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 (UPDATE: The said article by Amit Agarwal on service tax is no longer valid since the government has introduced service tax even for online advertising).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


AdSense Income TaxThere 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.


Article by Tony John
Tony John is a professional blogger from India, who started his first Weblog in 1998 at Tripod.com. Tony switched to blogging as a passion blended business in the year 2000 and currently operates several popular web properties including IndiaStudyChannel.com, Techulator.com, dotnetspider.com and many more.

Follow Tony John or read 646 articles authored by Tony John

Related Articles

How to track AdSense wire transfer payments

Did Google issue a payment to you but it didn't receive in your bank? Read this article to learn how to track your AdSense wire transfer payment and how to report it to Google and your bank.

More articles: Income Tax For Bloggers AdSense Wire Transfer Tax Saving Tips Ad Networks

Comments

Author: Sushil Kumar Saini18 Dec 2013 Member Level: Gold   Points : 3

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?

Author: Tony John18 Dec 2013 Member Level: Diamond   Points : 3

Sushil,

That is a standard procedure Google follows. You just have to declare that you are not a US person and have no business in USA. Then they will release your payments. As of now, Google doesn't withhold TDS or any other tax for AdSense earnings in India. However, when they introduce direct deposit for Indian publishers, then may start deducting TDS for AdSense publishers in India too.

Author: Bhakti Savla19 Dec 2013 Member Level: Gold   Points : 5

Hello Tony,
Thanks for clearing one of the most serious questions related to Google adsense earning. I used to wonder a lot if high-earning bloggers need to pay income tax for their earnings from google adsense. And the fact that we declare in our Google adsense account that "we (Indians) are not a US citizen, nor do we have any business in USA" made me believe probably Google adsense income is not subjected to tax cut. But, it was puzzling for me to understand how we can declare income from google adsense if we fall under any of the 3 tax slabs (10%, 20% or 30%).

This article has made it clear that Google adsense income is taxable and the basic rules of income tax apply to this income of Indians as well. Thanks for clearing the air.

Guest Author: siva10 Feb 2014

I advertised my site for 1 lakh rupees using adwords and got 1.5 lakhs from google adsense. Do I need to add 1.5 lakh income to my salary or just 50 thousand need to added. please let me know

Author: Tony John10 Feb 2014 Member Level: Diamond   Points : 2

Siva,

When you file the income tax returns, you have to show 1.5 lakhs income. However, you can show the 1 lakh as business expense and will be deducted from your gross earnings to calculate your taxable income.

Guest Author: Vishal Verma05 Mar 2014

One of my friend is making 2 Lakh+ from blogging (including AdSense). It's not been one year but only few months are remaining so, when to apply for income tax. Is there any to avoid paying income tax for AdSense income/ Please give some tips for saving income on Google AdSense income and other blogging income.

Author: Hefin Dsouza10 Mar 2014 Member Level: Silver   Points : 5

@Vishal Verma In India we need to pay our taxes for the previous year in starting from April 2014 and before July 2014 to avoid any penalty and Interest on the taxes.

What does previous year mean?

It means that when you are paying your taxes in April 2014 you need to show your income from 1st April 2013 to 31 March 2014.

The Income should include as Tony said the Income from Adsense as well as from any other income source.

You can pay your taxes online using the eIncomeTax website incometaxindiaefiling.gov.in but I highly recommend hiring a chartered accountant to do it for you and their charges mostly start from 3500/- per year or even less.

Guest Author: Anand Paul26 Mar 2014

Very useful article Tony. I think you should write an article on tips for possible deduction in IT for AdSense, just for an awareness and how much deductions can be made.

Author: Tony John26 Mar 2014 Member Level: Diamond   Points : 0

Anand Paul,

Thanks for stopping by and your comments. I will definitely add it to my list and try to come with an article on possible tax deductions for AdSense and blogging income.

Guest Author: Varun21 Apr 2014

Thanks for providing good article on Should we pay taxes for AdSense income in India?. http://www.blogercup.com

Guest Author: mahir30 Aug 2014

Hi sir
I have a video channel on youtube if i connect to adsence
The procedure ll be same as connecting to blogger & income tax
Limit is 2Lac so i don't need to pay tax
If my salary under 2 lac p.a



  • Do not include your name, "with regards" etc in the comment. Write detailed comment, relevant to the topic.
  • No HTML formatting and links to other web sites are allowed.
  • This is a strictly moderated site. Absolutely no spam allowed.
  • Name:
    Email: