Understanding Goods and Services Tax for Online Content Creators

Earnings from platforms like YouTube, blogging, and other video-sharing applications are common forms of passive income today. In India, it is crucial for content creators to understand the tax implications of such earnings, specifically regarding Goods and Services Tax (GST) and income tax. This article explores the GST treatment of income generated by YouTubers and bloggers.

Introduction to Digital Creators

YouTube, a Google subsidiary, enables individuals to establish channels and upload videos, generating revenue through advertisements and promotional content displayed on these videos. A YouTuber typically begins earning once their channel achieves a specified number of subscribers and video views, aligning with YouTube's monetization policies.

Similarly, bloggers offer digital space for brands to advertise. These advertisers often engage with bloggers through intermediary agencies or advertising platforms like Google AdSense. Bloggers earn revenue when ads placed on their sites receive clicks; Google AdSense facilitates this process, often obscuring the specific advertisers from the blogger.

Is Digital Creator Income Classified as a Supply under GST?

Under Section 7 of the CGST Act, a transaction is considered a "supply" for GST purposes only if it meets specific criteria. This includes the provision of goods or services for a business consideration. The CGST Act defines "service" broadly, encompassing everything except goods, money, and securities, and explicitly includes activities where money-related conversions are charged.

YouTubers provide services by publishing monetized video content and offering space for advertisements on their channels. Bloggers also offer services by allowing advertisers to display ads on their platforms for revenue. Consequently, both YouTubers and bloggers are categorized as service suppliers.

Blogging services can further be classified as Online Information and Database Access or Retrieval (OIDAR) services. As defined by Section 2(17) of the IGST Act, OIDAR services involve delivering information via information technology over the internet or electronic networks, which includes online advertising. These services are typically automated, require minimal human input, and cannot be delivered without digital technology.

GST Registration Requirements for Digital Content Creators

Bloggers and YouTubers must register for GST if their aggregate turnover, calculated on a PAN-India basis, exceeds Rs. 20 lakh in a financial year. For businesses operating in special category states, this threshold is Rs. 10 lakh. It is crucial to note that if services are provided to a recipient in a different state from the supplier (the YouTuber or blogger), this constitutes an interstate supply, mandating GST registration regardless of the turnover amount.

For example, if Mr. Akshay, a food blogger based in Delhi, earns Rs. 5 lakh annually and contracts dedicated ad space on his blog to Pinstorm, a Mumbai-registered advertising agency, he would be required to obtain GST registration due to this interstate service supply. Even for exported services, the Rs. 20 lakh GST registration threshold still applies.

Additionally, digital content creators whose turnover is up to Rs. 50 lakh may choose the composition scheme for service providers, provided they meet specific criteria. If the composition scheme is not preferred, they can opt for the Quarterly Return filing and Monthly Payment of taxes (QRMP) scheme to reduce compliance obligations.

Export of Digital Services and GST Implications

The export of services is recognized as a supply under GST when the service provider is located in India, but both the recipient and the place of supply are outside India. Key conditions for this classification include that the supplier and recipient are not distinct establishments and that payment is received in convertible foreign currency.

For services like blogging, which fall under OIDAR services, the place of supply is typically the recipient's location. When dealing with international entities like Google Inc. or Google AdSense, both of which are based outside India, these conditions are often met. Thus, content provided by bloggers to Google can qualify as an export of services.

As the recipient and the place of supply are beyond India's taxable territory, no GST is applicable to such transactions. Furthermore, Section 16(1)(a) of the IGST Act specifies that exports of goods or services are categorized as zero-rated supplies. This means that YouTubers providing services to platforms like Google AdSense for displaying advertisements offer zero-rated services.

Digital creators who provide services to international entities like Google or YouTube have two main choices: they can export their services without paying GST by utilizing a bond or a Letter of Undertaking (LUT) in Form RFD-11, or they can pay the GST upfront and subsequently claim a refund.

Applicable GST Rate for Digital Income

For YouTubers and bloggers who are liable for GST registration or are already registered, the standard GST rate for their services is 18%. This rate comprises 9% CGST and 9% SGST for intrastate supplies, or 18% IGST for interstate supplies. However, as noted earlier, services classified as exports are considered zero-rated supplies, and therefore, no GST is levied on them.

GST Compliance Requirements

Digital content creators are required to issue a GST invoice for all services rendered. Each invoice must include essential details such as the invoice number, date, the value of services provided, and the applicable GST rate. While no specific invoice format is prescribed for YouTubers or bloggers, all mandatory particulars as per GST law must be present.

Information from all issued invoices must be accurately reported in the GSTR-1 return. It is imperative that all invoices adhere strictly to GST regulations. Similar to other regular taxpayers, YouTubers and bloggers are responsible for filing both GSTR-1 and GSTR-3B returns.