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Taxes on the Income Received from Blogging

Taxes on the Income Received from Blogging

Today’s generation, also known as millennials, love working for themselves. They like being answerable to themselves, being accountable, and acting independently. For the same reason, blogging is widely gaining popularity among millennials.

In this digital age, this profession can be very lucrative, along with making you famous! Digital creators in India can earn lakhs every month. Yes, you read that, right! Lakhs! Blogging income is taxable under the Income-tax act and should be taken into account while deciding upon a career. To help make you an informed choice, we have covered all you need to know about taxes on the income received from blogging

What is Blogging?

The dictionary meaning of blogging is ‘a website containing the writer’s experiences, opinions or events in their life’. Recently, with the traction of YouTube in India, blogging has evolved to vlogging, which is nothing but a video format of a blog. So, the job of a blogger is to publish content regularly on their website to increase engagement and viewers. 

Sources of Income from Blogging

You might be thinking that I have a website, but how does that make me money? How do I monetise my blog? 

Your website is your primary business, and there are a couple of ways you can make money off of it. Listed below are a couple of sources that a blogger can make money from – 

Sponsored Ads:

Once a blogger has created an identity and an audience for themselves, interested brands pay them for endorsement of products. 

Affiliate Marketing:

Brands pay bloggers to promote their products. If a user buys the product through the blogger’s website, the blogger gets paid a certain mutually decided amount. 

Advertising:

Bloggers can sell spaces on their websites to advertisers to run ads. The process can be automated, where the advertiser with the highest bid wins the space.

Freelancing:

Bloggers can also do various freelancing services in which they can collaborate with others and get paid for the project. 

How to Calculate Taxes on the Income Received from Blogging

Since you need to file your taxes on the income from blogging, you need to know that this blogging income falls in the Income from Business/Profession section. According to the Income Tax Act, the taxpayers falling under this section must pay a tax on the income earned, excluding some allowable expenses. 

Coming to allowable expenses, yes, there are a couple of costs under this section which can help bloggers save money and the revenue falling under allowable expenses will be non-taxable. 

Allowable expenses while filing taxes on the income received from blogging- 

  1. Domain hosting expenses
  2. Salaries of employees
  3. Payments to freelance consultants
  4. Convenience charges
  5. Rent
  6. Utility expenses such as electricity, phone bill, etc.
  7. Depreciation * 

* Distributing the cost of the assets (which directly contribute to revenue generation) over the life of the asset is called Depreciation.

As a blogger, you must save the receipts and bills of payments that fall under allowable expenses. These payments must be such that they directly contribute to business and revenue. 

Let’s take an example of a blogger who goes by the name of Pearl. Pearl is a travel blogger whose gross annual income along with expenses is tabulated below.

Source of Income Annual Income
Travel Blogging 9,00,000 INR

Now let us look at Pearl’s annual expenses – 

Particulars Money Spent (Annually)
Rent 1,00,000 INR
Utility Expenses 1,50,000 INR
Domain Hosting Charges 25,000 INR
Payment to Freelance Consultants 40,000 INR
Depreciation (40% on 2 Lakhs) 80,000 INR
Net Taxable Income 3,95,000 INR

The net taxable income for Pearl is Rs. 3,95,000. The taxes need to be paid according to the tax slab Pearl falls in. On top of this, Pearl can also make other investments in mutual funds, PPF, etc. which are deductible under section 80C of the Income Tax Act. 

As a blogger, you need to file Advance Tax which means paying the income tax the same year in which income is earned. Apart from this, a blogger will be subject to taxes such as Goods and Services Tax (GST) and Tax Deduction at Source (TDS). 

FAQs

Q1. Is it mandatory for a blogger to register under GST?

A1. If a blogger has an aggregate turnover of 20 Lakhs or more, they need to get themselves GST registered. The aggregate turnover for North East and Hilly states is 10 Lakhs.

Q2. I have two separate websites. Do I need individual GST registrations for both?

A2. If both websites are under the same name, you need not have separate GST registrations. Both websites can be listed under the same name while registering for GST.

Q3. Is it okay to transfer all my Google AdSense money to my savings account?

A3. Yes, there is no limit to the amount that you can transfer to your bank account from Google AdSense. However, keep in mind that all these transactions should be mentioned while submitting your ITR.

Q4. I do blogging part-time. Do I need to share my secondary income while filing my ITR?

A4. You must show all your incomes while filing your income tax return. The primary source of income, i.e. your salary will come under the head ‘Salary from Income’ and the freelancing blogging money will fall under the head ‘Income from Business/Profession.’

Q5. What happens if I do not show my blogging income while filing my taxes?

A5. The blogging income is taxable by law, soo it is imperative that one should file their taxes for the income received from blogging. Income from blogging falls under the head ‘Income from Business/Profession’. If you fail to pay your Income Tax on time, you will be charged with a penalty as per Section 234F.

For FY 2019-20, a penalty of –

-> Rs 5,000 is applicable if the return is filed after the due date but by 31st December 2020.
-> Rs 10,000 is applicable if the return is filed after 31st December 2020 but by 31st March 2021.

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