IT department launches tax-evasion probe against social media influencers
The department initiated the action last week after it searched about 10 YouTubers and other social media influencers, mostly young artists and actors.
The income tax department has initiated an investigation against specific individuals who are social media influencers and content creators on platforms like YouTube and Instagram. These individuals are being probed for allegedly not disclosing their income and profits in line with their earnings, according to official sources.
Last week, the department conducted searches on approximately 10 YouTubers and other influencers, mainly young artists and actors, in Kerala. A “data analytics” investigation conducted by the department revealed that these influencers and content creators are earning significant amounts but either not reporting or under-reporting their income in their tax returns.
During the evidence-gathering process and while recording their statements, the individuals searched in Kerala were treated with care by the tax department, as per the sources. Notices have been issued to these individuals as part of the ongoing investigation to determine their exact tax liability.
Similar action has been taken against additional social media influencers located in various parts of the country, and the department is also examining the social media activities of certain celebrities.
The tax department has obtained crucial information about these online influencers and content creators, including details of brand endorsements, both paid and unpaid promotions, expenditures made using debit and credit cards, and their agreements with social media platforms like YouTube and Instagram, where they earn money based on specific parameters such as reaching a certain threshold of social media engagements.
Before conducting searches and issuing notices, the tax department utilized the tax deducted at source (TDS) database. The Central Board of Direct Taxes (CBDT), which oversees the income tax department, introduced new TDS provisions last year related to benefits received in a business or profession. These provisions state that such benefits can be in the form of cash, kind, or a combination of both.
In the 2022-23 Budget, a new section, 194R, was introduced in the Income Tax Act. This section mandates a deduction of tax at a rate of 10 percent by any person providing benefits or perquisites exceeding Rs 20,000 in a year to a resident, arising from the resident’s business or profession.
