The Income Tax Department has set its sights on several prominent social media influencers after their extravagant travel posts to exotic destinations raised suspicions. According to reports, notices have been sent to 15 influencers by the I-T department.
The department alleges that these influencers have flaunted their overseas vacations and luxury shopping sprees while paying little or no tax. A senior official from the department, quoted by the Economic Times, reveals that these influencers receive substantial sums from companies for promoting their products through their extensive social media presence.
Among those on the radar are a high-profile fashion influencer, a lifestyle and fitness coach, travel influencers, and an influencer known for Bollywood-related content. The official further states that three individuals on the list have not filed any tax returns, while the others have underreported their income.
As an example, the official highlights the case of a fashion influencer based in Mumbai, who allegedly earned between INR 50,000 to INR 100,000 for a single Instagram post endorsing luxury makeup brands. Despite receiving over INR 30 lakhs from a single brand for various posts, the influencer declared an annual income of just INR 3.5 lakhs in their latest tax return.
The income tax department is also scrutinizing a group of 30 other influencers active on platforms such as YouTube, Instagram, Twitter, and others.
This recent action by the I-T department reflects the government’s efforts to crack down on influencers who are not accurately reporting their income.
According to the Income Tax Act, individuals earning over INR 20 lakhs in a financial year are required to register their services under the goods and services tax law. These services fall under the category of Online Information and Database Access or Retrieval Services (OIDAR) and are subject to an 18% GST.
Furthermore, Section 194R of the Income Tax Act introduced a 10% Tax Deducted at Source (TDS) from July 1, 2022, for freebies and perks worth more than INR 20,000 received by influencers from brands for promotional purposes. This provision enables the tracking of influencers’ income.
Earlier this year, the Ministry of Consumer Affairs also released new endorsement guidelines for social media influencers, imposing fines of up to INR 50 lakhs for non-compliance.
According to Statista, the influencer marketing industry in India was valued at over INR 1,200 crore in 2022, with projected growth to INR 2,800 crore by 2026, at a CAGR of 23.59%. Additionally, approximately 55 million urban Indians were direct consumers of various influencer content as of 2022.
