Should we pay taxes for AdSense income in India?
AdSense income is not taxable is a common misconception among many new generation bloggers. I am trying to clarify some misunderstanding regarding income tax for Google AdSense income.
In this chapter of my blogging tips series, I am trying to clear a common misunderstanding among many new bloggers - Should we pay income taxes for AdSense income and other revenue from blogging?
Lot of new bloggers from India are students, young professionals and house wives, who do not normally fall under tax brackets since their annual income is below the basic tax slab. However, there are lot of bloggers who earn more than US$ 1,000 per month and they too wrongly assume that AdSense income is not taxable. I have seen many threads in popular blogger communities where people spread the wrong information and they all refer to an article by a popular blogger Mr. Amit Agarwal, which actually talks about service tax for AdSense income and not about income tax. (UPDATE: The said article by Amit Agarwal on service tax is no longer valid since the government has introduced service tax even for online advertising).
Let me make it clear - service tax is different from income tax. There are different types of taxes on your income. Service tax is just one of many taxes and is levied on the service provider, which in turn is collected from the service recipients. In the past, online advertising industry was excluded from service tax. Read more about service tax for AdSense income.Income tax and AdSense income
There is no special consideration for AdSense income. Just like any other income from any other business or profession, AdSense income is also liable for income tax in India. To calculate your annual income tax liability, all of your income from all sources will be added together, including your salary, AdSense income, expensive gifts from others etc. If your total annual income in a financial year exceeds the no-tax slab after deducting certain allowed deductions, you have to pay income taxes.
The no-tax slab is fixed by the government every year. For the financial year 2012-2013 in India, in normal cases, there is no taxes if the total income after deductions is less than Rs 2,00,000. For senior citizens, this limit is Rs 2.5 lakhs.
Let us see an example. Kumar is a young blogger from India and he makes about US$ 200 per month through AdSense. His total income during a financial year is, US$ 2,400, which is roughly equivalent to Rs 1,50,000 INR. Since this annual income is below the no-tax limit of 2 lakhs, he does not need to pay income tax on this income.
Consider another case. Akshay is working in a company and he is doing blogging as a part time work or hobby. He gets about 2 lakhs as salary from his job. In addition, he makes about US$ 200 per month through AdSense, which is about Rs 1.5 lakh annual income from blogging. So, his total income during the year is 3.5 lakhs, which comes under the tax slab and he has to pay taxes for his salary and blogging income. Out of the 3.5 lakhs income he makes during the year, first 2 lakhs is tax free and he has to pay taxes only for remaining 1.5 lakhs. (Practically, you can apply lot of deductions to your income and you need to pay taxes only if your income after deductions is above the no-tax slab. Consult a chartered accountant to learn more about the possible deductions.)
Read:
1. tax saving tips for AdSense publishers
2. Income tax for bloggers
3. Tax saving tips
Warning: I am not an accountant or tax expert. The information provided here is meant for general awareness and should not be taken as professional tax advice.
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Hello Tony Sir,
Thanks for above nice information.
Sir, my Adsense account is showing me a message that - "Your payments are currently on hold." and asking to submit my tax information.
Is it must for everyone to upload his income tax certificate to Google also?
If yes, than what about the publishers who do not have income tax submission proof, as you've specified the case of students and house wives?
If no, what I should do in my case?