Govt makes tax compliance easier for content creators, influencers

New Delhi: This tax season marks a significant change in the filing of returns for social media content creators and influencers, with their income now being classified under a specific category.

The Income Tax Department has introduced a new code namely ‘16021’ under Income Tax Return (ITR) utilities for FY 2024-25 (AY 2025–26) for influencers who earn from promotions, product endorsements, or digital content creation.

This code can be accessed under the ‘profession’ category in both ITR-3 and ITR-4 (Sugam). This simplifies compliance for creators, online coaches and bloggers.

Now influencers must choose between ITR-3 or ITR-4 (Sugam), depending on their income level and whether they opt for presumptive taxation— a simplified scheme that allows professionals to declare a fixed percentage of their receipts as income and avoid maintaining detailed books.

If an influencer is opting for presumptive taxation under Section 44ADA, he should use ITR-4. This applies to professionals with gross receipts up to Rs 50 lakh and those with Rs 75 lakh if their cash receipts are under 5 per cent of gross receipts, according to experts.

For those earning via business income, Section 44AD allows a presumptive rate of 8 per cent (6 per cent for digital payments) for income up to Rs 2 crore or Rs 3 crore if cash receipts are under 5 per cent, they added.

ITR-3 form is for individuals and Hindu Undivided Families (HUFs) with business or profession income, including remuneration from partnership firm. Income from salary, residential property, capital gains, and other sources can be declared under ITR-3. However, only individuals and HUFs with business or professional income are eligible. If your income falls under ITR-1, ITR-2, or ITR-4, you cannot use ITR-3.

ITR-4 is for individuals, HUFs, and partnership firms (resident in India) who opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE.

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