I-T Department To Knock On Social Media Influencers’ Doors

Several large social media influencers are on the Income Tax radar following their travel posts to exotic locations. The I-T department has reportedly sent notices to 15 such influencers.

Per the I-T department, these influencers have posted about their overseas holidays and luxury shopping and paid zero or ‘substantially low’ tax. Per a senior official from the department cited by the ET, these influencers are paid huge amounts by the companies whose products they promote through their large social media presence.

According to the senior official, the list includes a high-profile fashion influencer, a lifestyle and fitness coach, travel influencers and an influencer known for their Bollywood posts. The official added that three of these people have not filed any returns, while the rest have underreported their income.

Citing an example, the official cited by the publication said one Mumbai-based fashion influencer was receiving between INR 50K to INR 100K for a single post on Instagram for endorsing luxury makeup brands.

The official added that despite having received over INR 30 Lakhs for various posts from a single brand, the influencer declared an annual income of just INR 3.5 Lakhs in their latest tax return.

The income tax department is looking at a group of 30 other influencers on YouTube, Instagram, Twitter and other social media channels.

With the current planned action from the I-T department, the government has been steadily clamping down on influencers who are underreporting their income.

Under the Income Tax Act, people earning more than INR 20 Lakhs in a financial year need to register their services under the goods and services tax law, as these services are classified as Online Information and Database Access or Retrieval Services (OIDAR). These services are taxed at 18% GST.

Additionally, under Section 194R of the Income Tax Act, the government implemented a 10% TDS from July 1, 2022, on freebies and perks worth more than INR 20,000 received from brands for promotions. Incidentally, this TDS provision allowed them to track the income of social media influencers.

Earlier this year, the Ministry of Consumer Affairs also released new endorsement guidelines for social media influencers, making them liable to fines up to INR 50 Lakhs if not adhered to.

Per data from Statista, the influencer marketing industry in India was valued at more than INR 1,200 Cr in 2022. This figure is set to reach INR 2,800 Cr by 2026, growing at a CAGR of 23.59%. Further, nearly 55 Mn urban Indians were direct consumers of various kinds of influencers as of 2022.