Social Media Influencers To Pay TDS On The Gifts And Freebies
One of the most blooming professions around the world in recent times is becoming a social media influencer. There are influencers who are as young as 12-13 years of age and there are influencers who are as old as 80 years of age. And the fact that there is no age limit for this profession, is what makes it the most accessible profession for people from all walks of life. However, if you thought that the life of a social media influencer is all about enjoying the free stuff, think once again. While that may have been the case for a long time, the recent government rule states that these influencers also have to pay 10% TDS on the freebies and gifts that they receive from various businesses. Ouch!
As per the Central Board of Direct Taxes (CBDT) guidelines, the government is all set to levy a 10% TDS from social media influencers and doctors who receive freebies and gifts from businesses and pharmaceutical companies for their sales promotions. The new rule will apply from July 1, 2022. But, here’s the catch, if the influencers return the freebies/gifts after their job is done, then the TDS will not be applicable to the product(s).
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Speaking about taxing social media influencers with TDS, the CBDT said, “Whether this (the product given for sales promotion activity in social media) is beneficial or perquisite will depend upon the facts of the case. In case of benefit or prerequisite being a product like a car, mobile, outfit, cosmetics, etc. and if the product is returned to the manufacturing company after using for the purpose of rendering service, then it will not be treated as a benefit or prerequisite for the purposes of section 194R of the Act (the TDS provision).”
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Having said this, the reports suggest that if an influencer receives free samples then they will not be charged any money. And if any doctor is employed with a hospital, then they are liable to pay taxes on the free medicines that they are supplied with. This is because the hospital will treat the free medicines as a benefit and deduct income tax.