What groups of influencers will be most impacted by TDS on freebies?
How will brands and social media influencers be impacted by the 10% TDS on freebies? Which categories of influencers will be most impacted? Hear from a specialist.
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The Central Board of Direct Taxes (CBDTinitiative )'s to broaden the tax base of the government may have a considerable effect on most influencers due to the 10% TDS on gifts and business promotions. However, since they don't typically receive gifts or stuff, it might not have much of an impact on groups like financial influencers. That's because the majority of their advertisements focus on services rather than product advertisements.
Who will it affect the most, then?
Lifestyle, fashion, technology (electronics), and travel are the influencer categories that will be most impacted.
For instance, if a business pays Rs 1 lakh to sponsor a travel influencer's trip, the business must deduct Rs 10,000 as TDS. The same is true of the gifts given to influencers in fashion and lifestyle. Even tech influencers frequently receive gifts above the non-taxable limit of Rs 20,000.
However, the CBDT has also said that no fees will be assessed if the gifts are returned to the business after the goal of the sales promotion has been achieved.
What will businesses probably do now?
Therefore, my best guess is that with the promotion of durable goods like phones, cameras, or laptops that cost more than Rs 20,000, the companies may just skip the gifting system and instead rent the items to the content creators for free for the necessary period of time.
Non-durable or perishable goods, such as, example, a bakery campaign where they bring you cakes or cookies, scarcely exceed Rs 20,000.
Speaking of financial influencers, they often do not obtain free IPL tickets or trips for sales purposes. Additionally, influencer promotions are typically taxed. In their industry, freebies are uncommon. Therefore, they are responsible for 1 to 10 percent TDS whether or not this new development occurs. Therefore, I do not anticipate a material influence on social media niches that are focused on knowledge and fun.
And what's the verdict?
All things considered, we may observe a decline in freebies exceeding Rs 20,000 – when businesses either receive the gifts after the advertisement is shot or actually pay the TDS for expensive trip sponsorships or events!
