New Delhi unveils 'tax on infuencers'

Coming into effect on 1 July, the new measure imposes a 10 per cent tax on freebies and perks given to social media glitterati. The Indian government wants to broaden its tax base in a fast-growing industry. About 71 per cent of young people say they bought at least one product on the suggestion of an influencer on social media.

New Delhi (AsiaNews) – The Finance Act 2022 came into effect on 1 July, imposing a 10 per cent tax on any freebies and perks sponsors give to social media influencers. The tax will be withheld at the source.

Freebies and perks can be of any nature (cash, gift cards, etc.), as long as they exceed the 20,000 rupees (around US$ 250). The measure also applies to free samples of medical drugs provided to hospitals and doctors.

The taxation, which will not be applied if the products are returned, follows the Indian government’s decision to expand its tax base in light of the growth of social media and its rising profits.

According to a survey conducted in October 2020 by Rakuten Insight almost 67 per cent of respondents in India admitted to following at least one social media influencer, while only 12 per cent said they did not know the meaning of the word.

In the 25-34 age group, nearly 71 per cent of respondents admitted to buying a product sponsored by an influencer.

In 2021, India’s influencer marketing industry was worth 9 billion Indian rupees (around US$ 114 million), but is expected to grow by 25 per cent annually over the next five years, reaching 22 billion rupees (US$ 280 million) by 2025.

So far, mostly the big social media stars have benefited from this kind of marketing, but businesses could count on barter to exchange freebies for small influencers’ content.

Now, with the new tax, industry experts believe businesses will become much more selective in choosing partners for their promotions.

• india
• influencer
• industry
• sponsors
• freebies
• perks
• finance act 2022
• promotions