Quote from Ankit Agarwal, CEO & Founder, Do Your Thng

Becoming an “influencer” or YouTuber has become a popular career choice for children, according to a 2019 poll. They often receive gifts from companies in lieu of promoting their products or services. However, they will have to pay taxes for those items from July 1. The social media influencers will be liable to pay 10% TDS if they receive a product like a car, mobile, outfit, etc, and retain the same. In case they return the product after using the services, it will not fall under Section 194R.

Commenting on these new TDS rules Ankit Agarwal, CEO & Founder,  Do Your Thng says, “It’s the nature of the beast. Every nascent industry has to go through a phase of regulation. That’s how you convert chaos into clarity and control. The guidelines by ASCI were one such instance in influencer marketing. This provision introduced by GOI to tax freebies is the next.

That said because we’re introducing new factors into a relatively new ecosystem, there are going to be teething problems. Creators, especially small influencers, will be wary of opting for barter campaigns because it implies paperwork. More notably, it means they’ll be paying tax for collaborations they received no money for. For brands, it will also change the rules of the game and how they approach partnerships with creators.

Whether you welcome the move or not, you can’t deny the mandate is geared towards making influencer marketing and the creator economy more organised and legitimate.”