From 1st July, a new tax-deducted-at-source (TDS) is applicable on freebies or prerequisites retained by influencers and doctors. This also means that trips sponsored by social media influencers by brands will have 10% TDS applicable.
Why is there a 10% TDS for Doctors and Influencers?
For any resident that receives more than Rs. 20,000 as a cost for promotion, the brand, agency or individual will be applicable for 10% TDS deduction. The Union Budget has brought about this provision.
The deduction will be applicable if the deductor’s gross sale goes beyond Rs. 1 crore in the financial year. This also includes Rs. 50 lakhs worth of income from last year’s proceedings. This new rule has been introduced by the Finance Act 2022 to increase the tax base.
What Products or Services is TDS Applicable to?
This 10% deduction is applicable to the following provisions,
- In case any influencer retains benefits or freebies received by a company.
- Travel vouchers that an employee obtains for themselves and their families.
- Gifts like cars or flats that are obtained by the Director of a company.
- Cash incentives or kind such as new gadgets and electronics.
- Free tickets to a concert or free medical coverage.
In the following case, TDS will not be applicable,
- If an influencer decides to return the freebies or goodies obtained by a brand.
- For doctors or medical practitioners receiving free samples from a hospital, TDS would be applicable to the brand and not the doctor per se.
Is this good news? For a number of influencers and doctors, yes. Sometimes companies tend to send a package of free goods or samples without consent. If these things are not being utilised efficiently, they can lead to a surge of wastage. Now with this rule being applicable across the board, individuals will think twice before saying yes to collaborations where freebies are guaranteed.
What do you think of this new act?