Indian Influencers and Gig Workers Grapple with Tax Compliance Complexities

Mumbai-based ‘mominfluencer’ Avantika Bahuguna, Founder of MomsLeague Global, an online community for mothers, effortlessly juggles multiple client collaborations, brand deliverables and content for her own social media platforms round the year. Filing her income tax returns (ITR), however, is another matter altogether.

Like many creators and gig workers, she finds it difficult to navigate the exemptions and deductions she can claim, tax deducted at source (TDS), and other tax rules that apply to her evolving line of work.

“I’ve noticed that while many agencies deduct TDS from payments made to freelancers, there are instances where the deducted tax is not reflected or reported correctly, making it difficult to claim the credit while filing returns. This is an issue that deserves greater awareness and clarity so that freelancers know what to check and what steps to take if such discrepancies arise,” she says.

ITR Guide

From ITR filing due dates to right form - know everything about filing your income tax returns for Tax Year 2025-26 or AY 2026-27

View Details »

Comedian and lifestyle influencer Linda Fernandes’ predicament is similar. “The biggest challenge is keeping track of income from different brands. As creators, we deal with so many collaborations, invoices and TDS deductions that it’s easy to miss something,” she says, adding that she received a notice for a minor difference in interest calculation last year. “It reminded me how important it is to double-check everything,” she says.

Multitude of challenges

Compared to salaried taxpayers, such individuals face a much more daunting compliance burden, with paperwork that stretches across the year rather than peaking only in July or August. “One of the longstanding challenges has been determining whether their income qualifies for the presumptive taxation scheme and, if so, whether it falls under Section 44AD (business) or Section 44ADA (profession),” says Tanu Gupta, Partner, Mainstay Tax Advisors.

Put simply, the scheme exempts taxpayers engaged in small businesses or professions from the tedious process of maintaining regular the income at a prescribed rate and also, depending on other eligibility parameters, file returns using the much simpler Form ITR-4 (Sugam) instead of the more detailed ITR-3.

Having a clear idea of the eligibility criteria is therefore critical. “Whether the activity is characterised as a business or a profession directly impacts the applicable presumptive taxation provisions,” she adds.

Under presumptive taxation, businesses do not have to calculate their actual profits. Instead, the income is simply presumed to be 8% of total turnover or gross receipts. This rate is 6% for receipts through cheque or digital modes. If the actual income exceeds this deemed figure, the taxpayer must declare the higher amount. A few business activities, such as commission agencies, are not eligible for the scheme. “This applies for total turnover or gross receipts up to Rs.2 crore, or Rs.3 crore if not more than 5% of total receipts and payments are in cash,” explains Jayesh Sanghvi, Tax Partner, EY India.

For professionals, the presumptive income is 50% of gross receipts, or the actual income if it is higher. “This applies for gross receipts up to Rs.50 lakh, or Rs.75 lakh if not more than 5% of total receipts and payments are in cash,” he adds. The forms introduced last year have added another layer of complexity. “The determination of whether a taxpayer carries on ‘business’ or ‘profession’, while straightforward in the majority of cases, can be tricky in certain cases – especially where influencers are professionals,” he says.

New code, new debate

Herein lies the dilemma: should influencers be taxed as businesses, with just 6-8% of turnover deemed income, or as professionals, with 50% of receipts deemed income?

The presumptive scheme under Section 44ADA is open only to specified professionals: lawyers, doctors, engineers, architects, accountants, technical consultants, interior decorators, and a handful of other professions notified by the government. “Social media influencer or content creator is not specifically included as a notified profession under Section 44AA,” points out chartered accountant Himank Singla, Partner, SBHS and Associates.

Yet, last year, the tax department introduced a new code, 16021, for social media influencers in the ITR-3 and ITR-4 forms. Many taxpayers took this as official recognition: if a profession code exists for influencers, surely they qualify as professionals? “Legally, that conclusion is not necessarily correct because the Act itself has not been amended,” cautions Singla. In other words, a dropdown option in a tax form does not rewrite the law.

The code is available in ITR-3 (for taxpayers with income from business or profession) and ITR-4 (for eligible taxpayers opting for presumptive taxation). “The inclusion of this code in ITR-4 suggests that such taxpayers may avail themselves of the presumptive taxation regime, subject to satisfying the prescribed conditions,” explains Gupta of Mainstay Tax Advisors. “However, there remains some uncertainty because no corresponding amendment has been made to the definition of “profession” for the purposes of Section 44ADA of the Act.”

Chartered accountants feel the tax department ought to issue a clarification explicitly stating whether or not social media influencers can opt for presumptive taxation. “There should never be a situation where the return utility recognises a category, but the Act remains silent regarding its tax treatment,” asserts Singla.

Avantika Bahuguna

Mumbai

Momfluencer; Founder,

MomsLeague Global, Mumbai

TAX TRAVAILS

Agencies deduct TDS, but do not report correctly, making claiming tax credit difficult

LESSON LEARNT

Maintain meticulous records of business expenses—travel, food, flights and so on

TAX AUTHORITIES MUST…

Create simple tax tutorials tailored for women entrepreneurs, freelancers and content creators

Note:"One mistake I’ve made in the past is not keeping proper track of all my business expenses (travel, food bills, flight tickets), which made filing returns tougher."

Who should file tax returns?

Individuals must file an ITR if their total income exceeds the basic exemption limit (Rs.4 lakh under the new regime). However, it is not the sole parameter. “For instance, return filing is mandatory if the total sales, turnover or gross receipts from business exceed Rs.60 lakh during the previous year, or the gross receipts from a profession exceed Rs.10 lakh,” says Singla.

Likewise, in cases where the aggregate amount of tax deducted or collected (TDS/ TCS) during the financial year is Rs.25,000 or more (Rs.50,000 in the case of a resident senior citizen aged 60 or above). “Many creators believe that if their taxable income is below the exemption limit, they need not file a return. However, they often overlook that their gross receipts or turnover may independently trigger the filing requirement under Section 139(1),” says Singla. Therefore, besides taxable income, keep in mind your turnover, gross receipts, and the other mandatory filing conditions as per tax laws.

ITR-3 vs ITR-4

Selecting the wrong form – and thus making incorrect disclosures and reports – is a common mistake many taxpayers make. Essentially, individuals such as influencers and gig workers have to choose between Forms ITR-3 and ITR-4. Both Bahuguna and Fernandes say they use ITR-3.

“The choice of return form depends upon the nature of income and the taxpayer’s specific circumstances. Where gross receipts do not exceed Rs.50 lakh or Rs.75 lakh (where cash receipts do not exceed 5% of total receipts), and the taxpayer opts for presumptive taxation, ITR-4 may generally be used. In other cases, ITR-3 would be applicable,” says Gupta.

To be sure, ITR-4 is meant only for resident Indian taxpayers with total income of up to Rs.50 lakh. Also, if you have capital gains — except long-term capital gains of up to Rs.1.25 lakh on sale of equity-oriented assets—you cannot use this simpler form. Neither can those with foreign assets and income. “Such taxpayers will then have to use ITR-3, even if they are otherwise eligible for presumptive taxation,” she points out. Taxpayers using these forms have to file their returns by 31 August.

Old vs new tax regimes

The tax laws allow salaried taxpayers to choose between the two tax regimes—the old, with an exemptions framework, and the new one, with concessional rates but minimal exemptions—every year. However, others have not been granted this leeway. While the new regime is the default setting, if a freelancer were to choose the old regime, she will have to file a separate Form 10IEA on or before the due date of filing the return.

“Once the old regime is chosen, the freelancer has to compute taxes as per this regime for the subsequent years. She can switch to the new regime once by filing Form 10IEA again, but cannot opt for the old regime till cessation of business/ profession. Therefore, freelancers have to choose between the new regime and the old regime more carefully and comply with Form 10IEA filing,” points out Sanghvi of EY India.

Reconciliation of records, AIS

Taxpayers have to reconcile their income records with Form 26AS and the Annual Information Statement (AIS), which can be accessed on the income tax e-filing portal (incometax.gov.in), before filing their returns. Discrepancies in the AIS and mismatches with filed returns have led to many taxpayers receiving notices, with the I-T department stepping up data-driven scrutiny. However, reconciling data with Form 26AS and AIS is far from hassle-free. “Form 26AS and AIS keep getting updated as payers (clients and others from whom influencers and gig workers receive their payments for the services rendered) file their TDS returns. As a result, at the time of filing the ITR, the transactions reflected in Form 26AS may not show the full picture of sales in every case,” says Archit Gupta, Founder and CEO, ClearTax.

Therefore, arriving at the correct figures is indispensable. “Whenever a mismatch arises between the transactions shown in Form 26AS or AIS and the actual turnover, it is appropriate to raise feedback. Such mismatches can arise due to several reasons,” he adds. You can rely on your records to file returns provided you have proof to support your claims, should I-T queries arise.

Linda Fernandes

Mumbai

Lifestyle influencer and comedian

TAX TRAVAILS

Tracking income from multiple brand collaborations, platforms

LESSON LEARNT

Even a small mismatch can result in an income tax notice, making reconciliation essential

TAX AUTHORITIES MUST…

Simplify tax terminology and notices, which can be intimidating, especially for first-time taxpayers.

Note:"Earlier, I wasn’t aware of how important it was to reconcile every detail before filing. I have become more careful over the years."

Tax checks for creators

Treat income source as business or profession?

Is presumptive taxation available?

ITR-3 or ITR-4 (Sugam)?

Which regime to choose: old or new?

When to file Form 10IEA?

The grey zone

ITR utilities now have a separate code for social media influencers. But influencers not specifically recognised as a notified profession under Section 44AA

The result? Uncertainty over whether they can select presumptive taxation scheme (under Section 44ADA) for notified professions

Expert view: I-T ought to clarify whether or not they are eligible

Tax traps that can trigger notices

Choosing the wrong ITR form

Claiming presumptive taxation without checking eligibility

Not reconciling income with AIS, Form 26AS

Omitting platform payouts, freebies or foreign income

Not reporting benefits received in kind

Poor record-keeping for expenses and invoices

Ignoring GST obligations

Avoid these tax traps

Chartered accountants say such individuals often fail to disclose all sources of income, whether received as cash, kind or digitally. These include earnings from brand endorsements, social media platform payouts and collaborations, among others. “Sponsorships, appearance fees, referral commissions and foreign remittances are sometimes reported selectively or omitted. Some taxpayers disclose only the amount credited to their bank account while ignoring commissions deducted by platforms or payments received through digital wallets and international payment gateways,” says Singla.

Inadequate record-keeping is often a hurdle. Many fail to preserve invoices, agreements, expense bills and meticulous books of accounts. “Personal and business expenses are often mixed, making it difficult to determine the actual business income and substantiate deductions during scrutiny. Similarly, assets such as cameras, laptops, microphones, and mobile phones used for professional purposes are either not claimed correctly or are claimed without adequate supporting documentation,” says Singla.

Sanghvi of EY India stresses the need to maintain sufficient documentation to support your expense claims (which are deductions from your income and thus can lower your final tax outgo). “Ignoring the tax implications of freebies and non-cash benefits is also a mistake you must avoid,” he adds. Gupta believes this is one area where the government should consider providing relief. “Influencers often find it difficult to determine the taxable value of products received for promotional purposes. Since Section 194R already requires the provider of such benefits to comply with tax withholding requirements, the government could consider introducing a more practical compliance framework for such cases,” she says.

Do not ignore GST compliance

Finally, it is important to ensure compliance across applicable laws. “Many creators focus only on filing their ITR but overlook their GST obligations. In several cases, they continue to receive professional receipts well beyond the prescribed GST registration threshold without obtaining registration or assessing whether GST applies, particularly where services are provided across states or to foreign platforms. This can lead to significant compliance issues later,” says Singla.

This is another area where tax return filing for businesses or professionals is more complex compared to the salaried class. “Although the general threshold for GST registration is Rs.20 lakh (Rs.10 lakh in certain special category states), registration may become mandatory from the outset in specific situation