Tax-Related Aspects on Blogging Income under Income Tax Act

Running a blog is a significant source of revenue for a large number of entrepreneurs and freelancers who make income from advertisements set on their blogs and from product referrals. In fact in what is acknowledged as the gig economy, the number of freelancers has grown consistently over the years and their balance is only expected to grow. And thus  income tax provision is determined for bloggers also because it is the amount that a business or individual taxpayer requires to pay in income taxes for the current year. 

Major source of income for Bloggers& Freelancers

• Advertisement
• Blog Consultancy
• Freelance Income
• Catering services through Freelance websites

Filing of Income-Tax of Bloggers& Freelancers

Bloggers are freelancers. Income earned by blogging in India is liable to income-tax and thus is taxable income. Since blogging is a job/profession, the income from blogging will be calculated in the same manner as the income from job/profession is computed and taxed under the title “Profits and Gains of Business & Profession”.

All the expenses allowed as deductions have to be subtracted from the gross receipts from blogging. Depreciation is provided on the assets purchased for the intention of earning revenue at the rates designated by the Income-tax Act, 1961. For example, depreciation can be declared on computers purchased and utilized for the purposes of blogging.

The incomes earned which are not linked to the profession for example interest income on funds received through blogging are not to be taxed under the title “Profits and Gains of Business & Profession” but are to be taxed under the title “Income from Other Sources”. You can estimate your income tax with the help of income tax calculator which is an easy-to-use online tool that helps you calculate your taxes based on your income after the Union Budget is presented.

Expenses allowed as a deduction for bloggers

• Domain hosting expenses, Domain purchase expenses
• Rent
• Electricity
• Telephone/Internet
• Salary to the employees
• Fuel expenses
• Any other expenses related to the business
• Depreciation on the fixed assets gained for the business

Aside from these expenses from the income, there are some deductions concerning the specific investment is allowed. Investment from the common Investment forms like LIC, Mutual Funds, PPF Account, Health insurance, etc is permitted as a deduction from the Net Income.

Under Section 80C of the Income Tax Act 1961, taxpayers can demand deduction benefit on payments, donations, or investments in a way defined by the Income Tax law. These include payment for life insurance premium, contribution to any acknowledged provident fund and superannuation fund, subscription to National Savings Certificate, augmentation to ULIP, Sukanya Samriddhi Yojana, Public Provident Fund (PPF), 5-year tax-saving fixed deposit plans proposed by banks, among others.

In one financial year, the maximum amount of deduction below Section 80C or the Section 80C limit is Rs 1.5 lakh. To obtain the most of the provision, you require to limit your total contribution to designated products eligible for deduction below Section 80C.

Division of expenditure

As blogging is not usually a full-time activity, assets such as computers as well as expense such as electricity may be used for both business and personal objectives. The question appears as to how such expenses would be suitable for claim from the revenue made from blogging and freelancing.

Where common assets and expenses are used or acquired, the taxpayer should give a fair allocation of the expenditure and assets among those used for personal goals and for business goals. The allocation should have a sound base which can be proved before the Income Tax department as there is a chance that the Department may challenge certain claims of expenditure and try to increase the reported income by the taxpayer. In the event of unsupported claims, tax imposing officers can levy a penalty on the taxpayer.

Income Tax Return to be used

Individuals earning income from business and profession are expected to file ITR 3.

Bloggers would not pass for filing returns below Sec. 44ADA using the presumptive basis of tax, unlike other professionals.  

Steps for Filing Income Tax as a Blogger

1. Blogger or Youtubers require the Pan Card to file their income tax return, even these times some Youtuber are below 18 age but they can still apply for Pan Card Online in a clear way with an Aadhaar card on e-kyc basis.
2. After receiving a pan card, you have to build the Account on the Income Tax Official Website to complete the process of income tax efilling.
3. Now You have to Choose the ITR-3 Form or ITR-4 Form. Here you require some technical information on the same. (You always hire a Tax Expert if you have income greater than 3 lakh+)
4. Even if your TDS is more than your tax liability then you can demand your refund from the government in your bank account.

Due dates for payment of Advance Tax

It is essential for those earning income from the business to understand the rules relating to the payment of advance tax. Businesses are needed to estimate the total taxable income for the forthcoming financial year, for example for the financial year 2019-20 in all of the quarters as follows and make payment of advance tax to the Government.

In case the advance tax is not paid, the individual would be responsible to pay interest on such late payments when income tax filing returns at the conclusion of the year.

In case you have estimated your taxes below normal provisions and tax audit does not apply i.e., your gross total income is less than Rs 1 crore, you will have to register your income tax return by July 31 of the assessment year. For taxpayers who are subject to tax audit, the return filing deadline is normally September 30 of the assessment year.