The rise of social media has led to the emergence of a new type of celebrity, the social media influencers. These influencers have large followings on platforms such as Instagram, YouTube and Facebook, and they use their influence to promote products and services to their audiences. However, many social media influencers in India may not be aware of the taxation and compliance requirements that apply to their activities. 

Taxation Requirements for Social Media Influencers in India 

Social media influencers in India are subject to several taxation requirements, depending on the nature of their activities. Some of the key taxation requirements that may apply to social media influencers include the following:

1. Income Tax: Social media influencers must pay income tax on the income they earn from their activities on social media platforms. This includes income earned from sponsored posts, brand partnerships, and other forms of influencer marketing.

2. Goods and Services Tax (GST): Social media influencers who provide services to brands and businesses are also required to register for GST and pay GST on the services they provide, such as sponsored posts, product reviews, and other forms of influencer marketing.

3. Withholding Tax: Social media influencers paid by brands and businesses based outside India are also subject to withholding tax. This means that the payer withholds a portion of their income and pays directly to the Indian government.

 

Compliance Requirements for Social Media Influencers in India

In addition to taxation requirements, social media influencers are subject to several compliance requirements, which are designed to ensure that the influencers are transparent about their relationships with brands and businesses and comply with advertising standards. Some of the key compliance requirements for social media influencers in India include the following:

1. Disclosure Requirements: Influencers must disclose any financial relationships they have with brands and businesses. This includes sponsored posts, brand partnerships, and other forms of influencer marketing.

2. Advertising Standards: They must also comply with advertising standards set by the Advertising Standards Council of India (ASCI). This includes ensuring that their posts are not misleading, that they do not make false claims about products or services, and that they are not offensive or discriminatory.

The ASCI has issued guidelines that require them to disclose when a post or video is sponsored or paid for by a brand. These guidelines require influencers to use hashtags such as #sponsored, #ad, or #paidpartnership to indicate that a post or video is sponsored.

3. Copyright and Intellectual Property: They must also ensure that they do not infringe on the copyright or intellectual property rights of others. This includes using copyrighted images or music in their posts without permission.

4. Consumer Protection: The influencers are also subject to the Consumer Protection Act 2019. This law prohibits unfair trade practices, including false or misleading advertising. Influencers must ensure their posts and videos do not make false or misleading claims about a product or service.

5. Data Protection: The influencers must also comply with the country’s data protection and privacy laws. The Digital Personal Data Protection (DPDP) Act, 2023, recently passed act focuses on digital personal data within the territory of India which may be collected online or collected offline and later digitized. It is also applicable to processing digital personal data outside the territory of India, if it involves providing goods or services to the data principals within the territory of India. This act shall change how personal data is used and stored by businesses/freelancers.

 

Social media influencers in India are subject to these taxation and compliance requirements. These requirements are designed to ensure that social media influencers are transparent about their relationships with brands and businesses and comply with advertising standards. Social media influencers should ensure that they are aware of these requirements and comply with them to avoid legal issues or penalties.