Income from ad-revenue sharing plan on X liable to 18% GST if exceeds threshold

Remuneration received by individuals from X (formerly Twitter), as part of its advertisement revenue sharing plan, will be treated as supply under the GST law and will be subject to 18% tax, experts said.

The tax will kick in if the total income from various services, including rental income, interest on bank fixed deposit, and other professional services, rendered by an individual exceeds Rs 20 lakh in a year.

In recent times, X (formerly Twitter) has started advertisement revenue sharing for its X Premium subscribers or verified organisations. The account needs to have 15 million organic impressions on the posts in the last three months and have at least 500 followers to be able to be part of this revenue-sharing programme.

Content creators on X are able to set up Ad Revenue Sharing and Creator Subscriptions independently.

Many social media users have in the recent past posted tweets about receiving revenue share from X.

As per a report by Newsdrum.in, experts said it is not only the revenue share earnings from Twitter posts, but income from other sources, like interest, rental income, which will contribute to the calculation of the threshold for GST registration.

So, for calculating the Rs 20-lakh threshold, the revenues which are otherwise exempt from GST would be included. However, GST would not be leviable on such exempt income.

Currently, individuals and entities earning revenues or income from services exceeding Rs 20 lakh is liable to take Goods and Services Tax registration. The limit is Rs 10 lakh for some special category states like Mizoram, Meghalaya, Manipur.

Explaining this, AMRG & Associates Senior Partner Rajat Mohan gave an illustration and said if an individual earning interest income from banks amounting to Rs 20 lakhs annually who neither pays GST nor is required to take GST registration.

Now, if he generates any additional taxable income, say Rs 1 lakh, from platforms like Twitter, he would need a GST registration. GST would be levied at 18 per cent on the amount above Rs 20 lakh, which is Rs 1 lakh.

Mohan said if a social influencer earns income through their online presence, which includes any income paid by Twitter, these earnings are subject to annual consolidation. Notably, GST registration becomes mandatory if this income surpasses the Rs 20 lakh threshold, leading to potential GST liabilities.

"The moot point is not only the income from social influencing but other sources, like interest, which will contribute to the calculation of the threshold for GST registration. Even though interest remains tax neutral even after a GST registration," Mohan said.

EY Tax Partner Saurabh Agarwal said that for over the past few years, we have seen a steady increase in the number of individuals making content for digital platforms and being remunerated for the same.

"The said activities are subject to GST and therefore rendering it mandatory for such individuals to comply with registration, return and tax payment requirements where it exceeds the threshold of Rs 20 lakh," Agarwal said.

Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the content creator sources income from Twitter as a reward or in addition, from corporates as professional fee/ sponsorship.

"For a content creator in India, share in ad revenue from Twitter would qualify as 'export of services' in the nature of OIDAR under GST, considering Twitter is outside India and as a result, the place of supply is outside India," Jhunjhunwala said.

The aggregate of all the sources of income including professional fees and sponsorship, and rent/ bank interest has to be considered for the purposes of computing the threshold limit of Rs 20 lakhs for the purposes of registration under GST laws for content creators, he added.

KPMG, Partner & National Head, Indirect Taxes, Abhishek Jain said media influencers and content generators would need to obtain registration and discharge GST, if their turnover exceeds Rs 20 lakhs.

"The turnover for this includes exempt supplies and hence the Rs 20 lakh limit would include interest/ rental related exempt income as well; even while GST would not need to be discharged on the same," Jain added.