing Blogging or Vlogging Business on an Individual/HUF basis then you are liable for TDS if you are liable for Tax Audit (Audit u/s 44AB)
Currently Tax Audit limit for Individual doing Business is ₹ 2,00,00,000/-(₹ 2 CR)
(Bloggers cannot be considered as Professionals, and the reason is explained above).

Final Thoughts:

If Bloggers or Vloggers (YouTubers are Earning Direct Income from Sponsors or Direct approach by Businesses then they may consider their Income from the Profession if they are in a Specified Profession under Section 44AA(3).

Generally, Income from a Profession under Section 44ADA is considered only when that Profession is defined under section 44AA(3) and they are Earning through that Profession Expertise. Blog Writing or Video Creation is an altogether different Art.

Bloggers or YouTubers have to consider Income from All Sources before Filing a Return of Income. They are Eligible for certain Business Expenditures and Deductions under Chapter VIA like Section 80C, 80D, 80G, etc. They are also liable to Advance Tax and deduct TDS if certain conditions are met.

A point is to be noted here that Equalisation Levy even though Contracting Entity is Non-Resident (Google AdSense) DOES NOT come into the picture. Because Bloggers or YouTubers are Service Providers and Equalisation Levy is to be deducted by Service Receiver (the one who Receives the income has the liability to Deduct TDS).

Please feel Free to Contact us if you still have Confusion regarding What is Head of Income Blogging or YouTube Income to be considered or How to Calculate Income and File Return or Which ITR Form to be selected? or Which method will be beneficial?

GST Implications are discussed in another blog.