Social Media has grown tremendously in the last decade, and the ‘Influencers’ can be credited for its growth. Having said that, it becomes crucial to know who is an influencer. An influencer is a person who shares their knowledge on a specific topic under the umbrella of a bigger genre. For instance, people interested in beauty share information on various products and post it on their Social Media. Similarly, there are Food Influencers, Travel Influencers, Lifestyle Influencers, and so on.
Therefore, such influencers depend highly on brand collaborations as their major source of income. Such collaborations also mean free goodies. However, Influencers will no longer be able to enjoy these gifts to the fullest. The reason for it is that the government will now impose 10% Tax Deducted at Source (TDS) on the promotion of Free products from July 1. It is speculated that the Government of India has introduced this law to increase the Tax base in the Finance Act of 2022. The government has also decided to implement the law on doctors receiving free medical products from pharmaceutical companies.
However, the Central Board of Direct Taxes further cleared that there will be relief in TDS if there is a cash discount, sales discount, or rebate under section 194R of the Income Tax Act. TDS relief can also be enjoyed if instead of free goods, things such as free event tickets, cars, television, etc are received.