How content creators who earn from Twitter’s ad revenue will be taxed

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Twitter has recently started paying a share of their ad-revenue to its high profile users. It is paid on the basis of the engagement that the users generate.

Elon Musk recently announced that subscribers of X Premium (Blue) would receive a share of the company’s income. The micro-blogging platform X, formerly known as Twitter, also decided to share a portion of advertisement earnings with subscribers.  The programme encourages creators to post engaging content and then get a cut from X’s advertising revenue — hence the name of the program. Now, X has revealed that it is making it ‘easier’ for creators to make money.

In a post, X Support account said, “We’ve lowered the eligibility threshold for ads revenue sharing from 15M to 5M impressions within the last 3 months. We’ve also lowered the minimum payout threshold from $50 to $10.”

So users now need to get 5 million organic impressions and not the earlier criteria which was set at 15 million in the last three months and have at least 500 followers to be able to be part of this revenue sharing programme. ”

When does the tax angle kick in?

The tax in India will kick in if the total income from various services, including rental income, interest on bank fixed deposit, and other professional services, rendered by an individual exceeds Rs 20 lakh in a year.

For Indians receiving this revenue from Twitter, they will need to include this income in their taxable income and pay tax on it. However, two things are important to consider here, according to Ankit Jain, Partner, Ved Jain & Associates,

Head of Income – For people who are dedicately working on developing content for Twitter and social media, such as content creators and influencers, such income from tweets would be considered as their business income.

For other people, who are receiving such revenue, the income would be taxable as ‘Other Income’.

b. Allowability of expenditure – In either of the two cases, deduction for expenditure incurred on creating the content would be allowable as an expense. So, one can reduce their costs such as towards promotion, subscription, travel, etc. related to the creation of content from the revenue earned.

The GST issue” Influencers and content generators would need to obtain registration and discharge GST, if their turnover exceeds Rs 20 lakh

Content creators benefiting from this programme will be subject to an 18 percent Goods and Services Tax (GST) on their earnings in India, according to tax experts. Not only the revenue share earnings from Twitter posts, but income from other sources, like interest, rental income, which will contribute to the calculation of the threshold for GST registration.

So, for calculating the Rs 20-lakh threshold, the revenues which are otherwise exempt from GST would be included. However, GST would not be leviable on such exempt income.

Currently, individuals and entities earning revenues or income from services exceeding Rs 20 lakh is liable to take Goods and Services Tax registration. The limit is Rs 10 lakh for some special category states like Mizoram, Meghalaya, Manipur.

“If the stand is taken that the payment for these tweets is consideration against services provided to Twitter Inc. , such services could be considered export of services and would neccesitate registration under GST even if the overall turnover of the recipient may be less than Rs 20 lakh. This is something that most people are not aware of and therefore could lead to adverse departmental action against them, as per Pallav Pradyumn Narang, Partner, CNK.

Explaining this, AMRG & Associates Senior Partner Rajat Mohan gave an illustration and said if an individual earning interest income from banks amounting to Rs 20 lakh annually who neither pays GST nor is required to take GST registration. Now, if he generates any additional taxable income, say Rs 1 lakh, from platforms like Twitter, he would need a GST registration. GST would be levied at 18 per cent on the amount above Rs 20 lakh, which is Rs 1 lakh.

Mohan said if a social influencer earns income through their online presence, which includes any income paid by Twitter, these earnings are subject to annual consolidation. Notably, GST registration becomes mandatory if this income surpasses the Rs 20 lakh threshold, leading to potential GST liabilities.

“The moot point is not only the income from social influencing but other sources, like interest, which will contribute to the calculation of the threshold for GST registration. Even though interest remains tax neutral even after a GST registration,” Mohan said.

Revenue earned from twitter (now X) by an individual will be taxable either as profits and gains of business or profession or as income from other sources.

“Income received from the social media platform X shall be taxable in the hands of the recipient. Such an income may be reported under the head of business income/professional income. In case of taxpayers who are influencers, this income shall be like any other influencer income, related expenses are allowed to be deducted and net income from X shall be added to total income and thereafter deductions may be claimed and tax paid according to slabs applicable,” said Archit Gupta, Founder and CEO, Clear.

Whether such income will be treated as income from business or profession will depend on multiple factors, however, facts such substantial part of total income being generated from X and that the tweeting activity is being carried on by him in a systemic manner, akin to a business, would be crucial. If the activity of tweeting does not qualify as being in the nature of business or profession then the income so generated will be taxable as income from other sources.

“Though in a normative sense a person may call himself a professional while earning revenue from X, however, in terms of the provisions of the Act he may not be treated as a ‘professional’ considering that there are specified professions under the said Act. Therefore, benefit of presumptive scheme of taxation will not be available to such person and thus as part of tax compliance he may be required to maintains his books of accounts and get them audited as well,” said Shashank Sharma, advocate, Supreme Court of India.

“Influencers, who somehow tweet for a living, will be able to show such incomes as part of profits and gains from business and profession and deduct expenses incurred to earn such incomes while computing taxes. Eligible assesses may also be able to utilise presumptive tax provisions in this regard,” said Narang.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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