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. Hello
    Thank u for the post .

    My friend started a website and he is earning above 10 lakhs per annum through adds, google adds etc.

    Some people are saying if the earning is more than 8 lakhs per annum then it should be declared as company. So he should register it as serparate organization under govt of India. But he is working in anothere software company.
    If he registers as company he should resign the job. Becoz it will be like (owning and working) in one compnay
    and working as employee in software company. He is in dilema whether to quit the job of not ? Are there any solutions for this?

    2 questions:

    1. what is the limit of earning through commercial adds without registering the website or blog as an organization?

    2. Working in one software company and earning through blogs or website is legal or not? Will there be any breach of laws?

    1. Dear Sagar

      1. There is no such requirement of registering a company. Even if your friend earns in crores, you are not required to create a company for such a purpose.

      2. There is no limit on the amount you can earn through commercial blogs and websites.

      3. The govt will not have any problem if you are working in a company and alongside running a blog. However, your employer may or may not have a problem. This is a employer specific query and I may not be able to answer that.

      For any other queries, feel free to mail me at [email protected]

  2. This is a great article, i need your help on below matter concern related to taxation

    – In 2016, I joined a new organisation and during the month of April, May and June company deducted TDS on my salary. No other deduction were in the salary slip.
    – Organisation got closed and from July,2016 onwards till date I am working as an IT Consultant with one of US Company.
    – My total Income till date is about 12 Lac that is being paid directly into my personal account.
    – No TDS is deducted from the Income.

    I would like understand what all expenses can be considered:-

    – I have Telephone, Broadband and Mobile bills that is being used in my work.
    – I have Car Petrol, Toll and Food bills for my client visits.

    I also have my wife that work with me to do administrative work for me, How can i show atleast 3 Lacs of income to her and as an expense to me.

    Also recently I had a baby can i show that as a personal medical expense less from the income or not.

    I dont have any company, and working as an individual hoping it wont be an issue as my income is more than 12 Lac as a freelance consultant and 8.5 Lac working with an organisation.

    I did saving on Insurance and SIP plans etc of about 2 Lacs.

    Additionally, I am paying up for my Car loan about 12000 pm and House Loan about 25000 pm which I am awaiting registry/possession.

    Please help me understand what will be my Net Income on which tax will be calculated.

    Thanks in advance

    1. Dear Amit

      All payments made by you for the purpose of your business would be allowed to be claimed as an expense. Expenses like Car Fuel, Mobile Bill, Internet Bill, Payment to wife for administrative work would be allowed to be claimed as a deduction.

      Personal Expenses for yourself or your kid wont be allowed to be claimed as an expense

  3. Hello, what if i wont to pay tax then should i have to show where the money come from, or which ad network gave me money and for which website my getting payments. or we just have to pay money..

  4. Hi Sir,

    It’s a fantastic article and helped a lot of people like me to understand about income tax.

    I am Domainer (Buy & sell domains) and Freelancer (web developer).

    I sold a domain name for 9 Lac to Foreigner.

    1) Selling to foreigner comes under income tax ?

    2) What are all the ways to reduce the income tax ? Shall i add my dad & mom as administrative / sales contact and gave them 2 lac each?

    3) Please show me the ways to save the money.

    I am from middle class family and never earned huge money like this before, so i have to save it for my family future.

    Eagerly waiting for your reply.

    Thank you so much.

  5. Abhishek kumar sinha

    Hi karan,
    Thanks for information.It was quite helpful to know all these regarding Income tax.

    Now I have a confusion. I am working for a software company where i get an annual income of 6 lakhs whereas I even do freelance where i roughly make an income of 2.5 lakhs annually. The company is paying my income tax every month. Now I want to know how to pay income tax for freelance?

    Will I have to show my income as 2.5 lakhs for free lancer or 8.5 lakhs for free lancer? Hope I am clear.

    Thanks in advance.

  6. Venkata Krishna C V

    This is a very helpful article.
    Filled in all the missing gaps regarding Income tax and cleared all the doubts I had.
    Thank you

    1. Deductor will accept the form exceeding Rs 10000 as below Rs 10000 he has no liability. However, the onus will be on you to prove that you submitted the form 15G bonafide else you will be subject to penalty

  7. Hi Karan,

    Thank you for the great article. It’s really very useful info for the freelancers of India. Also If possible I would like to make a request for another great article on Health Insurance for Bloggers/Freelancers in India covering both Individual and Family plans. Please can any one of you guys here put up a great article on this.

    Thank you,
    Dheeraj

  8. Deep Gosalia

    What are tax info for ANDROID DEVELOPER in India??
    Since i will be selling my apps in different countries , so how i will be charged for tax.

    I am currently a First year student .
    Is that same as bloggers??

    Please reply

  9. great info.
    but above you said you will try to explain service tax also in this article. but u didn’t
    please explain service tax also. thanks

  10. Recently I have joined a Govt job and I do blogging as a side income. What are the precautions I should take ?

  11. I am a Govt. bank employee and want to start an online blog about preparations of different exams. If i am able to earn via my blog in future, wouldn’t it be counted as illegal practice.

    Can a Govt employee in India earn through blogs/websites from his/her own name legally? What rules and regulations say about this type of side business?

  12. Hey , Gr8 Post but i had a doubt, are we suppose to specify the website name(E.g : http://www.example.com) and monthly statistics(E.g : Pageviews ,users, etc)for the website as a part of income tax filing form or just specify our source of income as blogging/Freelancing ?
    If we have to submit stats should i maintain exports from my google analytics account ?
    Sorry if the doubt sounds silly but i am a newbie.
    Thanks And Regards

  13. Hi Karan

    Thanks for designing a good awareness forum.

    I have a small query.
    1. I am an employee to IT mnc and have 18L/annum direct income from my salary, my income goes in 30%Income tax slab.

    2. My wife does not work directly to company however I with my wife also deliver consulting/training services to other vendors there we may manage to make 7-10L/annum.

    Major comsulting income goes to my personal account in addition to my 30% salary tax slab rate. I have an idea that we can get some expenses exempted but we are thinking to get it registered as a consulting company to avoid 30% tax to directly applied to me only for our external income.

    Would please suggest if its a good idea to go for a company registration with my wife. What type company registration we should choose and what tax laibilies will be applicable for respective company type.

  14. I receiving money through my paypal/skrill and it directly transfer to my bank account. In case if i get scrutiny notice how can i handle it? only bank deposit statement will be enough? as far as i know tax department can send scrutiny notice to anyone but if yearly turnover 10laks+ scrutiny is mandatory is it true?

    it will be helpful if can make an article how to handle scrutiny as a freelancer.

  15. Sathya Kiran

    Hello,
    Really good information. Very helpful and thanks for it.
    Can you please help me with my query?

    I am a software freelancer and have earned about 15 lakhs in this year.
    I have provided my CA with a list of the payments received and expenses made giving him the dates and bank accounts linked to the payments and expenses.
    However my CA says he has to make a Profit and Loss statement.
    But he says that the P and L statement has to match with each and every entry in the saving banks account. Now there are 3 savings banks of mine in which payments and incomes have gone into.

    All these accounts have numerous personal expenses. Some have rebates from gas subsidies…some have details where I pay my mothers mseb bills etc.
    This means I have to sit with the CA spend at least 2 of my days explaining to him each and every entry of my 3 bank accounts.

    I have a feeling that the CA is making thinks very complicated to probably hike his fees in the end.

    Question: Does the Tax officials need so much detailing?
    Please note full details of my actual business expenses and income have been provided to my CA. Can the net income earned by me be arrived based on these details.
    Why has the CA to balance each and every entry in my saving bank accounts?

    Can you please advise?

  16. I needed to know can i use my PAN number as Foreign tax identification number? Can you please help me know, as per my views this is only my tax identification number as indian citizen, thank you

  17. Hi Karan,

    Very informative article. I am a content writer and have earned around 32,000 Rs for on-page SEO work. The company wants to deduct 10% of my earnings as tax. I am not an income tax assessee but I do have a pan card. Can I claim this amount later? My other source of income is interests from bank FDs.

    Thanks, Shilpa.

  18. Hello. I’m 13 years old. I’ve found a way blogging that is expected to generate me around 2-3 lakhs a month. I’m not exactly familiar with income tax. Now, my friend too shares this blog details with me as well, so he also must get his share. We get our money through PayPal since most of our money comes from abroad. We do affiliate marketing with various programs. We need to link a bank account that both of us share. But I’ve heard that we need a pan card to do so(for bank account) . Applying for pan is ok for me. I can apply for that . I need to know whether both of us need to have a pan card and how does the tax get calculated .

    Do I need to show two pan cards when creating the bank account? Can I enter two pan cards on my PayPal account? Please reply at the soonest

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