With the advent of social media, there is an increasing need for bloggers and content producers. The popularity of the blogging industry is largely due to its high income potential as well as the platform it provides for personal expression. The Income Tax Act's tax regulations apply to the money a blogger makes.
A blog is defined by the dictionary as "a website that contains a writer's or group of writers' personal experiences, observations, opinions, etc., and frequently has images and links to other websites."A person who frequently adds new information to this website is referred to as a blogger. A blog expresses the author's opinions and views and is an independent source of information.
A blogger can make money from their site through a variety of channels. Among them are:
The most typical way for a blogger to make money is through adverts. The blog turns into a platform for promoting a business's goods or services. One of the most well-known ad networks, Google AdSense, offers bloggers who make their ad spaces available for sale good rewards. The blogger earns money each time a reader clicks on the ads.
Affiliate sales - In this case, the blogger connects to goods or services on the blog that are associated with those goods and services. The blogger is compensated if a reader clicks on one of the links and makes a purchase.
Paid review: Organisations may directly contact well-known bloggers and request for a paid review. The blogger publishes the review and earns money
Others – The other sources are Blog Consultancy, Blog Designing, SEO services, Content Services, freelancing.
It should be clear that blogging revenue cannot simply be categorised within the five heads of income listed in the revenue Tax Act. The money should be categorised under money from Business or Profession according to the nature of the activity, and will be handled as such.
According to this section of the Income Tax Act, the taxpayer is required to remit taxes on the net income after deducting all necessary expenses and paying taxes on the income in the profit and loss account.
Permitted Expenses
Certain expenses are allowed because blogging income will be taxed as business income. Only the income after deducting expenses will be subject to taxation. These costs will be subtracted from the overall revenue. The permitted costs are:
1. Domain hosting expenses.
2. Rent expense.
3. Utility expenses such as electricity, telephone, etc.
4. Employee salaries.
5. Payments to freelance consultants.
6. Convenience charges.
Any additional fees paid with the intent of making money.
It is crucial to remember that the authorised costs must be incurred in order to generate income. The business's ability to generate income must be promoted or made easier by the expenses incurred. The writer must maintain the bills and receipts as valid proof of expenses incurred.
The blogger purchases resources that are required for the operation of his work, just like any business would. A portion of the cost of an asset purchase, such as a laptop, piece of furniture, or piece of office equipment, cannot be deducted in the year of the purchase. The price of the assets must be spread out during their lifetime. Depreciation is the phrase used to describe the distribution of an asset's cost throughout its lifespan. Depreciation is another permissible item that the blogger may deduct from his earnings to determine Net Income.
By investing the revenues in certain investments like mutual funds, LICs, and PPFs, the blogger can also reduce their tax burden. According to section 80C of the Income Tax Act, the investments are deductible. According to the limitations outlined in the Income Tax Act, the deduction for the specified investments will be permitted.
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