A new Central Board of Direct Taxation (CBDT) rule, introduced in the 2022 Finance Act, makes withholding tax (TDS) compulsory for social media influencers and doctors – against free gifts and products to which they are sent, by the brands . According to a report on the matter by Mint earlier this week, the government took this decision in order to increase the overall taxpayer base in India.
How the new TDS rule will work for social media influencers
According to the report, social media influencers will be exempt from the 10% TDS rate if they return a product, after the end of a brand collaboration or marketing activity. CBDT’s official explanation says, “Whether this is a benefit or a perquisite will depend on the facts of the case. In case of benefit or indirect benefit being a product like car, mobile, outfit, cosmetics etc. and if the product is returned to the manufacturing company after being used for the purpose of rendering a service, it will not be treated as a benefit or collateral benefit for the purposes of Section 194R of the Act.
Areas covered by the new regulations include gifts such as cars, televisions, laptops, cell phones, gold coins, free event tickets and overseas travel for media influencers. social.
For doctors, the deductions extend to areas such as free drug samples often provided to them by pharmaceutical companies. In such cases, hospitals and medical organizations that employ doctors will be required to calculate the value of free samples received by a doctor – and claim a tax deduction on them by adding the value of these samples to the individual’s income. respective.
The settlement further clarified that sales discounts, which are often offered by companies in partnership with social media influencers through marketing campaigns, will not be part of the new TDS rules – and will be exempt from charges. additional taxes. However, it is unclear whether awarding benefits through other means, such as crediting promotional money in digital wallets or loyalty points, would also be eligible for the tax deduction.
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