In August, Elon Musk unveiled an exciting opportunity for X Premium (Blue) subscribers to partake in ad revenue sharing. However, this anticipated remuneration is not exempt from the tax man’s reach, as experts, in conversation with news agency PTI, predict an 18% GST imposition on the ad revenue share doled out by ‘X,’ formerly known as Twitter.
These knowledgeable individuals assert that the ad revenue received by microblogging enthusiasts on the ‘X’ platform will be categorized as a supply under GST law, attracting the aforementioned 18% tax. A caveat exists, though, where this tax will only apply if an individual’s total income, spanning various services such as rental income, bank fixed deposit interest, and other professional services, exceeds ₹20 lahks within a year.
Elon Musk’s stipulation for eligibility in the revenue-sharing program sets a bar at 15 million organic impressions on posts within a three-month period, coupled with a requisite minimum of 500 followers for an account. Recent revelations from Musk highlight Twitter’s disbursement of thousands of dollars in advertising revenue to its premium users.
This initiative primarily benefits content creators on ‘X,’ empowering them to independently set up Ad Revenue Sharing and Creator Subscriptions. User testimonies reveal payments from ‘X’ and Twitter, with one individual stating, “Twitter just paid me $276.65 for 23,726,000 impressions in the past 127 days. For what it’s worth, YouTube paid me $289.31 in that exact same amount of time for 589,786 views and 7,223,639 impressions.”
According to PTI’s report, experts suggest that the 18% GST will apply to the total income exceeding ₹20 lahks, factoring in revenue share earnings from Twitter posts and income from various sources like interest and rental income. Notably, income from these other sources remains outside the purview of GST, unless combined with ad revenue from ‘X.’
Presently, individuals and entities earning revenue or income from services exceeding ₹20 lahks are obligated to obtain Goods and Services Tax registration, with a lower limit of ₹10 lahks for special category states like Mizoram, Meghalaya, and Manipur.
Saurabh Agarwal, a Tax Partner at EY, emphasizes that the number of individuals creating content for digital platforms and receiving compensation has steadily risen over the past few years. This influx in content creators makes GST compliance, including registration, return filing, and tax payments, a mandatory requirement when surpassing the ₹20 lakh threshold.
Many GST Experts share insights on the nature of income sources for content creators, highlighting ad revenue from Twitter as well as professional fees and sponsorships from corporates. Experts categorize the ad revenue share from Twitter as an ‘export of services in the nature of OIDAR under GST, as Twitter operates outside India, placing the supply outside the country.
Ultimately, when considering the threshold limit of ₹20 lakhs for GST registration among content creators, all sources of income, including professional fees, sponsorships, rent, and bank interest, must be aggregated for compliance, as per experts.
OIDAR full form is given in sec 2(17) of the IGST act which is as below :
“online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,
- Advertising on the Internet;
- Providing cloud services;
- Provision of e-books, movies, music, software, and other intangibles through telecommunication networks or the internet;
- providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;
- Online supplies of digital content (movies, television shows, music, and the like);
- Digital data storage; and
- Online gaming;