Introduction
We explored income tax for YouTubers and content creators in the previous article. Here in this article, we are going to understand various things under GST, including Registration, Tax Rates, Compliances and Return filings for YouTubers and Content Creators on different incomes like YouTube Ads, Affiliate Income, Brand Income, Independent Consultations, Merch Income etc.
Note: Whenever we use the word YouTuber here, please consider it as YouTubers and content creators.
Do I Need to Register for GST?
Generally, YouTubers and content creators must register for GST if their annual turnover exceeds ₹20 lakh in a financial year [The Limit is 10 Lakhs, in case of Nagaland, Manipur, Mizoram and Tripura]. So, if you're just starting out with ad revenue or a few brand deals, you can hold off on registration until your income reaches the threshold. However once the audience and the stream of revenue sources develop usually it is required practically to obtain GST number either due to crossing of turnover of 20L or because of need to raise GST Invoices to Brands. (In this industry, Usually brands ask for GST Invoice and to give GST Invoice it is compulsory that you voluntarily obtain GST Number irrespective of the turnover).
Understanding GST for Different Income Streams YouTube Ad Income
While paying for Ads, YouTube usually asks you to pay into the Google India account. However, while giving payouts to creators, YouTube usually pays from its Singapore office. This is classified as an export of service, which means you generally don't need to pay GST.
Important Note: Even though GST isn't due, it's crucial to file a Letter of Undertaking (LUT) beforehand to avoid future complications with tax authorities.
Brand Income
Revenue from brand collaborations usually attracts an 18% GST charge. In some sponsorship cases, the Reverse Charge Mechanism (RCM) applicability should also be considered.
Pro Tip: Always quote your rates as "price + GST" when negotiating brand deals. This ensures clarity and avoids you having to cover the GST cost from your pocket later
Affiliate Income
Similar to brand income, affiliate income typically incurs an 18% GST charge. Since affiliate income is often fixed, adjusting your quote for "Price + GST" might not be feasible. In such cases, one should be prepared to pay GST by factoring it into your overall income. If you have strong negotiating power, quoting "price + GST" can still be an option.
Merch Income
Whether you sell merch through your website or an e-commerce platform, GST implications differ
Selling through your own website
The GST rate depends on the type of merchandise you sell.
Selling through e-commerce platforms
Ensure you claim the Input Tax Credit (ITC) for the Tax Collected at Source (TCS) deducted by the platform.
In both cases, GST has to be charged depending upon the nature of the product and rate.
Claiming of Input Tax Credits
As a content creator, you're most likely dealing with taxable supplies, allowing you to claim ITC on business-related purchases. This includes equipment, software subscriptions, marketing services, online advertising (Instagram and Google Ads), and even merchandise purchases. (Export of Service is not exempt and thus no reversal needs to be made in such case as well).
TIP: Proper reconciliation for input tax credits should be made to ensure none of the credits are missed
Returns
Standard GST return filing procedures apply. If your turnover is below ₹5 crore, you can opt for the QRMP scheme (Quarterly Return Monthly Payment). Additionally, if your turnover exceeds ₹5 crore in any financial year since 2017, e-invoicing becomes mandatory. I hope you find it interesting, considering these kinds of businesses are relatively new in the market I have tried to give a practical view.
The author is Practicing CA and can be reached at ca.khandelwalraghav@gmail.com | Queries and Suggestions are welcome
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