Puttur, August 1, 2025: The Income Tax Department has introduced a new profession code, 16021, specifically for social media influencers.This new code, incorporated into the Income Tax Return (ITR) utilities for the fiscal year 2024-25, represents the first instance where influencers are categorized under a distinct professional code. This strategic move is expected to simplify tax reporting procedures for content creators who derive earnings from avenues such as brand endorsements, affiliate marketing, and digital content, as the influencer market in the country is on track to hit a substantial $2.8 billion by 2025.
The newly introduced code is applicable to influencers who are required to file their taxes using either ITR-3 or ITR-4 (Sugam), which are the forms commonly utilized by self-employed professionals and those who prefer presumptive taxation methods. Despite the clear intentions behind this development, tax specialists have expressed apprehension regarding potential classification issues. Social media content creation is not explicitly listed as a specified profession under Rule 6F of the Income Tax Act, which could result in ambiguity concerning audit thresholds and the application of presumptive taxation schemes outlined in Sections 44ADA, 44AD, and 44AB. This clarification will be crucial to ensure the smooth implementation of the new code and minimize confusion among taxpayers.
How to File ITR as an Influencer
Influencers must decide on the appropriate Income Tax Return (ITR) form, either ITR-3 or ITR-4, based on their income streams and tax preferences. ITR-3 caters to individuals with intricate earnings, including brand payments, affiliate incomes, and rental revenues, necessitating meticulous bookkeeping. On the other hand, ITR-4 (Sugam) offers a more straightforward option for those selecting presumptive taxation.This method involves declaring a predetermined percentage of their earnings as taxable: 8% for business income derived from digital transactions or 6% for traditional business income, and 50% for professional income, thus simplifying the overall tax compliance process.
To ensure accuracy, influencers are required to calculate their gross earnings, subtract eligible deductions such as equipment costs, internet bills, and travel expenses, and validate their returns within a 30-day window. This can be done either through the online e-filing platform or by dispatching a signed ITR-V to the Centralised Processing Centre in Bengaluru.
Key Considerations and Compliance Tips
The new tax code has ignited discussions within the tax professional community regarding the appropriate classification of influencer earnings. Some tax experts are contending that influencer income should be categorized under Section 44AD as business income rather than professional income under Section 44ADA, due to the absence of explicit legal foundation for the latter. This debate arises from concerns that misclassifying income could result in increased tax obligations, reduced audit thresholds (Rs 50 lakh for professionals compared to Rs 1 crore for businesses), and potential penalties. Additionally, influencers with annual earnings exceeding Rs 20 lakh (or Rs 10 lakh for those based in the northeastern states) are now mandated to obtain GST registration and adhere to regular filing requirements. To navigate these changes effectively and ensure accurate tax reporting, experts suggest that influencers review their Annual Information Statements (AIS) and Form 26AS, and maintain invoice records to substantiate deduction claims.The approaching deadline for filing Income Tax Returns for the financial year 2024-25, set for September 15, 2025, underscores the urgency for influencers to seek tax advisory services. This new code, code 16021, reflects the government's acknowledgment of the burgeoning digital economy. However, tax specialists are calling for more comprehensive guidelines from the Income Tax Department to address the current ambiguities and facilitate compliance. The clarification is expected to help influencers avoid potential pitfalls and make informed decisions regarding their tax obligations.
Keywords: social media influencers, ITR filing 2025, new tax code, influencer taxes, content creators, income tax return, ITR-3, ITR-4, tax deductions