On June 29, official sources stated that the Income-Tax department had initiated an investigation into certain social media celebrities and content creators on platforms such as YouTube and Instagram for allegedly failing to report their income and profits commensurate with their earnings.
According to the sources, the department conducted a “data analytics” investigation and discovered that these social media influencers and online content creators make “substantial” earnings but do not show or under-report them in their income tax returns (ITRs) or filings, owing to a lack of understanding of tax laws.
Last week, on June 22, the IT department conducted raids at the premises linked to 13 social media influencers in Kerala, as per the reports. For the past few months, the officials have been monitoring 30 social media influencers, out of which they short-listed 13, including famous TV host and actor Pearle Maaney.
Apart from Maaney, the IT department raided Sujith Bhaktan, Arun Prasath, Jayaraj G Nath, and others. These raids were conducted in 6 districts in Kerala: Alappuzha, Ernakulam, Kottayam, Kasargod, Pathanamthitta and Thrissur.
As per the officials, these social media stars generate an estimated annual income of more than Rs 1 crore. However, their tax returns filings do not adequately reflect their actual earnings, showing improper tax deductions at source. Furthermore, officials have highlighted their suspicions about the paid promotional content created by these content creators. The investigation is conducted to determine the authenticity of their income declarations and to look into any potential anomalies in their financial activity.
According to Income Tax Department sources, these social media influencers claim to have no fixed income and that the monthly payments they receive from YouTube and other social media platforms are based on the number of people who watch their work, which varies each month. This has led to confusion regarding the payment of their taxes. The IT team also reviewed bank statements and other transaction records pertaining to the revenue earned by these social media influencers.
These social media influencers and online content creators have a good outreach with the public and have the position to influence the purchasing decisions or opinions of their followers regarding any product or brand, because of which they get endorsements from popular companies. During these raids, the IT officials gathered important information about these endorsement deals taken by them as well as paid and unpaid promotions done by these social media influencers.
The IT department also took information regarding their earnings which they get directly from social media platforms such as YouTube and Instagram. Based on various parameters such as the number of followers on their social media accounts, likes on their posts, etc., these platforms give money to their users (content creators and influencers). The officials also looked at the transactions conducted on their financial instruments like debit and credit cards.
As per the sources, the department also used the tax deducted at source (TDS) database before examining these individuals and serving notices to them. According to the regulations, content creators must obtain GST registration and file periodical returns to disclose their ad earnings and remit the necessary GST.
However, it has been alleged that many content creators ignore existing regulations and fail to meet their GST obligations. It is reported that in the coming months, the IT department will conduct raids on social media influencers and content creators because of their irregularities in filing taxes.
Recently, IT officials also raided the premises of several YouTubers in Tamil Nadu in April. The raids were carried out in response to tax evasion and money laundering charges.
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