New Delhi: In a first, the Income Tax department has introduced five new professional codes in the Income Tax Return Form-3 (ITR3), recognising social media influencers, speculative traders, commission agents, and future and options traders as professions.
The move is part of the department’s efforts to capture the evolving nature of professions in the digital age with people opting for such career options, officials said.
“This year, we have added five new codes for professions and will continue to add more to bring them within the formal economy,” a senior official told ET.
According to tax officials, the number of influencers’ with more than ₹20 lakh gross annual income has risen sharply in the last two years. In some cases, the annual income was more than ₹2-5 crore, higher than professionals in many other sectors. In some cases, their net worth exceeded ₹100 crore, the official said, requesting anonymity.
In many cases, these influencers were brought under the tax scanner as they were either not filing returns or were filling wrong returns. “By assigning them proper professional code, they will be able to file returns correctly, and this will also help the field formations as they would know which bracket they would fall into,” the official added.
So far, many social media influencers use to either file returns as either business income or by choosing the “Other” code.
Tax experts anticipate that the latest change by the tax department will usher greater accuracy in income reporting and compliance, ultimately contributing to a more streamlined tax collection process.
“With the ever-evolving business landscape, it is of utmost importance to enact separate codes for emerging business,” said Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm. “For taxpayers, it brings more clarity in choosing the right category while filing returns, especially for emerging business and specialised services that were earlier forced to choose mismatched codes.”
The move will not only align income disclosure with the type of profession or business activity but will also help them in improving data analytics capabilities of the department, enhance compliance monitoring, and reduce misreporting.
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