Income Tax Department: The new 'follower' of social media influencers

A Mumbai-based fashion influencer, who had declared an annual income of just Rs 3.5 lakh, was getting over Rs 30 lakh for various posts from a single company

The ever-growing list of followers of social media influencers has a new addition — the Income Tax department. According to a report in the Economic Times, the I-T department has sent notices to 15 social media influencers, who had recently been on extravagant foreign trips, for paying no or ‘substantially low’ tax for receiving huge amounts by promoting products of luxury brands.

The list of those who have received such notice, as per the report, includes a high-profile fashion influencer, a lifestyle and fitness coach, travel influencers, and an influencer known for posts on Bollywood. The report also says that three of these influencers did not pay any amount as tax while others had underreported their incomes by massive margins.

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30 more such social media stars are on the radar of the I-T department for alleged tax evasion.

According to the report, one Mumbai-based fashion influencer, who had declared an annual income of just Rs 3.5 lakh, was paid over Rs 30 lakh for various posts from a single company. Besides this, the person was also receiving gifts from such companies.

These services are called Online Information and Database Access or Retrieval Services (OIDAR), and under the goods and services tax law, those earning over Rs 20 lakh in a fiscal year need to register their services under this, which will then be taxed at 18 per cent.

There is also a taxing mechanism for the gifts that these influencers receive. On freebies and perks worth over Rs 20,000 received from brands for promotions, under Section 194R of the Income Tax Act, a 10 per cent tax needs to be deducted at source (TDS). This came into effect from July last year.

As per the report, the provision of TDS helped officials track the income of such influencers.

According to last year’s Influencer Marketing Report, this market was worth Rs 900 crore in 2021 and is projected to shoot up to Rs 2,220 crore by 2025.