" Tax on google adsense earnings.

Digital marketing in India contributes around 246 Billion Indian rupees. The numbers are big. Many Youtuber, Blogger, vlogger and Affiliate Marketer in India are Earnings in Lakhs from the YouTube, Amazon Affiliate and AdSense like Google or media net. Tax on YouTube earning, AdSense receipt or affiliate market commission is applicable once the limit exceeds. We will tell you all the procedure and tax saving methods on your Digital marketing Earning in India for Financial Year 2021-2022.

Tax Implication on YouTube, AdSense earning

When your AdSense is approved by google, YouTube or others, you receive a mail regarding approval, terms & Conditions on YouTube, AdSense earning & Comprehensive details on How google AdSense pay in India. This T&C covers a Tax implications on the receiver. YouTube, amazon or google AdSense are foreign companies. In this case, you are going into contract with the foreign company and DTAA ( Double Tax Avoidance agreement) come into force in this scenario. As per DTAA, Tax will be applicable in which the Business is present, In your case, business is present in India, so Tax Implication will be on you. You can also find it on Google AdSense tax information India. Now you have two options and you have to see what option suits you the most.

Opt for Income From Business & profession-

See, you are earning from YouTube, AdSense based on your talent. You are incurring expenses for generating revenue. Youtuber is incurring in Camera, setup, Advertising, shooting instruments and software purchasing for video editing. Blogger is incurring in SEO, Advertising, paying to content writers and hosting providers, developers. All this expenses you are incurring is liable for deduction from your Income. Tax on YouTube, AdSense earning shall be calculated after deducting the expenses made by you.

If we opt for Income from Business & profession, you can File ITR-3 or ITR-4. In ITR-3, you can understand the scenario from this example.

Mr. Sambhav is a youtuber and his gross receipts is 20 lakh rupees in 2019-20. He incurred following expenses for earning this income.

• Shooting Instruments- 100,000
• Advertisement- 40000
• Internet-10,000
• Travelling- 500,000

Now, he also have purchased a asset like Camera, Laptop/PC, Furniture, car/ bike ( if vlogging).

Now we will deduct the entire expenses and for asset, we will claim depreciation.

Now after deducting the expenses, income comes at-

20,00,000-750,000 = 12,50,000

Now, for asset, we will claim depreciation. Depreciation will be calculated at the rate of

• Car/bike- 15% per annum
• Computer/laptop- 40% per annum
• Furniture- 10%

So, calculate depreciation as per the value of asset and deduct it from the 1750,000.

Now this income will be treated as Taxable Income and you have to pay tax on Income of 1750,000 minus depreciation.

The above treatment will be filed in ITR-3 in which proper profit & loss account and Balance sheet will be prepared showing all assets, its depreciation and all expenses.

How to Calculate Income Tax for YouTubers in India

A vlog is a particular channel where makers post regular videos for a niche public. This type of video content comprises mainly of people filming themselves talking about a subject or doing something relevant to their audience. YouTube video blogging, generally known as vlogging has touched the peak of its fame now. The trend of googling for content has moved to YouTube search. Many budding vloggers are earning money from YouTube.

In India if you have a blog or have a YouTube account and you are making money from AdSense then you have to pay Income tax on AdSense Income (youtube income in India) as in India; income from AdSense will be taxable. AdSense is a program run by Google which permits advertisers to advertise on the content sites of the Google network and these advertisements are managed, sorted, and maintained by Google.

In this article, we will let you know about how to compute Income tax for Indian Youtubers on Google AdSense tax information in India.

How is AdSense Income Treated in Income tax law?

The income from YouTube can be treated as:

1. Income from Business or
2. Profession Income from Other Sources

Let's try to comprehend the following scenarios:

Income from Business or Profession If vlogging is your full-time job or primary source of income; you may offer your income under Income from Business and Profession for taxation. You can form a single proprietorship, a partnership firm, an LLP, or a private limited company to conduct your business.

Unless you register your business as a corporation, limited liability partnership, or partnership, you will be taxed as a sole proprietor. You're practically running a business here, and you may deduct all of the expenses you incurred to generate this money. Let's look at an example to help us comprehend. Mr. B makes Rs. 50 lacs from travel vlogs in the fiscal year 2021-22. To earn the money, he incurred the following expenses.

1. Marketing Expense – Rs . 2,00,000
2. Advertisement Expense – Rs. 100,000
3. Travelling expenses- Rs. 5,00,000
4. Internet expenses- Rs. 12,000
5. Camera (Capital expenditure) – Rs. 5,00,000
6. Car (Capital expenditure) – Rs.6,00,000

Mr. B is only required to pay tax on the Net Profit earned throughout the year. Because assets like a camera and a car can be used over time, income tax laws allow only depreciation (40 percent on a camera and 15% on a car) to be claimed as an expense. The remaining sum, on the other hand, can be claimed as a future expense.

The total expenses Mr. B can claim are as below:

1. Marketing Expense – Rs .2, 00,000
2. Advertisement Expense – Rs. 100,000
3. Travelling expenses- Rs. 5,00,000
4. Internet expenses- Rs. 12,000
5. Camera (Capital expenditure) – Rs.200,000 (40%*5,00,000)
6. Car (Capital expenditure) – Rs. 90,000(15%*6,00,000)

The Net Profit made by Mr. B after setting the above expenditure of 10,90,000 is Rs.39,10,000. Tax should be calculated at applicable rates and if you are making a loss, you can carry forward this loss and set off against future profits.

Note: To claim the expenses, the business should uphold proper documents relating to the same.
Alternatively, individuals/HUF/Resident Firms can make use of Presumptive taxation under section 44AD of the income tax act and announce 6% of gross receipts (as a receipt is through an electronic medium) as Net Profit. Books of accounts need not be kept if presumptive taxation is chosen. This is in fact the best choice to save tax if your business creates consistent profit.

If YouTuber income in India is your passion and your earnings are modest, you may be able to claim your youtube earnings in India under income from other sources for YouTuber's tax purposes. It's very common these days for people to start vlogging as a way to supplement their income.

Let's look at an example to help us comprehend. Mr. X works for ABC Ltd and receives a monthly salary of Rs. 50,000. He's into biking and has started a vlog. During the fiscal year 20-21, he initiated uploading bike review videos on weekends and earned $100,000. Mr. X incurred a direct cost of Rs. 20,000 for the production of the videos (excluding capital expenditure).

When concluding his income tax return, he can show Rs. 4,80,000 as salary income and Rs. 70,000 as income from other sources (ITR). After taking into account permissible deductions, the tax will be valued at the applicable rates.

Second option for Tax treatment on AdSense, affiliate & YouTube income-

If you want to otp for simple process, than here comes our ITR-4, 44AD, Income based on Presumptive basis.

If we opt for 44AD, now Income will determined at 6% on gross receipt in Bank account.

Now, if we have gross receipt of 50 lakhs, we will have a Income of 6% on 50 lakhs i.e. 300,000.

You can’t claim expenses or depreciation in 44AD, so your Income is 300,000 now. Since we have rebate on income upto 500,000, so you have to pay nothing as Tax. Just file your return timely.

Best part of this section is that we don’t have to maintain books of account, records etc. if we have a gross receipt of upto 2 crore from YouTube, AdSense or affiliate, than income will be calculated at 6% of 2 crore i.e. 1200,000. now, you have to take deductions under 80C, 80D and pay your Tax as per Computed Total Income after deductions.

Note- You can opt for section 44Ad of income Tax act for YouTube, blogging or AdSense earning upto 2 crore. For more than 2 crore of gross earning, you have to pay tax after getting account audited.

2. If you are going for ITR-3 Income from Business & Profession, audit by CA will be applicable for Income exceeding 1 crore. This become exempt upto 2 crore if we are opting for 44AD.

In simple words, even you have a turnover of upto 2 crore, if can opt for 44AD, you don’t have to maintain books of account and no need to follow audit procedure. Just file your ITR on time.

Advance tax provision-

Advance Tax will be paid in case tax liability exceeds 10000 in a financial year. Due date and amount of advance tax is determined by following-

Due Date	Advance tax payable
15th june Â	15% of advance tax
15th September Â	45% of advance tax
15th september Â	75% of advance Tax
15th march Â	100% of advance tax

If you opts for 44AD, Tax On presumptive Income, than you just have to pay Advance Tax on or before 15^th march in a financial year. You don’t have to pay on above dates.

If any tds is deducted, you can trace the tds credited in 26AS on Income tax portal. Tax liability will be determined after deducting Tds.

Also Read-HRA Exemption Rules

Opt for Income From Other Sources-

If the vlogging, blogging and affiliate marketing is your side business or you have a Income from other sources like salary, House rent besides Income From YouTube, google AdSense and affiliate,  than can show your digital marketing Income as Income from other source.

Now suppose you have a Income like-

Income from salary- 600,000

Income from AdSense, YouTube & affiliate- 800,000

Now you have incurred expenses in YouTube video, vlogging or blogging rupees- 150,000. ( this capital must not include capital expenditure)

So now, you can show Income like this.

Income from salary- 600,000

Other sources ( Digital marketing)- 650,000

Total Income- 1250,000

Now you can file your Income Tax Return by showing your Income from salary and YouTube, AdSense like this.

you may be also link-meesho-seller-registration

Conclusion

If you are earning from AdSense then it is your duty to pay income tax on your AdSense Income in case of failure of income tax efiling you may have to face legal consequences. As you can see in the above article that income from youtube tax is taxable in India and you have to file your income tax according to tax slabs, and if your income is pure from AdSense then you have to pay tax under the Head of “Profits or gain from business or profession” only. So if you are earning from YouTube or Blog where AdSense is paying you then you have to tax that income.

File your income Tax return today.

Penalty in case of Non-filling-

If you don’t pay tax on time, Section 234 got attracted. According to Section 234F, if you fail to file your returns on time, you have to pay a penalty of up to Rs 10,000. If the Income Tax returns are filed after the return filing deadline but before December 31, the penalty would be Rs 5,000. If the returns are filed on or after January 1, the penalty goes up to Rs 10,000.

For Financial Year 2021-2022, You can File your ITR By 31st July 2022 (For Individual) & 31st September 2022 (For Firms & Companies). You can file your ITR Now as ITR Forms has been Updated on Official Income Tax Portal i.e. https://www.incometaxindia.gov.in

if you want, Team Tax Advisory can file your ITR for AdSense Earning, YouTube Income & Affiliate Earning with Huge savings and Investments perks. just write to us on-taxadvisory.in@gmail.com or give us a call on- 8077361475

 

 

By Arjun Mittal

Founder- Tax Advisory

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