For the first time, the Income Tax Department has added social media influencers as a separate category in the tax system. Now influencers will have to use the new profession code 16021 while filing tax returns. This code will apply to those who earn money by promoting brands and products on social media platforms.

This change has been made in the ITR utilities released for the financial year 2024-25 (assessment year 2025-26). Influencers filing ITR-3 or ITR-4 (Sugam) will need to fill in this code. Both these forms are for self-employed professionals and small business owners.

Who Should Fill Which Form?

Social media influencers, bloggers, online coaches, and digital gig workers have two options to file returns. They can either show their actual income and expenses or choose presumptive taxation.

Presumptive taxation does not require maintaining detailed accounts. Under this system, a fixed percentage of the total income is considered taxable income. If the income is treated as a business, then 8% of the total receipts (or 6% for digital payments) will be considered taxable under section 44AD. If the income is treated as a profession, then 50% of the total receipts will be taxable under section 44ADA.

Those who choose presumptive taxation will have to file ITR-4, provided their turnover is within the limits set by the Income Tax Act.

There is still confusion about whether influencer work should be treated as a business or profession. Rule 6F of the Income Tax Act lists notified professions, but content creation is not included. If it is treated as a profession, influencers will get the benefit of expenses and deductions under section 44ADA. If treated as a business, section 44AD will apply.

Process of Filing ITR

Under the new rules, influencers will need to follow these steps while filing returns:

  1. Calculate total earnings for the financial year.
  2. Calculate expenses and deductions.
  3. Log in to the Income Tax e-filing portal.
  4. Choose the correct form – ITR-3 (for actual income/expenses) or ITR-4 (for presumptive taxation).
  5. Enter profession code 16021.
  6. Fill in all details and submit.

This move by the government is viewed as a significant step toward incorporating the rapidly expanding influencer economy into the formal tax system. However, how the confusion between “profession” and “business” will be solved remains to be seen.