A Complete guide on Income Tax for Indian bloggers & Freelancers

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A new profession that has emerged in the past few years is blogging wherein people write articles and blogs. A major source of Income of such bloggers engaged in the profession of blogging is through

  • Advertisements (Google Adsense, Direct Ad Sales etc.)
  • Affiliate Sales
  • Services like Blog Consultancy, Blog Designing, SEO Services, Content Services etc
  • Any other Source like Freelance income etc

The best thing about earning from blogging is, it doesn’t require any age limit, and you can earn it all of your own. Many budding bloggers, who are earning handsome from blogging, are unsure about paying taxes on income from blogging in India. Here in this article I will try to give an overview of the manner in which tax is payable on Income from blogging.

Taxes payable on Income earned from Blogging in India

Income Tax and Service Tax are liable to be paid on income earned from blogging in India. In this article, I would mainly be focussing on the manner in which income tax is levied on blogging and in my next article I’ll try to explain service tax on blogging. The manner of computation of Income Tax has been explained in detail below in this Article.

(Please Note: If a person is earning income from salaries/ rent / interest from bank/ capital gains computation of Tax payable on his Income won’t be done in the following manner. This article has been specifically directed towards explaining the manner of computation of income earned from any blogging and other online sources which form a part of income from any business or profession)

Benefits of Filing Income Tax Return

The most important benefit of paying taxes and filing your income tax return is that only the income disclosed by you in your income tax return is considered your true income. If you are required to show your income at any place in future, only the amount disclosed in your income tax return would be considered as a valid proof of your income.

Moreover, even if you apply for any Loan from a Bank, you are mandatorily required to show them your income tax return and only the income disclosed in this income tax return would be considered as a valid source of income.

Secondly, there are many expenses which are done by the Govt. like construction of roads, airports etc. The Govt incurs these expenses from the taxes collected. It is a legal right of the govt to collect Income Tax and in case you don’t pay your income tax they may issue you a scrutiny notice and demand you to pay your Income Tax along with Interest and huge penalties.

Therefore, it is highly advisable for all income earning individuals to file their income tax returns before the due date with the Govt.

Computation of Income Tax in India

Any person earning income from any source is liable to pay income tax as per the tax rates prescribed by the govt. While computing the income on which tax is to be paid, the total of all Incomes earned by a Blogger are to be taken into account. You are requested to note that Income Tax is not payable on the Total Revenue earned but is payable on the Total Income earned. Total Revenue is the Gross Amount received and Total Income is the amount earned after Depreciation and Payment of Expenses incurred for the purpose of earning the Revenue.

The difference between Total Revenue and Total Income has been explained with the help of an example below:-

  • Total Revenue/ Total Turnover: Rs. 13,00,000
  • (Less) Total Expenses Incurred for the purpose of earning Revenue: Rs. 2,00,000
  • (Less) Total Depreciation on all Assets: Rs. 1,50,000
  • (=) Gross Total Income: Rs. 9,50,000
  • (Less) Deductions allowed for specified Investments: Rs. 1,00,000
  • (=) Total Taxable Income: Rs. 8,50,000

In the above example, income tax would be levied as per the income tax slabs on the total taxable income (i.e. Rs. 8,50,000) and not on total revenue (i.e. Rs. 13,00,000). The Income Tax Slab Rates keep changing are announced by the Govt in every budget.

Expenses allowed to be deducted while computing Income Tax

Deduction on INcome tax
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Any amount which has been paid for the purpose of earning revenue is allowed to be deducted as an expense. A few examples of the expenses allowed are as follows:-

  • Domain Hosting Expense, Domain Purchase Expense, Blog Designing Expense etc
  • Rent Expense
  • Electricity Expense/ Telephone Expense/ Internet Expense/ Water Expense
  • Salary to Employees
  • Payment to Freelance Consultants
  • Petrol/ Diesel Expenses
  • Any other expense incurred for the purpose of earning Revenue

Here, you are requested to note that only those expenses incurred for the purpose of earning Revenue are allowed to be deducted as an expense. For e.g.: If you invite a client for a meeting in a 5 star hotel, the payment made to the 5 star hotel is allowed to be deducted as an expense as this meeting would help you in increasing your business and would help you earn extra income. It is irrelevant whether you get extra business from this meeting or not, the point to be taken into account is that this expense was incurred for the purpose of gaining extra business.

But, if you go to a 5 Star Hotel for your personal purpose and not for business purpose, it would not be allowed to be deducted as an expense.

For the purpose of claiming these expenses, you are also required to provide proof of such expenses. Therefore, you are required to maintain a file showing bills of all the expenses incurred.

Depreciation on Assets

For the purpose of earning revenue, bloggers also purchase some assets. So for the purpose of earning revenue, if you’ve purchased any assets like mobile/ laptop/ car/ office furniture etc you are also allowed to reduce this form of expense incurred for the computation of total income.

However, the benefit arising from the expense incurred on the above mentioned assets would be arising for more than 1 year as these assets usually have a life span of more than 1 year. As the benefit would be arising for more than 1 year, the expense incurred shall also be attributed to more than 1 year.

In such cases where the expense has been incurred for purchase of any Asset, you are not allowed to claim the whole expense at one go. The total expenditure incurred for purchasing the asset is allocated over the life of the asset and you are allowed to claim this expenditure proportionately over the life of the asset. This can be explained with the help of an example below:-

For e.g.: If you purchase a laptop for Rs. 30,000 and the expected life of the laptop is 3 years, you cannot claim the whole Rs. 30,000 as an expense in one year as the life of the Asset is more than 1 year and this laptop would be giving you benefits for more than 1 year. In this case you would only be allowed to claim Rs. 10,000 (i.e. Rs. 30,000/3)

This method of proportionately claiming an expense based on the life of the Asset is called depreciation of asset. You are required to show the proof of expenditures made on purchase of Assets by showing requisite bills for the same.

Please Note: The Individual cannot himself decide the life of an asset and the Govt has already pre-defined the life of all the Assets.

Deductions allowed for Specified Investments

To promote the habit of savings amongst taxpayers and to channelize the resources in the right direction, the Govt also allows for Deduction for amount invested in specified investments. If a taxpayer makes an Investment in any of the Investment Options as specified by the Govt., he shall be allowed to claim deduction for the same. Income Tax would be levied on the amount so arrived after reducing the Deductions from the Gross Total Income.

Deductions for Investments made in specified Instruments are allowed and the most popular forms of Investment for claiming Deductions are Mutual Funds, PPF Accounts, Life Insurance Premium, Health Insurance Premium etc. The whole lists of Investments which are allowed to be claimed as a Deduction are given here.

Exemption from Payment of Income Tax

If the Total Taxable Income after deducting all expenses, depreciation & deductions allowed is less than the minimum income which is chargeable to tax, the individual is not mandatorily  required to file his income tax return.

As per the current Income Tax Slabs, no tax is payable if the Total Taxable Income of an Individual is less than Rs. 2,00,000. Therefore after deducting everything stated above, if the Total Taxable Income is less than Rs. 2,00,000 he is not mandatorily required to file his Income Tax Return and it is optional for him to file his Income Tax Return.

In cases wherein it is optional for the taxpayer to file his income tax return and he still files his Income Tax Return, in such cases he will file an Income Tax Return stating that the Tax payable by him is Nil.

PAN Card for filing Income Tax Return and Payment of Taxes

In India, there are many people by the same name. Let’s take the case of Harsh Agrawal. There are many people in India by the name of Harsh Agrawal. So if Harsh Agrawal goes and pays his Income Tax, how would the govt come to know which Harsh Agrawal has paid the tax?

So as to avoid this confusion, the govt issues a PAN Card to every taxpayer. PAN Card is a unique no allotted to every taxpayer. Only 1 PAN Card No is issued per person and for each Harsh Agrawal in this country, the PAN Card No would be different and it is through the PAN Card No that the govt would come to know which Harsh Agarwal has paid his Income Tax.

Every taxpayer has to apply for a PAN card no and this application can be made online as well. This is a one-time process and the PAN card no allotted to you would stay the same throughout your lifetime. Applying for pan card is a fairly easy process and application for the same can be made online as well as offline. The Charges for applying for a PAN card are very nominal and are Rs. 96 only.

The request for applying for a PAN Card is required to be made in Form 49A and online request for PAN Card No can be made through the TIN Portal on the NSDL Website. You are requested to note here that without PAN Card No. you cannot pay Income Tax.

As against popular belief, I would here also like to clarify that it’s not necessary for you to be 18 years of age to be applying for a PAN Card. You can apply for a PAN Card even before you are 18 years of age and this income would be counted as your income and not your parents income as you are earning this income out of your own skill.

Due Date for Payment of Income Tax

Every taxpayer is required to make payment of income tax during the year itself in which the income is earned. He is required to make the payment in instalments during the Year if the total tax payable during the year is more than Rs. 10,000.

Such payment of Income Tax during the year is called Advance Tax and due dates have been specified for the payment of advance tax during the year. The Payment of advance tax can be made online by submitting the requisite Challan Form on the NSDL Website.

The Due Dates for Payment of Advance Tax for all taxpayers (except Companies) is as follows:-

Due Date

Amount Payable

On or before 15th Sept

Not less than 30% of the Total Tax Liability

On or before 15th Dec

Not less than 60% of the Total Tax Liability

On or before 15th March

100% of the Total Tax Liability

Filing of Income Tax Return

At the end of the year, every taxpayer is required to file a statement of his taxes. This statement of taxes is called the Income Tax Return and this Statement should indicate:-

  1. The revenues earned and the sources from where they are earned
  2. The expenditures incurred
  3. The depreciation claimed on assets
  4. The investments made which have been claimed as a Deduction
  5. The Total Taxes paid incl. the Advance Tax paid or the TDS deducted (if any)

Delay in payment of income tax and filing of Income Tax Return would enforce levy of Interest and Penalty for the delay. In case a person has by mistake paid excess tax, he can also claim Refund of the excess tax paid.

The above article is only an overview of the computation of income tax on earnings from Blogging and it has been simplified so as to make it easier to understand for non-finance people. You are requested to refer to the Income Tax Act for exact interpretations.

In case of any query, feel free to ask them in the comments section below and I would be happy to help. If you find this guide useful, do share it on Facebook and Google plus.

This is a guest post by Blogger and Chartered accountant Karan Batra from Chartered Club. If you would like to write an original  guide for ShoutMeLoud, check our guest submission guidelines.

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Authored By
Karan Batra is a CA and blogs about Tax related matters on Chartered Club. He is also a Visiting Faculty Member at the Institute of Chartered Accountants of India

109 thoughts on “A Complete guide on Income Tax for Indian bloggers & Freelancers”

  1. Thanks for the informative article. I would like to pay the advance tax for the earned income from Google adsense.
    As the bank deduct TDS for the amount deposited in our bank account. Which chalan is to be used ITNS 281 or ITNS 280 to file the advance tax.

  2. Thank you for the article, Karan. On the link to tax slabs given here, it is stated that tax will be levied on “the amount by which it exceeds Rs XX,XXX.” So let’s say my annual taxable income after deductions is 5,50,000. Does this mean a tax of 20% will be calculated against 5.5 lakhs or just 50,000 though?

    1. Hello Jhon,

      If your annual taxable income after all deductions is 5.5 lakhs then according to slabs, you will be charged %age for each slab. i.e. if your income is 10 lakhs say, and tax free income is 2.5 lakhs, so your taxable income is 7.5 lakhs, now the calculation will be :
      2.5 lakhs to 5 lakhs @10% which means Rs. 25000.00
      5 lakhs to 10 lakhs @20% which means Rs. 1,00,000.00
      Net taxable income: Rs. 1,25,000.00

      In your case :

      till 2.5 lakhs no tax. i.e. Rs. 0.00
      2.5 lakhs to 5 lakhs @ 10 % -> Rs. 25000.00
      5 lakhs to 5.5 lakhs @ 20 % -> Rs. 10,000.00
      Payable Tax: Rs. 35,000.00

      I hope this helps

  3. Dear Sir,

    I am an NRI(holding Indian passport) and my wife OCI card holder, we both working in Ireland. Along with our job, recently we have started freelance Tour, Travel, IT and SEO consultation and affiliate service for companies located in India. They are paying in our Indian NRO bank account. I do have following questions related to Income tax.

    1. Do freelancers need to submit the income tax return, if their net income after the expenses are below 2.5lakh?

    2. As per my understanding freelancers can deduct all expenses from their income for calculating net Income. My question is we are renting the apartment in Ireland and doing our freelance work from home, we are paying rent Euro 1150 per month for apartment, Euro 50 for internet, Euro 150 for electricity etc, How much portion of the above expenses can we count with respect to our freelance work? How much percentage I can Claim and how much for my wife(Because both of them doing freelance work)?

    3. Can I deduct, domain registration charge, email promotion charge, web server space charge etc as expense?

    4. Which ITR form we have to use for income declaration?

    5. Can we use ITR4S? and calculate 50% of the total receipts for income for declaration?

    6. We do have agriculture income from India. Is it exempt?

    7. Finally, if my freelance income after all expenses is 2 Lakh and agriculture income is 75000/-. Do I want to submit income tax return?

    Thanks in advance.

    1. 1. Yes submitting income tax return is always good, either you are a freelancer or a businessman
      2. Yes, your all expenses that are valid are acceptable and will be deducted from taxable income, but a valid proof is needed.
      3. Yes, you can. These also are the expenses you made for your freelancing career. You can include travel tickets, hotel bookings and more.
      4. I have no idea yet. But probably you will file the same ITR that is filed by small businesses.
      5. I have no idea on that.
      6. I think there is exempt till a limit.
      7. Just do for freelancing. Agricultural income of yours is below 75k i believe you will get a rebate on that.

  4. I run my own website development firm in India. My all clients are in India. My yearly income is 3.5 Lakh

    1. Is it come under income from Business/profession head ?
    2. My IT file assistant submitted my income under “income from horse race” and telling me that website and this related income is appear under “Income from other source”

    I asked him how can it be ? There is no link up between income from horse race and income from website development. !!!

    Please guide me.

  5. Diana George

    Dear Karan,

    I retired as an employee on 31st Jan 2017) and then joined the same company as consultant. The total income from salaries come under the 30 % slab which has been settled as per dues , while the earnings from consultancy is approx. 120000/- for two months( feb and march 2017).

    would the TDS by the employer should be @ 10 % for consultancy or 30 % as per the slab rate. Do I need to pay advance tax also? and when?

  6. I am 25 years old Indian citizen, and currently, I’m working as an individual freelancer & blogger. I have a savings bank account in State Bank of India. I did take payment from my client on my PAYPAL account, and some few client did transfer fund by BANK using IMPS or NEFT. My Paypal set with auto withdrawal, so each day my revenue transfer to my savings bank account. I did calculate each month I made approx 40+ transaction [ total transaction is below 2k USD ] and nowadays my income was 1000$+ / Month

    So, as because I’m taking my payment day by day on that savings bank account, so in the future does it create any trouble for me? I don’t have any idea on it. So if it’s essential for me to create a trade license and current account for my job, please let me know or suggest me what i have to do in this case. I shall be highly obliged.

    Thank You.

  7. Himani Sharma

    Thanks for sharing this amazing article with us. This post is really very informative.
    Thanks!

  8. Rajat Kumar

    Hey Harsh!! A great article. I am in a little confusion and I will be grateful if you can reply.
    I have a website and two of us work on it and we have started earning handsome cash from the last month. We both agreed to the point and made an individual adsense account on one of the person’s name. We have a legal process done and we split the money once we get the payment. Suppose the adsense is on X person’s name and he is the one who is getting the payment and splitting with the person Y. How is Y person supposed to pay tax because all he is getting is a split of earning from X on which both of the person agreed legally and by trust. I am in a great confusion. How can I sort this?

    1. Harsh Agrawal

      @Rajat
      Person X can pay the amount (Share the profit) to Person Y & show it as his expense. This way he doesn’t have to pay the taxes on those Person Y can show that amount as income for his online work & pay taxes on that. Hope that helps!

  9. Hi sir my annual income is over 6 lakh receiving money from Adsense and infolinks i have to open itr file and gst and which form i have to use as a blogger ?

  10. i have filed ITR for the assement year 2017 -18 and i got notice to pay income tax . i have tax about 27100 according to form 16 and 26as form , ihave paid full amount but in the notice it is mention only 13000 is paid and remaining 14000 has to be paid. so kindly help how to response this notice

  11. Hi,
    Useful article. In my case, Iam a govt servent and already paying tax. Iam a part time blogger. Is it necessary to file a seperate IT returns for my blog or a single ITR is enough for it?
    Should I have a business bank account for a blog? Kindly help me.

    1. You can file a single consolidated return disclosing all your Salary as well as part time blogger income.

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