The Income Tax Department has introduced a dedicated income classification for social media influencers, content creators, and digital professionals, bringing clarity to their tax obligations. A new income code ‘16021’ has been added under the ‘Profession’ category in ITR-3 and ITR-4 (Sugam), streamlining tax filing for those earning through brand promotions, endorsements, and digital content.
Key Changes for Influencers
- New Income Code (16021)
- Now, earnings from influencer marketing, sponsorships, and digital content must be reported under this code.
- Applies to ITR-3 (for detailed income reporting) and ITR-4 (for presumptive taxation).
- Presumptive Taxation Option (Simplified Compliance)
- Section 44ADA (Profession Income):
- Eligible if gross receipts ≤ ₹50 lakh (₹75 lakh if cash receipts < 5%).
- Can declare 50% of receipts as income (no need for detailed books).
- Must file via ITR-4 (Sugam).
- Section 44AD (Business Income):
- For business-like influencer activities (e.g., merchandise sales).
- Presumptive rate: 8% (6% for digital transactions).
- Applies if turnover ≤ ₹2 crore (₹3 crore if cash receipts < 5%).
- Who Should File ITR-3?
- Mandatory if:
- Earnings exceed presumptive scheme limits.
- Income includes partnership firm remuneration, capital gains, or multiple sources.
- Not eligible if income falls under ITR-1, ITR-2, or ITR-4.
Why This Matters
- Easier Compliance: Reduces paperwork for small creators under presumptive schemes.
- Clearer Reporting: Dedicated code prevents misclassification of influencer income.
- Penalty Avoidance: Ensures proper disclosure of brand deals, sponsorships, and ad revenue.
What Influencers Should Do Now
✔ Check Income Level – Decide between ITR-3 (detailed) or ITR-4 (presumptive).
✔Maintain Records – Even if opting for presumptive tax, keep payment proofs (bank/UPI trails).
✔Digital Payments Preferred – Lower tax rate (6% vs. 8%) if receipts are digital.
With the July 31 deadline approaching, influencers must assess their filing category to avoid last-minute hassles. The new system aims to balance ease of compliance with transparent reporting in India’s booming creator economy.